These days, it seems like everything is coming up Southern. And I’m not talking about
“Choosin’ Texas” by Ella Langley—I’m talking about Southern Glazer’s Wine & Spirits, The country’s biggest booze distributor is also one of its biggest privately held companies, and it got that way, in part, by throwing its weight around in both the consumer market, and the political arena. There are few parties that can bring Southern to heel in either venue.

Uncle Sam could. And for a while there earlier this decade, it looked like Uncle Sam would, what with the Biden administration’s Federal Trade Commission opening up an investigation into Southern’s chain-pricing schemes under a longstanding law that neoliberal regulators from both parties had essentially ignored for decades. The FTC’s Robinson-Patman case against the case-moving colossus was an ambitious, illuminating bid to level the playing field for smaller booze retailers, but with the return of the Trump administration, its days were numbered. In early October, the hobbled anti-trust regulator announced a settlement with Southern that will see it pay zero dollars in penalties.

Joining me today on The Fingers Podcast is Ron Knox, a senior researcher and policy advocate at the Institute for Local Self-Reliance. Having followed the FTC’s case against Southern from the jump, and understanding which way the political winds are now blowing in Washington, DC, he wasn’t exactly surprised to see how this one shook out. But that doesn’t mean he wasn’t disappointed. Ron and I spoke at depth about Southern’s sweetheart settlement, how it may reshape the trade, and its broader implications for anti-trust enforcement in the booze industry—and beyond. Tune in below.

I’m working on getting the The Fingers Podcast archive back online, too. There were some real bangers in there! More to come soon.

Infante: What was your initial impression of the thesis of the investigation? Like, did it ring soundly to you when it was first announced in early 2023?

Knox: It was the first federal Robinson-Patman Act action since the since the early 2000s, and that was kind of a one-off case, so really, the first federal action under this law in almost 50 years. And Southern Glazer’s is a big player. And the retailers that were the beneficiaries of these alleged sweetheart deals were also huge, massive, the largest retailers in the economy.

I got on the phone with some smaller mom-and-pop liquor store owners. I talked to a guy who owns a liquor store in Durango, Colorado. He’d gotten ahold of a Southern pricing sheet and got to see the prices he paid per case of Merlot or a Cabernet Sauvignon or whatever , versus what the Kroger up the street was paying from Southern Glazer’s. The price difference was startling. He was paying triple the price of what the Kroger was paying. That is the definition of price discrimination, and exactly the kind of thing that this law is intended to prevent.

Knox: It's important for these cases to get through discovery and trial because you really get to understand what the argument is. So what was Southern Glazer’s argument here? And did they have a leg to stand on? Was it simply, “We're just taking part in economies of scale, we're paying into efficiency here. This is why we're charging one price to this person, another price to this person, because the person that's getting the better price is more efficient, they're buying more, that makes our life easier,” et cetera?

Infante: Sure. “We can drop a pallet behind Walmart and they stock it and deal with” versus “We have to go to 12 different independent liquor stores and drop a case and walk it into the store, which is more man-hours, more touch.” I mean, that is not untrue, right? There is a difference in the way that you service those accounts. Those are empirical realities. But—

Knox: That’s right! But but that's not what the FTC was alleging. And this is where this is where there will always be this mystery. For the FTC to bring this case, they clearly did their work. They they did an investigation. They know what the Robinson-Patman Act says, which is that it has to be like grade, amount, and quantity in order for for it to be price discrimination. And the FTC said that Total Wine, or Kroger, or whoever was buying the same the same goods, in the same amounts as these independents, and yet they were getting these very different prices. That's what the FTC said. What was the counter-argument to that from from Southern Glazer’s perspective? We will never know, because this case got settled.

Knox: To be fair, the FTC did not just walk away from this. What the settlement basically says is, “You're not going to get in trouble for all the law-breaking that you've already done, but we just want you to know that a law exists and you should follow it.”

Infante: Right. “Hey, knock it off guys. Cut the grab-ass.”

Knox: I don’t want to be disparaging—

Infante: Good. That’s my job here.

Knox: The settlement with Southern Glazer’s is not the worst thing I've ever read. It does, on its face, ensure that if Southern Glazer’s continues this price discrimination—where it's giving much better deals to Total Wine and others, and charging more to the little guy—that it has to make up has to make up for it monetarily by paying one and a half times whatever that difference was to the smaller independent stores that it was ripping off in the first place. That is okay. and it does the “cease-and-desist” thing, which is primarily what happens in these Robinson-Patman Act cases historically. That is the historic solution: a cease and desist. It's not terrible. My problems with with the settlement lie elsewhere.

Since starting The Fingers Podcast back up, I’ve spoken with: