Alcohol ordering start-up opens lawsuit against 2 dominant distributors

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

The alcohol industry: Alcohol sales remain highly regulated at the state and national level decades after prohibition ended in 1933. In most states, bars, restaurants and retailers cannot purchase alcohol only through distributors, who often have the exclusive right to sell certain brands or in specific territories. Southern Glazer’s is the largest distributor, serving 44 states, while RNDC operates in 35.

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

The allegations: Provi, established in 2016, offers an online platform for bars, restaurants and liquor stores to purchase alcohol from distributors, and provides data analytics to help analyze sales. National chains like PF Chang’s, Chili’s and Darden Restaurants’ Olive Garden as well as thousands of smaller restaurants and liquor stores have used the platform, which routes orders to the right distributor based on location.

The complaint alleges that Southern Glazer’s and RNDC colluded to prevent Provi from gaining additional customers. Last summer, the two companies moved 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. according to the complaint.

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