Big chains buy at much lower prices, hurting smaller retailers, suit charges
The Federal Trade Commission (FTC) has filed a lawsuit against Southern Glazer's Wine and Spirits, accusing the company of violating the Robinson-Patman Act by unfairly discriminating in prices between small, independent businesses and large national chains.
The FTC claims that Southern charged much higher prices to smaller retailers for the same products that were sold to large retailers like Costco and Kroger at significantly lower prices. This pricing discrepancy is said to harm competition by giving large chains an unfair advantage, ultimately leading to higher prices and fewer choices for consumers.
When local businesses get squeezed because of unfair pricing practices that favor large chains, Americans see fewer choices and pay higher pricesand communities suffer, said FTC Chair Lina M. Khan.
The law says that businesses of all sizes should be able to compete on a level playing field. Enforcers have ignored this mandate from Congress for decades, but the FTCs action today will help protect fair competition, lower prices, and restore the rule of law, she said.
The lawsuit seeks to ensure that all businesses, regardless of size, have equal access to discounts and rebates, which the FTC claims would help create a fairer, more competitive market.
Southern's pricing practices, which include offering special deals and volume discounts to large chains, are considered unlawful under the Robinson-Patman Act, as they do not reflect real cost differences. The FTC aims to stop this discriminatory pricing and restore competition in the market, benefiting consumers and independent retailers.
Big chains pay less
The FTC said that since at least 2018 and continuing today, Southern has repeatedly discriminated in price between disfavored independent purchaserswhich include neighborhood grocery stores, local convenience stores, and independently owned wine and spirits shopsand favored large chain purchasers of wine and spirits, such as Total Wine & More, Costco, and Kroger.
In 2023, Southern generated roughly $26 billion in revenues from wine and spirits sales to retail customers, making it the tenth largest privately held company in the country.
Southern serves as the distributor for many of the largest wine and spirits suppliers, including Pernod Ricard (Jameson Irish Whiskey, Absolut Vodka), Bacardi U.S.A., Inc. (Patron Silver Tequila, Grey Goose Vodka, Bacardi Rum), Diageo (Smirnoff Vodka, Aviation Gin), and Beam Suntory (Jim Beam Bourbon, Makers Mark Whiskey).
Southerns discriminatory pricing is pervasive and deeply engrained in Southerns business strategy and is accomplished through a variety of pricing mechanisms, according to the FTCs complaint.
Photo Credit: Consumer Affairs News Department Images
Posted: 2024-12-12 18:53:26
