Robinson–Patman Revival, Limited Roadmap: Assessing the Settlement Between the FTC and Southern Glazer's

Background

Congress enacted the RPA during the Great Depression in response to small businesses allegedly failing because of discriminatory pricing and promotions granted to large chain retailers. Among other provisions, RPA Section 2(a) prohibits charging different prices to competing reseller customers for the same physical products if the price difference may harm competition. Following the Supreme Court's 1948 decision in FTC v. Morton Salt Co., courts can infer the competitive harm element based on evidence of a substantial price difference between competing reseller customers over a significant period in a competitive market. This is known as the "Morton Salt inference." Something more than a de minimis or "negligible" price difference, therefore, is required, although the threshold varies with the context. Proving a Section 2(a) claim, including through a Morton Salt inference, can be sufficient to obtain injunctive relief, which is all that the FTC sought in the Southern Glazer's lawsuit (and can seek in any RPA lawsuit under the FTC Act). In a private lawsuit, however, while a plaintiff can rely on a Morton Salt inference to prove a Section 2(a) claim, it also must demonstrate antitrust injury, or lost sales or profits caused by the price difference, to recover damages.

The RPA recognizes several justifications for price differences. For example, lower prices do not violate Section 2(a) if they are tied to lower costs of doing business with certain customers or offered in good faith to meet a competitor's equally low prices. Congress incorporated these defenses, referred to as the "cost justification" and "meeting competition" defenses, respectively, directly into the statute. Additionally, functionally available discounts that are known to and practically achievable by all competing reseller buyers do not violate Section 2(a), even if the end prices differ.

Although the FTC historically was an active enforcer of the RPA, there had been virtually no FTC enforcement for more than 40 years leading up to 2024. In December 2024, the Biden-appointed commissioners made good on their public statements in favor of reinvigorating RPA enforcement, filing the lawsuit against Southern Glazer's (the first such lawsuit since 2000) over the dissents of the two Republican commissioners, one of whom became the current chair. The FTC alleged that Southern Glazer's had violated Section 2(a) by offering discounts and rebates to large chain retailers that were functionally unavailable to small independent retailers and not justified by a "cost justification" or "meeting competition" defense.

On April 17, 2025, the U.S. District Court for the Central District of California denied Southern Glazer's motion to dismiss. The court held that the FTC plausibly alleged a Section 2(a) violation based on claims that Southern Glazer's had made contemporaneous sales of the exact same products to large chain retailers and small independent retailers, often located only blocks from each other, at substantially different prices. The court then inferred competitive harm from those allegations under the Morton Salt inference. Following months of discovery, in June 2026 the FTC and Southern Glazer's jointly requested that the court stay the litigation so that they could negotiate a settlement.

The Settlement

The Southern Glazer's settlement aims to prevent Southern Glazer's from charging indefensibly lower prices to its five largest retail customers as compared to its small independent retail customers, defined as having 75 or fewer stores in the United States. To incentivize compliance, the settlement provides for direct payments to allegedly harmed small independent retailers if an independent monitor determines that Southern Glazer's has violated the settlement. But the settlement contains several provisions that depart from what the FTC or Southern Glazer's would have been required to establish if they had litigated the case.

First, the settlement covers only sales to Southern Glazer's five largest customers as compared to competing small independent customers. Although Congress passed the RPA to address allegedly favorable pricing given to large chains but not to small retailers, the RPA concerns sales to any competing reseller customers. As a result, Southern Glazer's sales to customers that are not among its top five but have more than 75 stores in the United States fall completely outside the settlement's scope.

Second, the settlement requires the independent monitor to identify potentially discriminatory paired transactions and perform a series of computations to calculate the size of any benefit given to a top-five customer but not a competing small independent customer, which the settlement refers to as an "excess payment" for each paired transaction. Competition between a large and a small independent customer is implied if they have stores in the same geographic area, ranging from 1.5 to 12 miles apart, depending on the city and state (the settlement covers 26 states).

The "excess payment" is not just the difference in the net prices charged to the large and small customer for each paired transaction. The monitor must offset the calculated net price difference by a state-specific "operating expense efficiency," which is an amount the settlement has predetermined, plus 2.5% of the large customer's net price, presumably in a rough approximation of a "cost justification" defense for Southern Glazer's. In the settlement, Southern Glazer's notably obtains this offset without having to offer any accounting for its costs, whereas in RPA litigation, to uphold a "cost justification" defense, a court would require Southern Glazer's to provide a strict accounting of its actual cost savings from selling to a customer with favorable pricing.

The settlement also incorporates a concept similar to the Morton Salt inference by setting a minimum threshold before "excess payments" violate the settlement. Southern Glazer's has violated the settlement only if the sum of "excess payments" in paired transactions involving a particular small independent customer over the course of a year exceeds $5,000. In other words, only price differences totaling more than $5,000 annually qualify as a substantial price difference over a significant period sufficient to trigger the Morton Salt inference. Southern Glazer's may then present certain defenses to the monitor.

Finally, if the monitor continues to believe there has been a violation after conducting the fact-intensive inquiry of evaluating Southern Glazer's defenses, Southern Glazer's can "cure" the violation by making a direct payment to the small independent retailer of 1.5 times the cumulative "excess payments." This payment should not be confused with a small independent customer's damages, which courts have repeatedly said are not derivative of the value of the price differences and require proof beyond the Morton Salt inference.

Although the Southern Glazer's settlement may suggest how the current FTC would assess potential RPA violations, it should not be broadly construed as guidance for complying with the RPA. The settlement deviates from prevailing RPA case law with regard to establishing both the elements of, and the defenses to, a Section 2(a) claim. The settlement's many complexities, including its sales data analysis, "excess payment" calculations, and fact-intensive evaluation of Southern Glazer's defenses, likely reflect the FTC's uncertainty about how the case would have been resolved if litigated. Furthermore, this settlement pertains to the highly state-regulated alcohol distribution market, in which states usually impose a three-tiered separation between producers, wholesalers (like Southern Glazer's), and retailers. Also, in that market, exclusive brand distribution arrangements make it difficult for small retailers to establish lost sales. Industries without such heavy state oversight could face very different demands from the FTC and private plaintiffs.