The legal battle between the Federal Trade Commission (FTC) and national bev-alc retailer Total Wine & More continued this week when the chain filed a motion to oppose the agency’s petition to force it to comply with a civil investigative demand (CID).
The FTC last month claimed Total Wine’s parent company, Retail Services & Systems, Inc. (RSSI), had failed to comply with a CID asked of it for more than four months as part of an investigation into multi-state wine and spirits wholesaler Southern Glazer’s Wine & Spirits.
In a motion filed in the U.S. District Court for the Eastern District of Virginia, RSSI said it provided “the price and corresponding data for every wine and spirit transaction that RSSI’s affiliated entities conducted with Southern since 2018, consisting of over 14 million transactions for 18,000 products in 19 states.”
“RSSI did not stop there,” the retailer wrote. “RSSI also produced the retail-level transaction data for those same 18,000 products, which totaled over 38 million transactions, thus allowing the FTC to see what prices RSSI’s affiliated entities charged customers and the profits they generated.
“And for four markets comprising the majority of retail sales of RSSI affiliates, RSSI also produced thousands of Excel spreadsheets that its affiliated entities or Southern used to communicate prices, report out-of-stocks, evaluate quantity discounts, and the like,” the company continued.
Due to these reports, the FTC “knows every price that RSSI’s affiliated entities have paid since 2018 to Southern, along with the retail prices at which those products were sold.”
The FTC’s investigation of Southern came to light earlier this year when three anonymous sources told Politico the agency was looking into the wholesaler for violations of the Robinson-Patman Act, which bars suppliers from offering favorable pricing to larger retailers at the expense of smaller stores.
The investigation follows a lawsuit filed against the distributor in June 2022, in which five California mom-and-pop liquor stores said Southern Glazer’s was charging them higher prices than larger off-premise retailers, including grocery giant Albertsons.
One specification of the CID asked RSSI to provide documents regarding “the sale of every wine or spirit from every wholesaler that were prepared or delivered to owners, board members, officers and executives.” RSSI pressed the FTC about the purpose of disclosing these documents and the agency said it would help them “understand the operation,” understand “RSSI’s relationship with Southern,” and “inform the commission’s judgment about [RSSI]’s position in the retail market and the effects of Southern’s conduct.”
RSSI wrote the “asserted rationale lacks merit,” and added that the FTC is trying “to force a private business that is not under investigation to open its board room and most confidential business matters and strategies to [the] government, and for what purpose?”
“This would create a dangerous new precedent for all businesses,” RSSI wrote.
“Noticeably absent from the FTC’s petition is any explanation of why the information now sought from RSSI is necessary or reasonably relevant to a charging decision against Southern, as opposed to an effort by the FTC to continue to garner ex parte discovery before any litigation commences,” RSSI continued. “Where, as here, an administrative agency overreaches and abuses its investigative authority, the judiciary should intervene to protect innocent parties such as RSSI.”
In addition to the FTC’s motion to compel RSSI to comply last month, the agency also published a press release claiming that RSSI “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.”
In its most recent complaint’s conclusion, RSSI said the FTC has been “conveniently ignoring the fact that RSSI and its affiliates are not targets.”
“No business expects to be excused from the responsibility to produce reasonably relevant documents to aid an agency’s investigation,” RSSI wrote. “But what they do expect – and deserve – is to be treated fairly and not like the enemy simply because they happen to be a successful business or the customer of a target.”