FTC Settles Price Discrimination Lawsuit Against Southern Glazer’s

On October 2, 2026, the Federal Trade Commission (FTC) settled its lawsuit against Southern Glazer’s Wine and Spirits, LLC (Southern) over allegations that Southern had charged independent retailers higher prices than their national and regional competitors in violation of the Robinson-Patman Act (RPA). In 2024, the FTC sued Southern, the nation’s largest distributor of wine and spirits, claiming it did not offer smaller retailers the same discounts and rebates it offered larger stores, such as Total Wine, Costco, and Target. As part of the settlement, Southern agreed not to charge small, independent retailers higher prices than competing large retail chains and that a court-appointed monitor could direct cash payments to small businesses if Southern violates the terms of the agreement.  

Daniel Guarnera, Director of the FTC’s Bureau of Competition, called the settlement a “significant milestone” in the FTC’s enforcement of the RPA. Chairman Ferguson released a statement applauding the result, noting that he originally dissented from the decision to issue a complaint against Southern but ultimately views the order as a success, in particular because it is “more specific and more readily enforceable than a litigated injunction would likely have been.” Chairman Ferguson emphasized that the RPA remains good law and the Commission will act upon evidence of unlawful price discrimination.

Key Takeaways

• Competition compliance is key. The FTC’s first RPA enforcement action in over two decades demonstrates the statute is not defunct, and businesses should be vigilant about sales terms that could be viewed as discriminating against smaller businesses.  
• Common defenses remain viable. The settlement preserves Southern’s ability to avail itself of the “meeting competition” and “cost justification” defenses, confirming they are still available when supported by documents and data. 
• The FTC has no pending public RPA matters. The FTC brought two RPA cases during the Biden Administration. The FTC voluntarily dismissed its case against PepsiCo in 2025 and has now settled its claims against Southern. It remains to be seen how the FTC will approach RPA enforcement during the rest of the Trump Administration.   

Robinson-Patman Act Background 

The RPA prohibits sellers from charging different prices to different purchasers of tangible goods, of like grade and quality, when doing so threatens to injure competition. RPA cases are notoriously difficult to bring, in large part because defendants can frequently invoke valid defenses like “meeting competition” and “cost justification.” The meeting competition defense involves offering a lower price to meet an equally low price offered by a competitor, and the cost justification defense exempts price differentials that reflect actual cost savings in manufacturing, sales, or delivery efficiencies, such as volume-based discounts.  

Issued in December 2024 toward the end of the Biden Administration, the FTC’s complaint against Southern marked the Commission’s first RPA enforcement action in more than two decades. Just one month later, the FTC initiated another RPA action against PepsiCo, alleging that the beverage company unlawfully offered preferential pricing, rebates, and promotional allowances to large national supermarket and club chains at the expense of independent grocers. While the FTC dropped its lawsuit against PepsiCo shortly after the change in administration, the action against Southern proceeded, making its resolution the first modern benchmark to guide corporate compliance under the Act.

Further background on the RPA and the FTC’s complaint against Southern can be found at our blog here. 

Terms of the Settlement 

The settlement covers nearly all of Southern’s sales to the five largest retailers across 26 states. At the center of the agreement is a ban on unfair “paired sales,” instances where Southern sells identical products within a short window of time and geographical area to a retail chain at a discounted price and to an independent retailer at a substantially higher price.

Southern must abide by specific qualitative and quantitative thresholds for paired sales. In particular, pricing differences cannot surpass a defined cap indexed to state-specific operating efficiency benchmarks, less supplier discounts and a 2.5% safe harbor. In addition, cumulative price differentials cannot exceed $5,000 to a single retailer over any rolling 12-month window. A court-appointed monitor will regularly review transactional data, calculate paired price differentials, evaluate asserted defenses (discussed below), issue violation notices, and submit semi-annual compliance reports directly to the FTC.

To incentivize compliance, the agreement establishes a two-tiered remedial framework. When the monitor detects a violation, Southern can self-cure by paying the affected independent retailer 150% of the total aggregated price difference. If Southern fails to remediate the issue, the FTC has the option to bring an enforcement proceeding in federal district court and may compel Southern to pay the retailer double the total price variance.

Southern reserves the right to assert enumerated defenses in response to a possible violation. These include: 

• Functional availability: Southern reserves the right to defend against an alleged violation by showing that the challenged prices or deals were “functionally available” to the affected independent retailer. The FTC expressly reserves the right to challenge this defense by proving that the pricing or promotions were not functionally available, particularly where Southern failed to affirmatively communicate them to the retailer, or where the discount terms were not realistically or practically attainable. In practice, this means that any volume discounts given to large retailers must be reasonably attainable by smaller retailers. 
• Meeting competition: Southern reserves the right to raise the meeting-competition defense under Section 2(b) of the RPA but explicitly bears the burden of proving it by a preponderance of the evidence.
• Changed market conditions: Southern reserves the right to assert that "changed market conditions" under Section 2(a) of the RPA—including good faith sales in discontinuance of business in the goods concerned or closeout sales—explain any net price disparity exceeding the order's safe-harbor thresholds. Southern bears the burden of establishing this defense by a preponderance of the evidence.

The agreement also institutes an RPA compliance program, involving mandatory internal auditing of discount schedules against actual distribution costs, employee training for commercial sales teams, and periodic compliance reporting to the FTC.

Compliance & Future Enforcement of the RPA

Companies whose activities may fall within the scope of the RPA should ensure discount structures are affirmatively communicated to all customers and are reasonably attainable for smaller retailers. Companies should also take care to accurately document the cost efficiencies that justify substantial price differentials and lower prices offered as a means of meeting competitive offers in good faith. While we expect the FTC to remain receptive to retailer complaints regarding price discrimination, the agency has now either voluntarily dismissed or settled both its RPA cases, which were initiated under the Biden Administration. Companies should, however, remain vigilant of any sales terms that could be characterized as discriminating against small businesses and assume they may receive FTC scrutiny.  

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