The Federal Trade Commission has secured a settlement in the first federal Robinson-Patman Act (the Act) enforcement action in more than two decades. Originally filed by the prior administration in December 2024, the lawsuit alleged Southern Glazer’s Wine and Spirits, LLC (SGWS) was the largest wholesaler of wine and spirits in the United States and routinely charged small, independent retailers prices higher than those charged to larger national or regional chains in violation of the Act’s prohibition on price discrimination.
The settlement was filed on October 2, 2026, after the FTC defeated a motion to dismiss earlier in the year. Chair Ferguson’s statement accompanying the settlement, however, acknowledges that subsequent discovery revealed “serious” evidentiary weakness in the FTC’s case and “only modest quantifiable harm,” such that avoiding litigation uncertainty and costs was ultimately in the interest of all parties.
Recognizing that the Act is still “good law,” Chair Ferguson praised the settlement for establishing specific conduct that would violate the Act and creating “self-calibrating” incentives for compliance due to penalties being tied to the number of violative transactions. The settlement does not ban all volume discounts or require uniform pricing, but it does require SGWS to implement a significant compliance program, overseen by a monitor, for six years.
The Case Against SGWS
In general, and subject to certain defenses, the Act prohibits discrimination in price of “commodities of like grade and quality” sold for use, consumption, or resale and where the discrimination substantially lessens competition. (The Act also addresses advertising or promotional allowance and services discrimination, but that was not part of the FTC’s case.) According to the FTC, SGWS sold identical product to small “mom and pop” businesses at prices 12% to 67% higher than what it charged large chains in “the exact same geographic area.” Moreover, the FTC alleged that such differentials were not justified by the cost of serving the different sized retailers, which can be a narrow exception to the Act’s price discrimination prohibition. The FTC alleged that the unlawful discrimination was accomplished through quantity discounts, rebates, and special deals made available to large buyers but not to smaller competitors — including, e.g., because the deals were made known only for a short window to disfavored retailers, or the disfavored retailers could not buy the volumes necessary to reach the highest discount levels as a practical matter.
Motion to Dismiss
On April 17, 2025, the U.S. District Court for the Central District of California denied SGWS’s motion to dismiss, allowing the FTC’s claims to proceed. Fed. Trade Comm’n v. S. Glazer's Wine & Spirits, LLC, No. 8:24-CV-02684-FWS-ADS, 2025 WL 1392166, at *1 (C.D. Cal. Apr. 17, 2025). The court relied on the so-called Morton Salt inference — referring to case law allowing the element of competitive injury to be inferred where a favored competitor receives a significant price reduction over a substantial period — and found the complaint’s allegations sufficient at the pleading stage. See Id. at 177. In reaching this decision, the court also discussed that the FTC adequately alleged the independent stores and the larger, favored customers were competitors despite their different business models. Specifically, the court held that the FTC’s complaint sufficiently pleaded each element of the Ninth Circuit’s three-part test for establishing competition: (1) the customers were in geographic proximity to one another; (2) the goods each customer purchased from the seller were of the same quality and were purchased within approximately the same time period; and (3) the customers operated at the same functional level of trade, such as wholesaling or retailing. See U.S. Wholesale Outlet & Distribution, Inc. v. Innovation Ventures, LLC, 89 F.4th 1126, 1142 (9th Cir. 2023).
Settlement Terms
According to Chair Ferguson, the FTC’s work through discovery narrowed its case and raised questions about whether it could show substantial injury. While the parties disagreed about what the Act required SGWS to do, Chair Ferguson supported the settlement as a significant “milestone in the history of Robinson-Patman Act enforcement” for articulating clear standards and using enforcement mechanisms designed to minimize situations where the FTC itself has to become involved in compliance.
A key feature of the settlement is the requirement that SGWS implement and maintain a compliance program throughout the settlement’s six-year term. SGWS must keep the price disparities between its top customers in a geographic area and smaller customers within the agreement’s safe harbor. If SGWS exceeds that safe harbor, it can cure by making refund payments equal to 1.5 times the relevant disparity if the company makes the payments automatically, but that escalates to twice the disparity if the FTC has to bring an enforcement action. Additionally, the program will be overseen by a third-party monitor at SGWS’s expense.
Some key terms of the settlement are summarized below, including aspects that reveal how the FTC will analyze relevant “transaction pairs” for discrimination:
- Relevant Customer Comparisons: The settlement specifies that the comparison for any “transaction pair” will involve any of the top-five SGWS off-premise retail customers in a state for the most recent calendar year (termed In Commerce Retailers) on the one hand, and other SGWS customers in that state with 75 or fewer U.S. store locations that are not acting as distributors (termed Covered Retailers) on the other hand. Products manufactured in the same state do not count toward the relevant SGWS sales.
- Relevant Geographic Proximity: In the settlement, the FTC agreed to different tests for geographic relevance when comparing transactions for discrimination. First, comparisons are only between sales in the same state. Additionally, they must be within a certain proximity, which varies based on population density: 2.5 miles in Chicago, New York City, San Francisco, and Seattle; 3.5 miles in other urban areas; 5 miles in suburban areas; or 12 miles in rural areas, according to the designations used by the current National Center for Education Statistics Education Demographic and Geographic Estimates (NCES EDGE) data.
- Relevant Temporal Proximity: The FTC agreed to two different timeframes for relevant large customer transactions in a subject “transaction pair.” For certain undisclosed In Commerce retailers, transactions invoiced within the last 75 days are relevant, but for all other In Commerce retailers, only transactions invoiced within the prior 45 days are relevant.
- Price Disparity Safe Harbor & Enforcement Threshold: Before a transaction is deemed to violate the settlement and trigger potential payments to the disfavored retailer, two thresholds must be satisfied. First, the disparity for a particular transaction must exceed a state-specific operating expense differential agreed to by the FTC (adjusted annually for inflation) plus 2.5% of the net price to the larger In Commerce customer (termed the Safe Harbor). Second, the sum of all potential payments for disparate prices to a particular smaller Covered Retailer must exceed a $5,000 in a 12-month period (termed the Enforcement Threshold).
- Monitor & No Circumvention Clause: The settlement requires SGWS to maintain a broad program for compliance with the Act, including written policies and procedures, employee training, and processes for raising and addressing compliance concerns. It must also contemporaneously document any affirmative defense to justify a price differential. The FTC will appoint an independent monitor (subject to SGWS consent), who will have access to relevant records and personnel to oversee compliance at the expense of SGWS. In addition, the settlement broadly bars SGWS from taking steps to “evade, defeat, or frustrate the requirements” of the settlement—e.g., through the introduction of other pricing programs or accounting treatment.
Key Takeaways
- Price Discrimination Enforcement Ripe to Persist Across Administrations Where the Facts Support It. The case against SGWS was brought during the prior administration, and both Chair Ferguson and the only other current sitting Commissioner, Mark Meador, have advanced the view that enforcement of the Act should not be categorically abandoned as a matter of policy as it has historically been. Indeed, while Commissioner Meador called for the FTC to consider publishing formal guidelines before bringing more cases, in connection with the settlement he supported inquiries into “sector[s] that more directly impact[] the cost of living for American families.” These signs suggest that the FTC will take complaints of potentially unlawful discrimination seriously and be willing to investigate them in the future.
- Future Federal Enforcement Likely to Focus on Cases Where Those with “Buyer Power” Are Favored. In recent public remarks, Chair Ferguson has stated that he does not agree with past FTC price discrimination enforcement that was taken against smaller businesses because, in his view, it harmed them and consumers by suppressing discounts. Rather, he has espoused the view that the agency’s scarce enforcement resources are better spent on cases where the favored retailers are those with substantial market power that may be contributing higher prices for smaller retailers—he views those as having a greater benefit for consumers. Indeed, in connection with the SGWS settlement Chair Ferguson noted that “the Commission had no evidence that the chain stores had the sort of buyer power that could compel suppliers to increase prices at the chain stores’ competitors.”
- FTC Settlement Suggests Where Future Enforcement Lines May Be Drawn. Given the long dormancy of federal enforcement of the Act, aspects of the FTC’s analytical approach remained unclear. Before the settlement, Commissioner Meador stated that the FTC needed to provide “credible guidance on its enforcement approach” through the discrimination cases it brings and emphasized that “Compliance with the RPA is mandatory, and this Commission will enforce it where sound investigations give the Commission the required ‘reason to believe’ the law has been violated to bring meritorious enforcement actions.” Similarly, Chair Ferguson characterized the SGWS settlement as the agency’s “first new statement of how we think Robinson-Patman Act enforcement should look like, what remedies should look like.” As a result, companies should consider the analytical framework reflected in the settlement as a deliberate guideline on the Commission’s approach in future enforcement matters when evaluating their own compliance with the Act.