‘The FTC Will Not Hesitate To Use The Full Force of The Law’: Total Wine Hit With Federal Court Order Over Alleged Preferential Treatment From Spirits Distributor
A logo sign outside of a Total Wine & More retail store location in Richmond, Virginia on May 13, 2020., the store was hit with an FTC probe for potential antitrust violations. (Photo: Kristoffer Tripplaar/Sipa USA)(Sipa via AP Images)
Total Wine received a petition from the Federal Trade Commission seeking the retail chain’s compliance in an antitrust probe with the federal court, the FTC said in a statement Friday.
This marks the latest incident in an ongoing FTC investigation with Southern Glazer’s Wine & Spirits LLC, a major liquor distribution company, under the claims of alleged discriminatory pricing practices.
The FTC is looking into whether Southern Glazer’s Wine and Spirits LLC offered large retailers including Total Wine, more competitive prices than smaller liquor stores, providing the mega booze retailer an unfair advantage in the marketplace.
Bloomberg Law reported Monday that the FTC is investigating whether the distributor allegedly operated in violation of the 1936 Robinson-Patman Act. Congress passed the Depression-era legislation to level the playing field so smaller liquor stores could compete with larger retailers. According to the Robinson-Patman Act, price discrimination such as offering discounts to larger retailers is strictly prohibited.
“A civil investigative demand issued by the FTC is not a voluntary request, it is a demand made by the federal government that companies must comply with,” said Henry Liu, the director of the FTC’s Bureau of Competition. “Failing to comply with a CID ultimately hinders the FTC’s ability to protect consumers and businesses from anticompetitive practices. The FTC will not hesitate to use the full force of the law and take companies to court if they fail to comply.”
Total Wine is requested to appear before the U.S. District Court for the Eastern District of Virginia. If Total Wine does not appear, the FTC asks that the wine retailer franchise procure documents and information within 20 days.
Bloomberg Law reports that the Robinson-Patman Act is typically unenforced due to worries about inflated pricing affecting the consumer.
Despite the FTC’s implications otherwise, Total Wine and its parent company, Retail Services and Systems, allege they have complied with the ongoing investigation, however.
“In August, we stated our willingness to continue our discussions toward an amicable resolution of this matter,” RSS said in a statement, per Bloomberg Law. “We are disappointed that the FTC declined our offer to produce additional records and chose to pursue this matter in the courts.”
Politico reported in March that Southern Glazer’s Wine and Spirits was under investigation by the FTC for possibly violating the Robinson-Patman Act.
In addition to potential violations of the Robinson-Patman Act, the FTC is investigating Southern Glazer’s Wine and Spirits under Section 5 of the FTC Act.
Politico cites that the investigation is meant to decide whether SGWS engaged in “unfair, deceptive or anti-competitive business practices.”
Southern Glazer is no stranger to making the media headlines for its unconventional business practices and interesting hiring choices. In November 2022, The Drinks Business reported the IRS raided the company’s California office for “unfair trade practices.”
The drinks-distributing giant was hit with a $5 million fine over pay-to-play tactics in New York 2017. Wine Enthusiast reported the pay-to-play deals were mostly credit card swipes at retail establishments.
“The multitude of violations found during the course of these investigations is truly staggering,” State Liquor Authority Chairman Vincent G. Bradley said in regards to the charges. “The SLA remains committed to rooting out abuse and corruption in the alcoholic beverage control industry to ensure a level playing field for all businesses.”
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