Sensational Legal Battle: FTC Sues Total Wine & More in Investigation of Southern Glazer’s

In a surprising turn of events, the Federal Trade Commission (FTC) has taken legal action against national wine and spirits retailer Total Wine & More. The FTC is seeking sales and other records for an investigation into Southern Glazer’s, the largest distributor of alcoholic beverages in the United States.

The FTC has filed a lawsuit in a U.S. court, asking a federal judge in Alexandria, Virginia, to compel Retail Services & Systems Inc, better known as Total Wine & More, to hand over business records in response to an agency subpoena. The investigation is focused on whether Southern Glazer’s has unlawfully given price preferences to large chains like Total Wine, while withholding them from smaller retailers.

Total Wine, based in Maryland and operating over 250 stores in nearly 30 states, has faced accusations from the FTC of obstructing and delaying the probe of Southern Glazer’s. FTC lawyers argued in court that Total Wine has been uncooperative, making it difficult to gather necessary information.

Stephen Weissman, a lawyer representing Total Wine from Gibson, Dunn & Crutcher, has not provided an immediate comment in response to the recent developments. In a statement issued by Total Wine, the company denies being the subject or target of the FTC probe. Total Wine claims to have made substantial efforts to cooperate with the FTC’s investigation, responding in good faith to most of their data and document requests.

Southern Glazer’s, however, has not yet responded to requests for comment regarding the ongoing investigation.

The subpoena issued by the FTC seeks information from Total Wine, including sales and purchase data, as well as “formal and informal agreements” with suppliers and details about its negotiation process for rebates and discounts. The FTC’s price discrimination probe revolves around the Robinson-Patman Act, a federal law enacted during the Great Depression that prohibits larger suppliers from engaging in certain price-related practices that may harm smaller businesses.

Interestingly, this probe has brought the Robinson-Patman Act back into the spotlight after years of being dormant. Until last year, the 1936 antitrust law had not received significant attention. Now, the FTC is determined to investigate potential violations and enforce the law.

Over the past few months, Total Wine and the FTC have been at odds, ever since the agency issued the initial subpoena in February. Total Wine attempted to limit the scope of the information demand through an administrative challenge at the agency, but their efforts were unsuccessful. The company accused the FTC of embarking on a “fishing expedition” and subjecting them to relentless and heavy-handed demands.

In response, Total Wine’s attorneys defended their client, noting that they are only one of many retailers served by Southern Glazer’s. They have questioned the relevancy of the records the FTC is seeking and argued that the agency’s investigation of a target company should not give them unfettered access to innocent third parties.

As the legal battle unfolds, it remains to be seen how the court will rule on the FTC’s demands for Total Wine’s records. This case, identified as Federal Trade Commission v. Retail Services & Systems Inc d/b/a Total Wine & More, is being closely watched by the legal community.

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Disclaimer: This blog post is based on a Reuters news article. The story and logic have been preserved while presenting the information in a different format.