Andrew Harnik/AP Photo
U.S. Rep. David Trone (D-MD) is seen speaking at a news conference on January 17, 2019, on Capitol Hill in Washington.
Americans are drinking themselves to death at the highest rate in decades. During the pandemic, alcohol-related deaths spiked 30 percent, killing more than 49,000 people in 2020. The trend has since subsided but still remains at higher levels than before COVID. Even as restaurants and gyms were deemed nonessential and subject to closing, the liquor lobby convinced state governments to keep its stores open, and even relax previous regulations on direct-to-consumer deliveries. The business made a killing as sales numbers shot up to increase the deaths of despair that the pandemic wrought.
America’s drinking problem has lined the pockets of the liquor giants that rolled up the industry over the past two decades from production to distribution, making alcohol cheaper and more readily available for its most loyal addicted customers. No company better embodies the liquor-pushing practices by these monopolies than the largest chain liquor store retailer, Total Wine, which is co-owned by Democratic Congressman David Trone (D-MD), who’s now running for Senate in Maryland to replace Sen. Ben Cardin, who’ll retire at the end of the current term.
One of the wealthiest members of Congress, Trone is proudly self-funding his Senate bid, as he did with his previous congressional races, through the vast fortune he amassed from his discount retail chain. “The Walmart of liquor,” as it’s known, hauled in its highest revenue numbers during the pandemic. Swearing off corporate PAC money, Trone recently put $10 million of “show me money” (his own) into his campaign, sending a warning shot to other Democrats in the state who have been hesitant about entering the race. Rep. Jamie Raskin (D-MD), a prominent liberal with a national following, recently announced he wouldn’t run for the seat.
That effectively leaves the Democratic primary wide open for Trone’s taking. His main challenger thus far is the executive of Prince George’s County, Angela Alsobrooks, widely seen as a rising star in the party though with less name recognition and a much smaller campaign treasury than the wine mogul. A member of the House Problem Solvers Caucus, Trone has declared himself a unifier in the race.
Even as Trone runs for senator, however, Total Wine is actively trying to impede an investigation by the Biden administration that could expose Trone’s empire for business practices that amount to modern-day bootlegging—or, at least, violations of federal and state laws.
The trouble for Total Wine began earlier this year. The Federal Trade Commission opened an investigation into price discrimination and exclusive dealing arrangements in alcohol markets as part of a broader crackdown that’s also charging Pepsi and Coke for similar anti-competitive conduct. The FTC’s probe specifically targets the largest alcohol distributor, Southern Glazer’s, but that ties Total Wine into the case as the largest chain retailer for wine and spirits that Southern Glazer’s sells to.
Because of consolidation over recent decades, each line of supply in the alcohol market from production to distribution to retail is controlled by a few dominant players that cut deals with each other that choke off access to the market for smaller companies.
Total Wine’s recent efforts to cut off the investigation fall into a pattern for the company, which has routinely trampled over state regulations and asked for forgiveness later.
Total Wine can effectively offer low prices and discount deals at its stores because it strikes agreements with Southern Glazer’s and other large distributors to purchase in bulk for lower costs. Both independent liquor stores and small producers like craft brewers lack the scale to be able to make these types of deals, so the wholesalers who act as middlemen cut them out entirely. It’s the same playbook that big-box retailers like Walmart have used to sell discounted goods.
Both Southern Glazer’s and Total Wine have faced numerous lawsuits for these practices, including a recent class action suit brought by liquor stores in California that allege a two-tiered pricing system leveraged against them.
Both companies have built their business models by disregarding the Robinson-Patman Act, a piece of antitrust legislation that explicitly prohibits unfair and anti-competitive price discrimination. The FTC has made it a priority to revive this long-dormant law, which has gone unenforced for decades. The current investigation into Southern Glazer’s is predicated on violations of both Robinson-Patman as well as the unfair methods of competition under Section 5 of the FTC Act.
In February, as part of its investigation, the FTC issued information requests to Total Wine about its business practices and communications with Southern Glazer’s. In April, after delaying its response for several months, Total Wine submitted a formal petition to block the agency’s requests entirely, arguing the information was “sensitive and confidential” and that the FTC lacked authority to demand it of the company.
In May, the FTC denied Total Wine’s petition and is moving forward with the investigation by resubmitting new information requests. The company has not announced any subsequent appeals and will be forced to comply with the investigation, though it’s succeeded in delaying it.
Total Wine’s recent efforts to cut off the investigation fall into a pattern for the company, which has routinely trampled over state regulations and asked for forgiveness later. Since the end of Prohibition, states have wielded far greater power to impose restrictions on the sale of alcohol than on other products. Many even set minimum prices to dissuade alcoholism and protect independent stores.
Under Trone’s watch, Total Wine has fought against state laws that block chain retailers from selling below cost. It temporarily had its license revoked in Massachusetts for refusing to comply with state pricing laws. In a notorious incident, Total Wine protested Connecticut’s laws by taking out a front-page ad bragging that it would sell liquor for less than state-mandated minimums. It eventually paid $37,500 to regulators to settle for the violations.
In 2019, Total Wine brought a case all the way to the Supreme Court against state residency laws that limit how quickly newly arrived liquor chains can expand into a state. The court sided with Total Wine in a ruling so expansive that it could limit states’ authority to impose other regulations on liquor.
As the FTC continues its investigation into Southern Glazer’s and revives enforcement of Robinson-Patman, Trone’s Total Wine could be caught in the crosshairs. Along with the FTC’s crackdown, the Alcohol and Tobacco Tax and Trade Bureau is in the midst of setting new rules to enforce competitive standards as part of President Biden’s executive order on competition.
Rep. Trone is still registered as a co-owner of the company and has involved himself in the company’s dealings during his time in Congress. In 2021, for example, Rep. Trone personally threatened to “execute” a delivery worker at one of his store locations in Tempe, Arizona, according to a police report obtained by The Spectator.
In response to an inquiry from the Prospect about Trone’s involvement in Total Wine and the ongoing FTC investigation, his congressional office responded: “David Trone resigned as CEO of Total Wine & More in 2015, and he relinquished all operational responsibility when he became a member of Congress in early 2019.”
If his bid for Senate proves successful, Trone would hold substantial political power to potentially sway these impending regulatory actions against his company. The race should be followed closely for that reason alone.
