The Not-So-Surprising Return of FTC’s Robinson-Patman Act Enforcement

On December 12, 2024, the Federal Trade Commission (“FTC”) filed a lawsuit against Southern Glazer’s Wine and Spirits, the largest distributor of wine and spirits in the U.S., alleging that Southern Glazer’s has violated the Robinson-Patman Act (“RPA”) and FTC Act through pricing practices that FTC claims discriminate against small and independent retailers.¹

Originally passed in 1936 to protect small grocery businesses from fast growing supermarket chains, the Robinson-Patman Act prohibits sellers from discriminating in price or promotional deals between competing customers when the effect of such discrimination may be to lessen competition.  The law had fallen out of favor amongst regulators, and the FTC case against Southern Glazer’s marks the government’s first enforcement action brought under the Robinson-Patman act in nearly a quarter-century.² The suit against Southern Glazer’s also represents a culmination of President Biden’s July 2021 Executive Order on “Promoting Competition in the American Economy,”³ which lead earlier this year to the creation of a “strike force” to tackle allegedly unfair and illegal pricing practices.⁴

Rumors of Robinson-Patman Act’s Demise Were Exaggerated

While a never-ending stream of articles and other commentaries have observed the federal government’s inaction in recent decades regarding Robinson-Patman enforcement, private Robinson-Patman lawsuits have been pursued on a relatively consistent basis over the last decade in a variety of industries including automotive, food & beverage and other consumer goods.  Indeed, earlier this year a district court in the Central District of California confirmed a rare plaintiff-side jury victory in private litigation brought under the RPA (L.A. International Corp. v. Prestige Brands Holdings, Inc.), in a case involving the sale of Clear Eyes branded eye drops.⁵ Plaintiffs also secured a significant legal win in the Ninth Circuit’s December 2023 opinion in U.S. Wholesale Outlet & Dist., Inc. v. Innovation Ventures,⁶ which confirmed a plaintiff-friendly standard for which companies are competitors within the meaning of the RPA.

While the FTC’s lawsuit against Glazer’s represents the first government Robinson-Patman lawsuit in more than two decades, it hardly comes as a surprise. President Biden’s July 2021 Executive Order on “Promoting Competition in the American Economy” called for the FTC Chair and Secretary of Agriculture to report practices potentially violating the RPA to the White House Competition Council, particularly in the context of the food industry. Since then, FTC Chair Lina Khan⁷ and Commissioner Alvaro Bedoya⁸ have repeatedly foreshadowed increased RPA enforcement. The FTC also announced in early 2023 an investigation into potential price discrimination by Coke and Pepsi in the U.S. beverage industry,⁹ and the FTC’s RPA investigation into Southern Glazer’s has been widely known for much of the last two years.

The Southern Glazer’s Complaint

The FTC’s lawsuit, which was filed in the Central District of California, alleges that starting in at least 2018, Southern Glazer’s routinely charges small and independent businesses significantly higher prices for than charges national or regional chain retailers for identical bottles of wines and spirits. Southern Glazer’s is alleged to have implemented this discriminatory pricing regime through high-volume quantity discounts, cumulative quantity discounts, and scan rebates, which all favor large retail chains. In the heavily redacted complaint, the FTC alleges several examples of instances where Southern Glazer’s has charged different prices to independent and large retailers for identical products in the same geographic location.

According to the FTC, these practices harm small businesses such as neighborhood grocery stores, convenience stores, and independently owned wine and spirit retailers, which compete directly against large chain retailers for customers in the same geographic locations. Southern Glazer’s pricing approach is also alleged to have substantially lessened competition in the market for the retail sale of wine and spirits. In anticipation of Southern Glazer’s expected defenses, the FTC further argues that these practices cannot be supported by any legitimate business or competitive justification, such as differences in its cost of supplying large chains and independent retailers, or the need for Southern Glazer’s to match its own competitors’ pricing.

Where Does the Robinson-Patman Act Go From Here?

It remains to be seen whether the Southern Glazer’s case reflects a shift in federal antitrust enforcement strategy that will carry over to the Trump Administration. The FTC’s vote to file the complaint split along party lines, and both Republican commissioners Andrew Ferguson¹⁰ and Melissa Holyoak¹¹ issued lengthy dissents. Still, the Republican commissioners signaled a general openness to RPA enforcement, even while disagreeing with the decision to proceed with the case against Southern Glazer’s. Moreover, increased Robinson-Patman enforcement as a solution to ever-increasing retail prices has been a relatively popular talking point across the political spectrum.

For companies asking what this means for them, moderate upticks in civil Robinson-Patman lawsuits and government Robinson-Patman enforcement are realistic outcomes regardless of whether the Southern Glazer’s lawsuit succeeds. While government lawyers for many years had no experience with Robinson-Patman enforcement, recent investigations and the Southern Glazer’s lawsuit have provided FTC lawyers with the experience and roadmap necessary to facilitate future enforcement efforts. Private plaintiffs are likely to be emboldened by the government’s efforts and recent pro-plaintiff outcomes in civil RPA cases.

To avoid the potential legal headache associated with an RPA investigation or litigation, companies that sell to resellers—particularly those that sell any sort of consumer good—should regularly review their pricing practices and promotional allowance programs to ensure compliance with the RPA. Consultation with antitrust counsel is particularly important in this climate during the early stages of new pricing programs to identify areas of RPA risk and implement risk mitigation strategies that align with the manufacturers’ or wholesalers’ business strategies.

¹ F.T.C. v. Southern Glazer’s Wine and Spirits, LLC, No. 8:24-cv-02684 (C.D. Cal. Dec. 12, 2024).

² McCormick & Co., Docket No. C-3939 (F.T.C. Apr. 27, 2000).

³ Exec. Order. No. 14,036 (2021)

⁴ Press Release, White House, Fact Sheet: President Biden Announces New Actions to Lower Costs for Americans by Fighting Corporate Rip-Offs (Mar. 5, 2024), https://www.whitehouse.gov/briefing-room/statements-releases/2024/03/05/fact-sheet-president-biden-announces-new-actions-to-lower-costs-for-americans-by-fighting-corporate-rip-offs/.

⁵ L.A. Int’l Corp. v. Prestige Brands Holdings, Inc., No. 18-6809-MWF (MRWx), ECF No. 372 (C.D. Cal. May 20, 2024).

⁶ U.S. Wholesale Outlet & Distribution, Inc. v. Innovation Ventures, LLC, 89 F.4th 1126 (9th Cir. 2023).

⁷ Lina M. Khan, Chair, Fed. Trade Comm’n, Remarks of Chair Lina M. Khan Regarding Policy Statement on Rebates and Fees in Exchange for Excluding Lower-Cost Drug Products (June 16, 2022), https://www.ftc.gov/system/files/ftc_gov/pdf/Remarks-Chair-Lina-Khan-Regarding-Policy-Statement-Rebates-Fees.pdf.

⁸ For example, see Alvaro Bedoya, “Returning to Fairness”: Prepared remarks of Commissioner Alvaro M. Bedoya, FTC (Sept. 22, 2022); see also Matthew Perlman, “FTC’s Bedoya Says Oft-Ignored Pricing Statute Still Good Law,” Law360 (March 29, 2023); Matthew Perlman, “FTC’s Bedoya Looking for Market Power in Pricing Cases,” Law360 (April 11, 2024).

⁹ Josh Sisco, Pepsi, Coke Soda Pricing Targeted in New Federal Probe, POLITICO (Jan. 9, 2023), https://www.politico.com/news/2023/01/09/pepsi-coke-soda-federal-probe-00077126.

¹⁰ Dissenting Statement of Commissioner Andrew N. Ferguson, p. 1, 30, available at https://www.ftc.gov/system/files/ftc_gov/pdf/ferguson-southernglazers-statement.pdf.

¹¹ Dissenting Statement of Commissioner Melissa Holyoak, p. 1, 88, available at https://www.ftc.gov/system/files/ftc_gov/pdf/holyoak-statement_southern-glazers.pdf.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.