On December 12, 2024, the Federal Trade Commission (FTC) sued Southern Glazer’s Wine and Spirits, LLC (Southern) in the Central District of California for alleged price discrimination, initiating the first federal government enforcement action under the Robinson-Patman Act (RPA) in nearly 25 years.1 Much ink was spilled across statements issued by FTC Commissioners Alvaro Bedoya, Andrew Ferguson, and Melissa Holyoak about the history of the enactment and enforcement of the RPA and various statutory interpretation arguments. That commentary is certainly interesting reading to better understand dueling views on the origin and purpose of the RPA, but the key takeaways for suppliers and retailers assessing legal risk under the RPA are: the RPA remains good law, the FTC has delivered on its promise to revive enforcement, and the incoming Chair for the Trump Administration—Commissioner Ferguson—is open to future RPA enforcement, particularly when the favored buyer has market power.
What Is the Robinson-Patman Act?
The RPA prohibits certain types of unjustified price discrimination, including where a supplier offers favorable pricing to large retailers (like supermarket chains) that it does not make available to smaller competitors (like locally owned grocery stores), subject to several exceptions.
The Robinson Patman Act was passed in 1936 in response to damaging deflation and political animus against large chain stores. The RPA was aggressively enforced by antitrust authorities up until the 1970s, when scholars and politicians started to consider that RPA enforcement would likely lead to higher pricing overall to retailers, and in turn higher consumer prices. Since then, government enforcers have declined to pursue RPA cases as a matter of prosecutorial discretion, though the law remained on the books. Despite the lapse in government enforcement, the law has been and continues to be used by private plaintiffs to bring suit against alleged price discrimination. In the Biden Administration, FTC leadership and some advocacy groups called for a return to enforcing the RPA, blaming high prices for consumer goods at smaller stores on RPA underenforcement, theorizing that price discrimination by manufacturers/suppliers inhibits smaller retailers’ ability to compete with larger retailers.
Under Section 2(a) of the RPA, illegal price discrimination can occur when i) a seller is charging different prices to different purchasers; ii) the sales to those purchasers occur at substantially the same time; iii) involving the sale of commodities (goods only, not services) made within interstate commerce; iv) for goods of like grade and quality; v) which results in an injury to competition. However, even if all above criteria are met, there are several exceptions to the application of Section 2(a), including statutory carve-outs for instances where a price differential is justified because the cost of serving one of the purchasers is lower, and where a seller is lowering a price to meet but not beat a specific competitor’s pricing. Sellers also may rely upon the “functional availability defense”: if purchasers would be able to take advantage of the lower price by meeting the same criteria, such as a volume-based discount or sales-growth-based discount, then a seller’s differential pricing may be justified.
The FTC’s Case Against Southern Glazer’s
Here, the FTC alleges that alcohol wholesaler Southern Glazer’s has been selling wine and spirits to small, independent businesses at significantly higher prices than it charges large national and regional chains. The FTC alleges that Southern Glazer’s has been the largest U.S. wholesaler of wine and spirits for several years, reportedly selling one out of every three bottles of wine and spirits purchased in the U.S. The FTC claims Southern Glazer’s charges small, independent retailers as much as 20 to 50 percent more for the same bottles of certain wine and spirits than large chains in the same geographic area. According to the FTC, these price differentials are not justified by differences in Southern’s cost of providing goods to larger retailers, nor are they a bona fide attempt to meet prices offered by a competing distributor.2 The FTC seeks an injunction to prohibit further price discrimination and enable all retailers served by Southern to have access to the same discounts, rebates, and pricing.
Republican Commissioners Holyoak and Ferguson Dissent
The FTC’s decision to bring the suit against Southern was approved on a 3-2 split along party lines, with Republican Commissioners Ferguson and Holyoak both authoring lengthy dissents. The dissenters have two main objections: first, due to a unique regulatory framework, the wine and spirits remained wholly within the confines of a particular state, which means that the commerce in question is not interstate commerce regulable by the Robinson-Patman Act.3 The second objection from the dissenting Commissioners is that the Complaint does not allege harm to competition, focusing instead on harm to competitors, which is at odds with the plain statutory construction of the RPA.
The dissenting Commissioners may rely on plain statutory construction because the RPA case law has vacillated between decisions that protect competitors from discriminatory pricing and the consistent theme of all other antitrust laws, which is to protect competition. Twelve years after the passage of the RPA, the U.S. Supreme Court held in FTC v. Morton Salt Co. that the long-term use of quantity discounts may have substantially lessened competition when the “price differentials between competing purchasers [was] sufficient in amount to influence their resale price of salt.”4 According to Commissioners Holyoak and Ferguson, the Morton Salt holding mistakenly created a way to derive evidence of competitive injury in Robinson-Patman cases based solely on an inference of competitive harm, as opposed to the four statutory requirements found in Section 2(a). In the case against Southern Glazer’s, the FTC alleges that Southern Glazer’s violated the RPA based on evidence of price disparity between prices charged by Southern to chain stores and independent stores. The dissents harshly criticize the Complaint’s failure to establish harm to the market as a whole (rather than individual competitors). In particular, Commissioner Holyoak notes that this approach collapses Section 2(a)’s requirement to show anticompetitive harm into simply providing evidence of discrimination in price.
Commissioner Bedoya Refutes the Republican Commissioners’ Arguments
In his statement for the majority, FTC Commissioner Bedoya, joined by Chair Lina Khan and Commissioner Rebecca Slaughter, defends the FTC's complaint against Southern Glazer’s. Commissioner Bedoya argues that the dissenters’ critiques are based on selective readings of case law, novel interpretations of statutory language, and incomplete and incorrect factual assertions. He claims the dissenters’ arguments would make the law harder to enforce and are contrary to the intent of Congress.
Commissioner Bedoya argues that the RPA was intended to protect small businesses and prevent large companies from abusing their power to secure discounts unavailable to their competitors. He rejects the argument that the law raises prices for consumers, stating that there are no empirical studies demonstrating this claim. Commissioner Bedoya sharply criticizes Commissioner Holyoak’s dissent for effectively providing a roadmap for Southern Glazer’s to defeat the FTC's complaint, arguing that it undermines the FTC's mission. Commissioner Bedoya provided detailed disputes of Commissioner Holyoak’s legal arguments, including her interpretation of the “in commerce” requirement.
Potential RPA Enforcement Under the New Trump Administration
Perhaps the most surprising development in the nearly 100 pages of Commissioner statements issued along with the Complaint is soon-to-be Chair Ferguson’s stance on the RPA. Namely, Commissioner Ferguson criticizes the FTC for decades of non-enforcement on the grounds that “[t]he separation of powers forbids the suspension of the laws merely because of a policy disagreement with that law.” He further states that while he does not view this case as a good use of the Commission’s limited resources, he believes the Commission should focus RPA enforcement efforts on secondary-line cases where “there is strong evidence that the favored purchasers possess market power.” Pursuing violations “that most irked Congress is a sound way to deploy the enforcement resources that Congress has given” the Commission and will “maximize[] the effect of the Commission’s enforcement resources.”
Commissioner Ferguson’s dissent, in combination with President-elect Trump’s proposed appointment of Mark Meador—a staunch defender of the RPA who has advocated for RPA enforcement in the grocery sector5—as the third Republican Commissioner, is a clear signal to the business community and the antitrust bar that RPA enforcement will likely continue under the next administration.
Ensuring compliance with the RPA will be critical for large chain stores and their suppliers for the foreseeable future. Importantly, Section 2(f) of the RPA creates liability for buyers who knowingly induce or receive a discriminatory price that is prohibited by Section 2(a). A buyer can be held liable under 2(f) only if it knows both that it is getting a lower price and that this price discrimination constitutes a violation of 2(a) for the seller. With RPA enforcement on the rise, powerful buyers and those who sell to them should exercise caution and be prepared to justify differential pricing.
[1] See Fed. Trade Comm’n, FTC Sues Southern Glazer’s for Illegal Price Discrimination (Dec. 12, 2024), https://www.ftc.gov/news-events/news/press-releases/2024/12/ftc-sues-southern-glazers-illegal-price-discrimination.
[2] Compl. ¶ 33.
[3] See Major Mart, Inc. v. Mitchell Distrib. Co., 46 F. Supp. 3d 639, 667–68 (S.D. Miss. 2014), Callahan v. A.E.V., Inc., 1994 WL 682756, at *7 (W.D. Pa. Sept. 26, 1994), Royal Farms, Inc. v. Piels Bros., Inc., 1971 WL 508, at *5 (E.D.N.Y. Jan. 29, 1971). But see Fast & Easy Food Stores, No. 7:11-CV-1929-MHH, 2013 WL 12136610 (N.D. Ala. Nov. 4, 2013) (finding that the plaintiff adequately pled the interstate commerce requirement in a Robinson-Patman Act suit against an intrastate beer distributor).
[4] 334 U.S. 37, 43 (1948).
[5] See Mark Meador, Not Enforcing the Robinson-Patman Act is Lawless and Likely Harms Consumer, The Federalist Society (Jul. 9, 2024), https://fedsoc.org/commentary/fedsoc-blog/not-enforcing-the-robinson-patman-act-is-lawless-and-likely-harms-consumers.
