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Federal Trade Commission readies lawsuit against Southern Glazer’s
The Federal Trade Commission (FTC) is preparing a lawsuit against the US’s largest distributor of alcohol, Southern Glazer’s Wine and Spirit, according to reports.
According to Politico, the Commission’s staff are investigating the company under the Robinson-Patman Act, which was created to stop suppliers from offering favourable prices to certain retailers — for example, larger national stores instead of small independents.
It follows the FTC filing last year for a federal court order to force Total Wine to comply with requests for documentation as part of its ongoing investigation into US distributor Southern Glazer’s and its business practices.
Anti-competition
The 1936 law, created during the height of the Depression, has not been used by the FTC in more than two decades. But it comes as other lawsuits against big corporate giants have also taken place with the Biden White House attempting to bring down the cost of living for the average consumer.
It follows Biden’s 2021 order on competition policy, which referred to stopping “unlawful trade practices in the beer, wine, and spirits markets”, including anti-competition and discriminatory practices — especially those that would impact smaller or independent businesses, or those looking to enter the sector.
The reports do state that a decision on the lawsuit is “not final”, but a meeting is planned with the company and commissioners in the next few weeks, which could impact the future direction of the investigation.
Moving forward
In the event of moving forward, the FTC could either go to federal court or its own administrative court, and should the lawsuit prove successful, it would result in Southern Glazer’s being served an order prohibiting the former business practices.
But it is also believed, according to the report, that action may be difficult due to the complexity and variety of bureaucracy and laws around alcohol and how it is regulated in different states. As a result, it could be challenging for the federal government.
In addition, The Alcohol Tax and Trade Bureau is currently in the process of changing the rules about how alcohol is sold.
Offices raided
In November 2022, the drinks business reported that agents from the Internal Revenue Service (IRS) and the federal Alcohol and Tobacco Tax and Trade Bureau raided the offices of Southern Glazer’s.
The US distribution giant has also previously come under fire from trade officials, receiving a US$5 million fine in 2017 over a “pay to play” case in Pennsylvania in which the company was found to have offered incentives to staff of the state’s liquor control board in order to win business.
The violations uncovered were described as “truly staggering” by one official.
In July 2023, Sheldon Stein, president of Southern Glazer’s, stepped down from the role but will continue to serve as an advisor to the company’s board of managers.