Investigation cites pre-WWII amendment to the FTC Act.
- Marks at least second such pricing investigation this year. Both involve leading retailers and beverage companies.
- Centers on whether large producers give preferential pricing to big retailers, putting smaller players at a disadvantage.
- Jonathan Rubin questions key underpinning of FTC Chair’s strategy (see earlier post).
The Federal Trade Commission filed a petition on Oct. 20 seeking a federal court order forcing Total Wine to supply information relating to its antitrust probe of distributor Southern Glazer Wine & Spirits LLC. The FTC says it has tried to get Total Wine’s assistance for several months but the company has refused to search employee-maintained files or even say why it’s not cooperating.
The Commission is investigating whether Southern Glazer has engaged in discriminatory practices in its sales to big retailers like Total Wine in violation of the Robinson-Patman Act or whether it engaged in other unfair methods of competition in violation of Section 5 of the FTC Act.
Filing a petition with the U.S. District Court for the Eastern District of Virginia, the FTC wants to compel Total Wine to produce the requested documents and information within 20 days from the date of the petition, otherwise explain to the court why it is not complying with the request.
Khan Thirsty for Refreshed Robinson-Patman
Earlier this year, the FTC launched a similar investigation into the cola industry, again relying on Robinson-Patman. FTC Chair Lina Khan has written of her interest in reviving the Act, which was signed into law in 1936. Read Jonathan Rubin’s commentary on the MoginRubin Blog from March 17, 2023.
Commission investigators reportedly contacted Walmart, Costco, and other large retail chains to gather information about their purchases from the Coca-Cola Company and PepsiCo Inc. The issue is whether the retail giants use their market heft to obtain preferential pricing from the beverage companies, putting smaller retailers at a competitive disadvantage. The companies have denied any wrongdoing. The National Grocers Association, a trade group representing the independent supermarket industry, previously called on the FTC to investigate “the unchecked power of big box stores and e-commerce giants” that are “squeezing suppliers” and “forcing higher prices and fewer products on independent grocers and their customers.”
“The real problem lies in Chair Khan’s apparent inability to appreciate that the Commission cannot bring a case just because economic principles may dictate that government intervention can improve the market outcome,” Rubin wrote in March. “That is not enough. Although the legal standards established by the courts have significant economic content, they must first comply with American standards of due process and legal procedure.”
Edited by Tom Hagy for MoginRubin LLP.