U.S. FTC Sues Southern Glazer's for Exclusive Discounts

By Jody Godoy

NEW YORK (Reuters) – The U.S. Federal Trade Commission (FTC) filed a lawsuit against Southern Glazer's, an alcohol distributor, for offering exclusive discounts to large customers, a move aimed at protecting small retailers under the Robinson-Patman Act for the first time in decades.

The lawsuit marks the first application of the Robinson-Patman Act in over 20 years, spearheaded by outgoing FTC Chair Lina Khan, who interprets U.S. antitrust laws as tools to safeguard independent businesses and consumers.

Southern Glazer's, the largest liquor distributor in the U.S., represents brands like Bacardi, Smirnoff, and Jim Beam. The complaint, filed in California, seeks to prevent pricing practices claimed to favor large clients over smaller retailers.

Khan stated, "When local businesses get squeezed because of unfair pricing practices that favor large chains, Americans see fewer choices and pay higher prices, and communities suffer."

The Commission voted 3-2 to pursue the case, facing opposition from Republican Commissioners Andrew Ferguson and Melissa Holyoak, who argued that the lawsuit addresses benign business practices without demonstrating competitiveness harm.

Southern Glazer's allegedly offered discounts to major clients like Costco and Kroger since at least 2018—practices not extended to smaller independent shops.

Holyoak's dissent pointed out that the lawsuit was targeting normal business practices and lacked evidence of competitive harm. Ferguson suggested that the case may be weak and criticized the use of FTC resources for it.

A lack of enforcement of the Robinson-Patman Act has contributed to the dominance of large retailers like Walmart, endangering local independent businesses and generating food deserts, according to the Institute for Local Self-Reliance, a think tank.

The FTC is also investigating pricing practices by Coca-Cola and PepsiCo without accusations of wrongdoing.

The Robinson-Patman Act, passed in 1936 during the Great Depression, prohibits sellers from providing different prices for the same goods to different buyers, with several exceptions, including higher shipping costs.

The FTC has previously taken action against companies for unfair pricing, but critics argue that enforcing this law could lead to higher consumer prices by deterring wholesale discounts. Khan and her associates challenge this perspective, seeking to utilize antitrust laws to address broader issues caused by corporate consolidation.