Federal regulators are considering a lawsuit against Southern Glazer’s Wine and Spirits, the largest alcohol distributor in the US, under the rarely enforced Robinson-Patman Act of 1936. The FTC aims to lower costs for consumers and ensure fairness for small businesses in the market. This move aligns with the Biden administration’s focus on taking action to reduce costs and address dominance in various industries.
Critics argue that enforcing the Robinson-Patman Act could backfire on consumers, leading big chains to raise prices as they lose access to deep discounts. They believe favoring small businesses over larger ones could harm consumers by eliminating competition and potentially raising prices. Some experts suggest repealing the Robinson-Patman Act due to concerns about antitrust principles and the possible negative impact of enforcement on consumer prices.
While opponents of enforcing the Robinson-Patman Act argue that consumers benefit from the discounts received by large chains, proponents believe that market power leads to higher consumer prices. The advocacy for enforcing the act comes from groups like the National Grocers Association, which argues that maintaining fair competition through enforcement will benefit consumers and enhance options for everyday goods at lower prices. However, no empirical evidence supports the claim that enforcing the law increases consumer prices.
Southern Glazer’s has not commented on the potential lawsuit, but a source familiar with the situation indicates that their discounts are available to all retailers where permitted by state law. The source affirms that there are no secret discounts, and differences in discounts may arise due to volume discrepancies between stores. The FTC has not taken legal action against Southern Glazer’s yet, and the decision to pursue a lawsuit is still pending, subject to approval by FTC commissioners.
Enforcing the Robinson-Patman Act against Southern Glazer’s would be a complex test case, as it would challenge the current enforcement policy at the FTC under Chair Lina Khan. The alcohol industry is already heavily regulated at the state level, which could complicate the legal proceedings and potentially involve state’s rights issues. This case would reflect a shift towards prioritizing fair competition over consumer welfare standards, with the goal of leveling the playing field for small retailers and addressing dominance in the industry.
Overall, the potential lawsuit against Southern Glazer’s highlights the ongoing debate over antitrust laws and their impact on consumer prices and market competition. While proponents argue that enforcing the Robinson-Patman Act will benefit consumers by promoting fair competition, opponents suggest that it could lead to unintended consequences, such as price increases by major retailers. The outcome of this case could have far-reaching implications for the alcohol distribution industry and set a precedent for future antitrust enforcement actions.
