SGWS and RNDC face antitrust lawsuit

A legal complaint alleging that US distributors Southern Glazer’s Wine & Spirits (SGWS) and Republic National Distributing Company (RNDC) have ‘stifled competition’ will proceed in court.

The US’ biggest alcohol distributors, SGWS and RNDC, will now face a lawsuit following a complaint from online alcohol marketplace Provi.

Provi filed the complaint to the US District Court for the Northern District of Illinois’ Eastern Division in March 2022.

The court denied a motion-to-dismiss request from the two distributors, with US district court judge Nancy L Maldonado ruling the lawsuit can proceed to the discovery process.

Provi claims that SGWS and RNDC have violated antitrust laws and made efforts to ‘maintain or enhance their respective monopoly power’ in online alcohol marketplaces, search and display advertising on online alcohol marketplaces, and data analytics services in certain states.

Provi alleges that some of the actions included blocking and rejecting orders for wine and spirits when retailers select Provi, and ‘forcing or coercing retailers not to use Provi’.

Maldonado said in the ruling: “These allegations suggest that any harm stemming from defendants’ behaviour was not limited to Provi alone.”

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

“The case is important for the industry’s future, as it necessarily transitions to digital solutions. We look forward to our case proceeding and obtaining valuable relief for Provi and the industry more broadly.”

In response, a SGWS spokesperson said: “We respectfully disagree with the court’s ruling. We believe this lawsuit’s claims are baseless and we will continue to vigorously defend the company against these allegations.”

RNDC refused to provide a comment.

SGWS, the largest alcohol distributor in the US, is currently being investigated by the Federal Trade Commission for multiple possible antitrust violations, Provi claims.

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

Provi also highlighted that Texas-headquartered RNDC, the second-biggest alcohol distributor in the States, was sued by US spirits firm Sazerac last year for its failure to pay invoices and illegal ‘tie-in’ sales.

David Cross, lead counsel for Provi and Morrison Foerster’s antitrust litigation chair, added: “We’re confident that discovery will reveal the great lengths to which Southern and RNDC have gone to thwart competition from Provi and others, to the detriment of suppliers, retailers, and ultimately consumers.

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

Headquartered in Miami, Southern Glazer’s distributes more than 7,000 brands in 45 US markets and Canada.

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

The e-commerce platform of RNDC generated US$800m in 2023, reaching US$1.7bn in lifetime sales.

RNDC invested in e-commerce platform Thirstie in 2022, a move it said would bring a ‘compliant, technology-driven, more efficient approach’ to the alcohol industry.

E-commerce alcohol sales in the US could grow by 7% in value between 2023 and 2027, according to IWSR Drinks Market Analysis.