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The FTC claims that a major liquor distributor in the US preferred Costco, Kroger, and other chains over small companies.

In a recent lawsuit, the Federal Trade Commission charges the biggest wine and spirits distributor in the United States with engaging in unlawful price discrimination, offering big-box retailers like Costco, Kroger, and Total Wine & More significantly lower prices than those provided to independent liquor stores, convenience stores, and local grocery stores.

In announcing the lawsuit on Thursday, the FTC stated that Southern Glazer’s Wine and Spirits, the distributor, is the tenth biggest privately owned corporation in the United States and would generate approximately $26 billion in revenue from sales to retail consumers in 2023.

Top U.S. liquor distributor favored Costco, Kroger, other chains over small businesses: FTC
Top U.S. liquor distributor favored Costco, Kroger, other chains over small businesses: FTC

According to the complaint, Southern, which distributes around 5,600 wine and spirit labels, hurt smaller businesses’ ability to compete with big national and regional chain stores by denying them access to discounts and rebates.

According to the lawsuit, the distributor gave a certain group of merchants “steep discounts” without any market rationale, in violation of the Robinson-Patman Act.

In a statement, FTC Chair Lina Khan said, “When local businesses are squeezed due to unfair pricing practices that favor large chains, Americans see fewer choices and pay higher prices — and communities suffer.”

Top U.S. Liquor Distributor Favored Costco, Kroger, Other Chains Over Small Businesses: FTC - South Florida Reporter
Top U.S. Liquor Distributor Favored Costco, Kroger, Other Chains Over Small Businesses: FTC – South Florida Reporter

“Businesses of all sizes should be able to compete on an equal basis, according to the law,” Khan stated. “The FTC’s action today will help protect fair competition, lower prices, and restore the rule of law, despite enforcers disregarding this congressional mandate for decades.”

Southern has been asked to comment on the complaint by CNBC. Southern has been accused of pricing discrimination since at least 2018 in the lawsuit, which was filed in the U.S. District Court for the Central District of California.

Top liquor distributor favored Costco and Kroger over small businesses, FTC says
Top liquor distributor favored Costco and Kroger over small businesses, FTC says

According to the FTC, Southern distributes wine and spirits for numerous large suppliers, such as Pernod Ricard, which supplies Jameson Irish Whiskey and Absolut Vodka; Bacardi U.S.A., which supplies Patron Silver Tequila, Grey Goose Vodka, and Bacardi Rum; Diageo, which supplies Smirnoff Vodka; and Beam Suntory, which supplies Jim Beam Bourbon and Makers Mark Whiskey.

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