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Depression-era law bans lowering prices for favored buyers

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U.S. has not brought a case under this law in over 20

years

By Jody Godoy

NEW YORK, Dec 12 (Reuters) - The U.S. Federal Trade

Commission sued alcohol distributor Southern Glazer's on

Thursday for giving big customers exclusive discounts, enforcing

a law aimed at protecting small retailers from bigger

competitors for the first time in decades.

The lawsuit is the first the FTC has brought under the

Robinson-Patman Act in more than 20 years, a capstone project

for outgoing FTC Chair Lina Khan, who views U.S. antitrust laws

as intended to combat harms to independent businesses and

workers as well as consumers.

Southern Glazer's is the largest liquor distributor in the

U.S., carrying brands including Bacardi, Smirnoff and Jim Beam.

The lawsuit filed in California seeks to block it from pricing

practices that the FTC alleges discriminate against smaller

businesses.

The FTC said Southern Glazer's gave discounts to its largest

customers, such as grocery chains Costco and Kroger ( KR )

, and alcohol retailer Total Wine & More, that it did

not extend to smaller independent shops since at least 2018.

A lack of enforcement of the act has fueled the rise of

behemoths such as Walmart ( WMT ) and driven local independent

retailers out of business, leading to food deserts, according to

the Institute for Local Self-Reliance, an antimonopoly think

tank.

The FTC has separately been looking into pricing practices

at Coca-Cola and PepsiCo ( PEP ), which have not been

accused of wrongdoing.

Passed in 1936 during the Great Depression, the

Robinson-Patman Act prohibits a seller from offering different

prices for the same goods to different buyers. The law has a few

exceptions, such as when shipping costs are higher for one

customer than another.

The FTC brought a case against a powdered milk company in

the 1960s that priced private label products differently than

its identically formulated brand version, and sued a corn syrup

maker in the 1940s for inflating prices for some customers

through phantom shipping charges.

Critics say enforcing the law could raise prices for

consumers by discouraging wholesale discounts, and that U.S.

antitrust laws are fundamentally meant to promote lower prices

for shoppers.

Khan and her allies have challenged that view, seeking to

wield antitrust law to remedy broader harms associated with

corporate consolidation.