FTC Sues Total Wine for Docs in Southern Glazer's Antitrust Case

The Federal Trade Commission filed a petition seeking a federal court order to force Total Wine to turn over documents and other information related to an ongoing antitrust investigation. The FTC has sought the documents and issued a civil investigative demand to Total Wine. The request is part of an FTC investigation into a Southern Glazer’s Wine & Spirits LLC.

The FTC’s petition notes that it has tried to work cooperatively with Total Wine, but Total Wine has stonewalled the FTC for more than four months.

Despite the issuance of the CID, the FTC said in its complaint, Total Wine has categorically refused to search any employee-maintained files for documents and information needed to address the FTC’s CID and has failed to assert any valid reason for its refusal to comply. Total Wine’s actions have impeded and delayed the FTC’s investigation, forcing the Commission to seek federal court enforcement.

“A civil investigative demand issued by the FTC is not a voluntary request, it is a demand made by the federal government that companies must comply with,” said Henry Liu, Director of the FTC’s Bureau of Competition. “Failing to comply with a CID ultimately hinders the FTC’s ability to protect consumers and businesses from anticompetitive practices. The FTC will not hesitate to use the full force of the law and take companies to court if they fail to comply.”

The Commission is requesting that the U.S. District Court for the Eastern District of Virginia order Retail Services & Systems, Inc. d/b/a Total Wine
& More to appear before the Court and demonstrate why it should not be required to comply with the CID. Otherwise, the FTC is asking that the Court order Total Wine to produce specified documents and information within 20 days.

The Commission issued the CID to Total Wine as part of its investigation into whether Southern Glazer’s has engaged in discriminatory practices in its sales to retailers like Total Wine in violation of the Robinson-Patman Act or engaged in other unfair methods of competition in violation of Section 5 of the FTC Act.

The FTC says its staff "attempted for months to work cooperatively with Total Wine to secure
compliance; however, Total Wine’s CID response remains severely deficient in multiple respects.
Rather than negotiate a limited set of document custodians and keyword searches for responding
to the CID (as every other retailer CID recipient has done in this investigation), Total Wine filed
an administrative petition to limit the CID, which was denied by the Commission."

What the FTC is Investigating

The complaint says it is investigating whether Southern may be discriminating in price by selling wine of like grade and quality to small independent retailers at higher prices "that it extends to large, favored chain retailers, such as Total Wine."

The complaint also says the FTC "staff seeks to determine whether Southern may be providing Total Wine and other large chain retailers with illegal, discriminatory non-price services, such as shelf stocking and other forms of free labor and marketing support, that it does not provide to smaller independent retailers." The FTC issued CIDs to 10 large retailers.

The CID seeks information as to "(a) the wine and
spirits purchased or sold by Total Wine at the retail level, including sales and purchase data; (b) formal and informal agreements between Total Wine and its
distributors or suppliers; (c) Total Wine’s negotiation processes for pricing, rebates, promotions, coupons, and other discounts; (d) services provided to Total Wine by Southern; (e) Total Wine’s market share and competition at the wine and spirits retailer level; (f) Total Wine’s inventory and storage processes; and (g) Total Wine’s strategies, practices, or policies regarding
retail sales of wine and spirits.

The complain goes on to suggest that despite Total Wine's refusal to product all documents, the FTC staff sought to be reasonable. In this respect, it sought production of documents from five employees, provide definition of the fields in certain datasets in its production and produce the five categories of materials identified and offered by Total Wine in its letter of Aug. 15, 2023.

Total Wine's parent, Retail Systems, said it plans to "vigorously defend" itself. It said it had produced more than 1 terrabyte of records, had agreed to produce millions more when discussion broke down in April. In August, Total Wine told the FTC it wanted to resume discussions.

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