SGWS and RNDC face antitrust lawsuit

A legal challenge alleging that US distributors Southern Glazer’s Wine & Spirits (SGWS) and Republic National Distributing Company (RNDC) “suppressed competition” will be heard in court.

The largest US alcohol distributors, SGWS and RNDC, will now face trial over a complaint filed by online alcohol trading platform Provi.

Provi filed the complaint in the United States District Court for the Eastern Division of the Northern District of Illinois in March 2022.

The court denied the two distributors’ motion to dismiss the case, and U.S. District Court Judge Nancy L Maldonado ruled that the lawsuit could proceed to discovery.

Provi alleges that SGWS and RNDC violated antitrust laws and engaged in efforts to “maintain or enhance their monopoly position” in online alcohol marketplaces, in the search and display of advertising on online alcohol marketplaces, and in data analytics services in certain states.

Provi says some of the actions included blocking and denying wine and spirits orders from retailers choosing Provi and “forcing or coercing retailers not to use Provi.”

Maldonado said in the ruling: “These allegations suggest that any harm resulting from defendants’ conduct was not limited solely to Provi.”

Provi CEO and founder Taylor Katzman said: “Today’s final decision allows our case to move forward. The tactics regularly and often openly used by the South and the RNDC suppress competition in the markets we have identified and harm everyone from producers to retailers and consumers.

“The case is important for the future of the industry, which is necessarily moving to digital solutions. We look forward to hearing our case and obtaining valuable relief for Provi and the industry.”

Provi says SGWS, the largest alcohol distributor in the U.S., is currently under investigation by the Federal Trade Commission for multiple possible antitrust violations.

In March, SGWS agreed to a $5.5 million settlement to resolve a class action lawsuit alleging illegal late fees.

Provi also highlighted that Texas-based RNDC, the second-largest alcohol distributor in the United States, was sued last year by US spirits company Sazerac for unpaid invoices and illegal tying.

David Cross, the chairman’s lead antitrust counsel for Provi and Morrison Foerster, added: “We believe this discovery will reveal the lengths to which Southern and RNDC have gone to thwart competition from Provi and other companies, to the detriment of suppliers and retailers. and ultimately consumers.

“We look forward to proving our case at trial and holding these monopolists accountable for their conduct.”

Spirits business contacted SGWS and RNDC for comment.

Southern Glazer’s, headquartered in Miami, distributes more than 7,000 brands in 45 markets in the U.S. and Canada.

Southern Glazer’s launched its Proof e-commerce platform in 2019, reporting revenue topped $3 billion in January and more than 82,000 orders placed in 2022.

The RNDC e-commerce platform generated USD 800 million in 2023, achieving total sales of USD 1.7 billion.

The RNDC has invested in e-commerce platform Thirstie in 2022, which it says will deliver a “regulatory-compliant, technology-led and more efficient approach” to the alcohol industry.

E-commerce alcohol sales in the U.S. could grow 7% between 2023 and 2027, according to IWSR Beverage Market Analysis.