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The Federal Commerce Fee sued the biggest U.S. distributor of wine and spirits on Thursday, saying it’s illegally discriminating towards small and impartial companies.

Southern Glazer’s Wine and Spirits doesn’t give smaller shops entry to reductions and rebates that bigger chains obtain, placing the smaller shops at a aggressive drawback, the FTC alleged within the lawsuit it filed in California.

“When native companies get squeezed due to unfair pricing practices that favor massive chains, People see fewer selections and pay larger costs — and communities undergo,” FTC Chair Lina Khan stated in an announcement.

Miami-based Southern Glazer’s referred to as the lawsuit “each misguided and legally flawed.”

“Alcohol distributors face quite a few rules that dictate how they compete and may worth and low cost merchandise, and Southern Glazer’s complies with these authorized necessities,” the corporate stated. “Southern Glazer’s strongly disputes the FTC’s allegations and can defend itself vigorously on this litigation.”

Southern Glazer’s is likely one of the largest privately held corporations within the U.S., with $26 billion in income from wine and spirits gross sales to retail clients in 2023, in accordance with the FTC. It distributes one out of each three bottles of wine and spirits within the U.S. and serves business clients similar to Whole Wine, Costco and Kroger.

The FTC’s case is predicated on the hardly ever enforced 1936 Robinson-Patman Act, which allows quantity reductions however provided that a vendor can show they obtain actual price efficiencies.

In response to the FTC, Southern Glazer’s has repeatedly provided amount reductions and rebates to massive patrons that aren’t justified by the distinction within the prices of distributing merchandise. In some instances, Southern Glazer’s has charged considerably larger costs for gross sales of equivalent bottles of wine and spirits to impartial retailers than to massive chains which are only some blocks away.

Southern Glazer’s additionally doesn’t inform smaller retailers about amount reductions, rebates and different particular affords out there to bigger chains even when smaller shops might take part within the offers, the FTC alleged.

The FTC is in search of an injunction within the U.S. District Court docket for California’s Central District to ban additional worth discrimination.

The destiny of the lawsuit beneath the Trump administration is unclear. Two of the FTC’s 5 commissioners voted to not authorize the lawsuit towards Southern Glazer’s. President-elect Donald Trump not too long ago picked one of many objecting commissioners, Andrew Ferguson, to go the FTC.

In his dissent, Ferguson stated the FTC had not introduced a case beneath the Robinson-Patman Act in additional than 25 years. Whereas the act must be enforced, the FTC was unlikely to prevail in Southern Glazer’s case, he stated.

Ferguson stated that whereas it’s attainable the FTC would possibly uncover some situations the place Southern Glazer’s worth differential couldn’t be totally justified, solely “substantial worth discrimination” — not remoted conditions — violate the act.

“The proof offered to me doesn’t lead me to the conclusion that such in depth, unjustified discrimination has taken place,” Ferguson wrote.