Feds to country’s biggest wholesaler: May be time to clean up your act
by Wine Curmudgeon Posted On
FTC investigating Southern Glazer’s for anti-trust violations
The Federal Trade Commission, doing something that it hasn’t done in two decades, says the country’s biggest wine and spirits wholesaler may have broken anti-trust laws.
The FTC is investigating Southern Glazer’s Wine & Spirits, which could control much as much as two-fifths of the U.S. wine distribution market, of illegal practices “related to how wine and liquor are priced and sold around the country,” Politico reported on Friday.
Politco reports that Southern may have violated the 1936 Robinson-Patman Act, which prohibits suppliers from offering better prices to large retailers at the expense of their smaller competitors. The federal government has largely ignored enforcement of the Robinson-Patman Act for more than 20 years, and this action may indicate that the Biden Administration was serous about its 2021 report calling for more competition in a variety of U.S. businesses, including alcohol.
Why does this matter to those of us who buy wine? Because, if the charges are proved, it means Southern has used its dominant position to artificially inflate prices – and we’ve paid more than we should have.
Which, frankly, would not be surprising given consolidation in the second tier, where Southern and RNDC probably control some two-thirds of the business. And I can’t emphasize enough how important this action is, even if nothing comes from it. And nothing might, since it’s just an investigation. Nevertheless, this demonstrates that someone understands that one or two companies dominating a market is not good business and is not necessarily good for the economy – unless you’re the companies doing the dominating.
Says the Politco story: The FTC is seeking detailed sales data on thousands of brands of alcohol and wine sold around the U.S. by both Southern Glazer and its competing distributors. This includes questions about pricing and benefits Southern Glazer offers to retailers, including quantity-based discounts, rebates, promotions, as well as marketing, warehousing, merchandising and other services.
It is also asking about the “competitive dynamics” in the retail market for wine and alcohol and how Southern Glazer allocates wine and alcohol between different retailers, including whether and how it limits distribution to certain customers.