Alcohol-ordering Startup Uncorks Suit Against 2 Dominant Distributors

Posted: Mar 31, 2022

An Illinois startup that allows bars and restaurants to buy alcohol online sued the United States’ two largest alcohol wholesalers Tuesday, alleging the companies conspired to block its orders to force customers to use their own digital platforms.

The antitrust suit, filed in Chicago federal court by the alcohol e-commerce platform Provi, targets Southern Glazer’s and Republic National Distributing Co., the only two national alcohol wholesalers.

The lawsuit comes after a Treasury report last month found that significant consolidation in alcohol distribution has made it difficult for smaller producers and startups to succeed.

Alcohol sales remain highly regulated at both the state and national level decades after Prohibition ended in 1933. In most states, bars, restaurants and retailers can purchase alcohol only through distributors, who often have exclusive rights to sell certain brands or in specific territories. Southern Glazer’s is the largest distributor, serving 44 states, while RNDC has operations in 35.

The industry was one of several that President Joe Biden targeted last summer in an executive order urging federal agencies to use their authority to promote greater competition. The February report by the Treasury Department — whose Alcohol and Tobacco Tax and Trade Bureau has some alcohol industry oversight — called on the Justice Department to take a “closer look” at monopolization of alcohol markets and identified consolidation among distributors as “the greatest threat to competition” there.

The complaint alleges that Southern Glazer’s and RNDC have colluded to prevent Provi from gaining additional customers. Last summer, both companies took steps to block customer orders routed through Provi’s system, and began requiring bars and restaurants to use their own online platforms, Southern Glazer’s Proof and eRNDC, the complaint alleges.

By Leah Nylen
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