News Alert: Provi Files Federal Antitrust Suit Against Southern Glazer’s, RNDCMarch 30, 2022
This morning, B2B e-commerce platform Provi filed a federal antitrust complaint in Illinois against Southern Glazer’s Wine & Spirits and Republic National Distributing Company (RNDC). The complaint alleges that the two largest wine and spirits distributors in the U.S. have illegally curbed Provi’s attempts to provide a third-party ordering platform for retailers in an effort to thwart competition in the e-commerce market. Provi “seeks treble damages and injunctive relief arising from Federal and State antitrust violations and tortious interference.” Both Southern Glazer’s and RNDC tell SND the claims are meritless and that they plan to vigorously defend their positions in the case.
“Southern and RNDC are illegally stifling innovation by blocking retailers from using open market solutions like Provi, which promotes transparency and more efficient operations, particularly for small businesses,” said Provi CEO and founder Taylor Katzman. “They have a tight grip on distribution physically—and now they want to control it and any related next generation businesses digitally through data.”
According to Provi’s complaint, Southern and RNDC “have acted together and individually to boycott, disparage, and tortiously interfere with Provi’s business. Southern has also unlawfully forced retailers to use its own online marketplace, SG Proof, by tying online sales of its alcohol products to use of that specific marketplace.”
The complaint accuses Southern of communicating to retailers around July 7, 2021 that the distributor would “no longer accept orders transmitted by third-party e-commerce platforms or services, such as Provi, SevenFifty, or others.” (Provi and SevenFifty recently announced plans to merge.)
“We have reviewed the lawsuit and believe it to be meritless,” said Alan N. Greenspan, executive vice president and general counsel of Southern Glazer’s, in a statement to SND. “We plan to vigorously defend and ultimately prevail.”
Provi’s complaint also alleges that RNDC sought to undermine the e-commerce platform—which is active in 35 states and valued at $750 million—by spreading rumors that Provi was owned by competitor Breakthru Beverage and by blocking orders placed by retailers through Provi. According to the complaint, at a February 18, 2022 meeting between Provi and RNDC leadership, RNDC’s senior vice president for eCommerce and digital said, “RNDC will continue to block all incoming email traffic and/or orders sent to RNDC using Provi.”
In response to a request for comment, a spokesperson for RNDC said, “RNDC strongly denies the allegations in the complaint and we intend to vigorously defend the case.”
The complaint follows President Biden’s July 2021 executive order on promoting competition in the American economy and the U.S. Treasury department’s February 2022 report on competition in the beverage alcohol industry. The Treasury report flagged distributor consolidation as one potential inhibitor of competition in the alcohol industry. The Wine & Spirits Wholesalers of America countered that the report “fails to recognize how consolidation in other tiers created the need for an evolution of the distribution tier to address supply chain and logistics challenges.”
Southern Glazer’s is expected to have a roughly 34% share of the U.S. wholesale market for wine and spirits this year, while RNDC’s 2022 market share is projected at around 19%.—Shane EnglishSubscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning.