Greenspoon Marder Hospitality, Alcohol & Leisure Blog: Two Largest Distributors Sued by E-Commerce Market Entrant “Provi”

Apr 5, 2022

By now the reader is likely aware of the Biden Administration’s Executive Order on promoting competition in the American marketplace which took aim at the wine, spirits and beer business and the three-tier system in particular. The report identified the largest distributors of wine, beer and spirits like Southern Glazer Wine and Spirts and Republic National, among others, as threats to fair competition, stating that “distributors with a larger national footprint may be able to leverage their size and enter exclusive agreements with producers that tend to push out smaller competitors.”

With that in mind, Provi.com, a Chicago based leading e-commerce platform operating in 35 states, which streamlines communication and the ordering process between retailer, distributor and supplier has filed an anti-trust action and claims of tortious interference in the United States District Court for the Northern District of Illinois seeking money damages and injunctive relief against the two largest wine and spirits distributors in the US marketplace. The complaint alleges, among other things, that the two distributors used their unparalleled influence to divert retailers unfairly away from the Provi e-commerce platform and redirected them to their own e-commerce sites. Interestingly the complaint alleges that this pressure was not in the best economic interests of the two distributors, which were enjoying what appears to be a reasonable and profitable order stream from Provi. The complaint seems to suggest that this anti-business practice was motivated by the desire to limit participants, particularly Provi, in the distribution chain and ensure the vitality of their dominant position in the three-tier system. In addition, the complaint’s allegations include both RNDC and SGWS blocked or rejected orders received by them and placed by retailers through the Provi portal; the two distributors coerced retailers not to use the Provi portal, forcing them to use SGWS’s own ordering portal. Click here for a copy of the complaint.

The Complaint is an interesting read and provides a good understanding of the current state of the alcohol trade in the US arguing that the three-tier system is anti-competitive in nature comporting with the assertions of the recent White House Executive Order on the industry. Take a look at the charts on pages 17 and 18 of the complaint for a look at market share of the Defendants (the accuracy of the charts has not been confirmed by this writer, but it is interesting). We will be following this case closely and will provide updates as it proceeds.

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Greenspoon Marder Hospitality, Alcohol & Leisure Blog: Two Largest Distributors Sued by E-Commerce Market Entrant “Provi”

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