Antitrust Investigations, Class Action Lawsuits and More: Southern Glazer’s Legal Woes Continue With Provi Case Heading to Court
Southern Glazer’s was denied the company’s motion to dismiss after Provi sued the company over unfair pricing practices. (Photo: GDA via AP Images)
Southern Glazer’s might see its day in court after a federal judge denied the liquor distribution giant’s motion to dismiss an antitrust complaint from the online retailer Provi, Wine Industry Advisor reported on Thursday.
Provi filed the complaint with the United States District Court in the Northern District of Illinois Eastern Division in March 2022 against Southern and another major liquor distributor, Republic National Distributing Company.
The lawsuit was the first to occur after President Joe Biden signed an Executive Order on Promoting Competition in the American Economy in 2021.
The order aimed to “protect the vibrancy of the American markets for beer, wine and spirits” and ensure a level playing field, thus prohibiting “discriminatory” “anti-competitive distribution practices.”
Some of the anti-competitive distribution practices the bill referred to would be pay-to-play tactics, which include paying restaurant buyers to put certain alcohol brands in cocktail placements.
In December 2017, Southern Glazer’s faced a fine of $3.5 million from the New York State Liquor Authority for implementing these illegal tactics, according to Wine Enthusiast. Though the distribution giant maintained it had “zero tolerance” for such business practices, the company cooperated and paid the fine.
As for Southern’s latest legal issue, the wholesaler attempted to dismiss the motion. However, U.S. District Court Judge Nancy L. Maldonado ruled that the lawsuit claiming Southern and RNDC engaged in practices that pushed out smaller businesses would move to discovery.
“Defendants’ allegedly anticompetitive conduct affects both competitors and customers in the relevant markets, making it even more reasonable to infer that Defendants’ allegedly anticompetitive conduct harms competition in the relevant markets, as opposed to Provi individually… These allegations suggest that any harm stemming from Defendants’ behavior was not limited to Provi alone,” Maldonado said.
Provi, an online platform that allows businesses to order alcohol, alleged that Southern Glazer’s and RNDC attempted to “stifle competition” according to Wine Industry Advisor, and continue their “monopoly power” within the online alcohol marketplace.
The company alleged that Southern and RNDC blocked and rejected orders for wines and spirits when retailers decided to use Provi.
It also claimed Southern and RNDC forced retailers not to use Provi, and that Southern coerced businesses to use its e-commerce platform instead of Provi’s.
A Sales Representative from Southern corroborated this and claimed it was “an abysmal failure of epic proportions,” according to Wine Industry Advisor.
“Today’s definitive decision allows our case to move forward,” Provi CEO and founder Taylor Katzman said in a statement. “The tactics regularly and often openly used by Southern and RNDC stifle competition in the markets we identified and harm everyone from producers to retailers and consumers. The case is important for the industry’s future, as it necessarily transitions to digital solutions. We look forward to our case proceeding and obtaining valuable relief for Provi and the industry more broadly.”
To add to the distribution company’s legal woes, Southern Glazer’s currently faces an investigation from the Federal Trade Commission for violating Antitrust laws.
In March, Southern had to pay $5.5 million as part of a class action lawsuit settlement in California after discovering that the distributor charged illegal late fees to retailers and restaurants.
Southern “strongly denied” any wrongdoing, yet still paid and canceled the $44.1 million in late fees.
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