FTC Secures Settlement that Protects Small Businesses from Illegal Price Discrimination

The Federal Trade Commission secured a settlement agreement with Southern Glazer’s Wine and Spirits LLC, the nation’s largest distributor of wine and spirits, that will redress allegedly illegal price discrimination practices and make it easier for small businesses to compete against large chain retailers.

The sweeping settlement covers nearly all Southern wine and spirits sales to the five largest chain retailers in 26 states. The settlement will also provide direct cash payments to harmed small businesses if an independent monitor finds that Southern violates the settlement order going forward.

“This settlement marks a significant milestone for the FTC in its enforcement of the Robinson-Patman Act, which Congress enacted to empower small businesses to compete against large ones,” said Daniel Guarnera, Director of the FTC’s Bureau of Competition. “Small businesses are an invaluable part of the American economy and way of life. The FTC is committed to ensuring that all businesses, no matter their size, can compete on a fair and level playing field to serve their customers and boost the entire American economy.”

The FTC’s settlement with Southern delivers a successful conclusion to the Commission’s first enforcement action under the Robinson-Patman Act in a generation.

Under the terms of a proposed stipulated order filed by the FTC, Southern will face limitations on its ability to charge small, independent retailers higher prices for wine and spirits than it charges competing large retail chains. 

The FTC’s settlement resolves a lawsuit brought by the Commission in 2024, which alleges that Southern violated the Robinson-Patman Act by depriving small, independent businesses access to discounts and rebates that were available to large competitors. As alleged in the complaint, these pricing practices interfere with the ability of independent retailers to compete against large national and regional chains and big box stores. Under the Robinson-Patman Act, it is generally unlawful for sellers to engage in price discrimination that harms competition by charging higher prices to disfavored retailers that purchase similar goods.

According to the FTC’s complaint, Southern charged significantly higher prices for sales of identical bottles of wine and spirits during the same time period to independent retailers as compared to competing large chains, like Total Wine, Walmart and Kroger, even when the stores were located a few miles or even a few blocks from each other. Southern engaged in discriminatory pricing via a variety of mechanisms, such as by offering discounts and rebates to large buyers that were inaccessible to small competitors and were not justified by differences in the cost of distributing products to different retailers, the FTC’s complaint further alleged. 

Settlement Terms

To resolve the FTC’s complaint, Southern has agreed to a series of conditions that will disincentivize the company from engaging in discriminatory pricing and compensate independent retailers if they are harmed. Specifically, the terms of the proposed stipulated order target “paired” transactions where Southern sells a product to a chain retailer at one price while contemporaneously selling that same product to a nearby independent retailer at a significantly higher price. 

Southern will be in violation of the FTC’s proposed stipulated order, if, among other conditions, the paired transactions involve: 

• Significant price discrimination (exceeding a maximum threshold based on state-specific operating costs)
• Recurring price discrimination (in the aggregate, exceeding $5,000 over a 12-month period)

Where a set of discriminatory paired transactions meets certain specifications, Southern can resolve the violation by paying the independent retailer 1.5 times the full aggregated price-differential amount. If Southern does not redress the price discrimination, the FTC can bring an enforcement action, and, if the Commission prevails, Southern must pay the independent retailer double the aggregated price differentials. 

The FTC’s proposed stipulated order will remain in effect for six years and will be overseen by an independent monitor.

The states covered by the order are Alaska, Arizona, Arkansas, California, Colorado, Delaware, Florida, Hawaii, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maryland, Minnesota, Missouri, Nebraska, Nevada, New Mexico, New York, North Dakota, Oklahoma, South Carolina, Tennessee, Texas and Washington.

The Commission vote to issue the proposed stipulated order was 2-0. The order was filed in the U.S. District Court for the Central District of California. Chairman Andrew N. Ferguson and Commissioner Mark R. Meador issued separate statements. 

NOTE: Stipulated orders have the force of law when approved and signed by the District Court judge.