UNITED STATES OF AMERICA

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BEFORE THE FEDERAL TRADE COMMISSION

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In re CID Issued To Retail

Services & Systems, Inc.

FTC File No. 211-0155

Retail Services & System, Inc.’s Petition to Limit

Civil Investigative Demand

April 7, 2023

Stephen Weissman

Logan Billman

Gibson, Dunn & Crutcher LLP

1050 Connecticut Ave., N.W.

Washington, D.C. 200036

Telephone: 202.955.8500

SWeissman@gibsondunn.com

LBillman@gibsondunn.com

Counsel For Petitioner

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RETAIL SERVICES & SYSTEM, INC.’S PETITION TO LIMIT

CIVIL INVESTIGATIVE DEMAND

Introduction

Retail Services & Systems, Inc., d/b/a Total Wine & More (“TWM” or the “Company”),

owns the Total Wine & More trade name and related intellectual property used by separate but

affiliated businesses that operate under the Total Wine trade name in 27 different states. The

Company itself does not sell wine or spirits; the independent Total Wine retail stores do. 1 Staff

has confirmed that the Company and its affiliated retail businesses are not a target or subject of

the FTC investigation at issue, which relates to Southern Glazer’s Wine and Spirits, LLC

(“Southern”). Nevertheless, the Company is compelled to file this Petition to Limit the Civil

Investigative Demand (the “CID”) served on the Company on February 27, 2023.

The CID includes nineteen different specifications, including nearly one hundred separate

sub-parts therein, seeking sensitive and confidential information about almost the entirety of

TWM’s business over a period of more than five years. Despite producing on April 3 materials

and sample data responsive to the “priority” specifications identified and requested by Staff, and

despite diligent efforts by TWM to discuss a narrowing of the CID, Staff refused to extend the

April 7 deadline for filing a petition to limit or quash the CID. The Company’s strong preference

would have been to continue negotiating with Staff––the parties were making substantial progress

on a production plan earlier this week––while securing an agreed extension of the April 7 petition

deadline. Staff rejected that proposal in a letter dated April 5, while also acknowledging that the

negotiations were ongoing and that the parties had not yet reached an impasse on any Specification.

The records that the FTC seeks from the Company are actually records of the separate but affiliated entities that

have not been served with a CID but are nonetheless referenced in the definition section of CID under D.1.

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Absent Staff granting the requested extension, TWM regrettably has no choice but to file this

Petition to Limit to preserve its legal rights.

The heart of the dispute pertains to two broad definitions in the CID.

First, the CID defined “Distributor” to mean any distributor of any wine or spirit product.

Second, the CID defined “Relevant Products” as any wine or spirit TWM has purchased or sold.

Neither definition is limited to Southern. However, the CID specifies that the subject of the

Commission’s investigation is whether Southern “engaged in unfair methods of competition” or

“discriminatory practices in violation of the Robinson-Patman Act.” See CID at 1, attached as

Appendix A. And Staff has informed the Company that the CID concerns only the RobinsonPatman Act aspects of its investigation of Southern.

But when limitless definitions for “Distributor” and “Relevant Product” are applied to the

nearly one hundred separate sub-parts in the CID, the FTC has effectively asked TWM to turn over

all data and documents in its possession regardless of whether such data or documents have any

connection to Southern. TWM’s business activity unrelated to Southern has no relevance to an

administrative investigation into Southern, and Staff has failed to offer any explanation otherwise.

The Company fails to see any relevance of such information, which it explained in comprehensive

objections to the CID’s definitions. See April 3 Ltr. at 3–4, attached as Appendix B.

Staff has responded that the only reason it needs data and documents about TWM’s

purchases, sales, and dealings with non-Southern distributors and their products is to satisfy a

“need for information in [the FTC]’s investigation into the distribution of wine and spirits under

the FTC Act and the Robinson-Patman Act.” See April 5 Ltr. at 4, attached as Appendix C. Neither

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Staff’s April 5 letter nor any other letter or email from Staff articulates a different theory of

relevance.

But this is no theory at all and amounts to overreach. As an initial matter, a vaguely

asserted “need for information” does not establish its relevance.

Further, the FTC is not

investigating the entire “wine and spirits” industry. The FTC is investigating Southern. The FTC

is only authorized to compel the production of “relevant” information. 15 U.S.C. § 57b–1(c)(1)

(authorizing the FTC to issue CIDs for information “relevant to unfair or deceptive acts or

practices” (emphasis added)); see also 15 U.S.C. § 49 (granting the FTC the “power to require by

subpoena . . . the production of all such documentary evidence relating to any matter under

investigation” (emphasis added)). If merely the alleged “need for information” was enough to

compel burdensome productions from third-party witnesses, as Staff claims, then multiple

relevance standards under the FTC Act are rendered superfluous. See 15 U.S.C. § 57b–1(c)(1); 15

U.S.C. § 49.

Simply put, an administrative investigation into a target company does not give the agency

free rein to obtain whatever it wants from innocent third parties who transact business with the

target company, nor does it reasonably permit an agency intrusion into business transactions with

unrelated entities. As federal courts have held, if “the things sought by [an administrative]

subpoena do not relate to the [third party’s] business with the [target company] under investigation,

then the [agency] does not have the right to obtain them.” Servitron, Inc. v. Interstate Comm.

Commish., 380 F. Supp. 1344, 1346 (M.D. La. 1974) (emphasis added); see also Belle Fourche

Pipeline Co. v. U.S., 554 F. Supp. 1350, 1362 (D. Wyo. 1983) (“If the Court were to try to think

of a document that the Plaintiffs might have that is not covered by the [agency] subpoenas, it could

not do so. These subpoenas require a production of very extensive magnitude, with very little

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direction or specificity; as such, they do not fall within the requirement of being ‘reasonably

relevant.’”) (overturned on jurisdictional grounds).

Staff’s non-existent relevance theory does not justify inflicting TWM with the additional

unreasonable burden and expense that would be required for TWM to produce such information,

especially before the Staff has an opportunity to appropriately narrow and focus its requests based

on the evolution of its investigation. TWM’s burdens are explained in greater detail below.

TWM respectfully requests that the Commission, as a threshold matter, limit the definitions

of “Distributor” and “Relevant Products” to Southern and the wines and spirits that Southern sells

to TWM. Once these terms, which appear in all but one of the Specifications, are properly limited,

the vast majority of the parties’ disputes over the scope of the CID can be easily resolved. But

several other concerns exist.

First, certain Specifications seek confidential, sensitive, and proprietary data and

information about such things as TWM’s gross and net profits, operating margins, and business

tactics and strategies that have no connection to any business transaction with Southern, nor has

Staff attempted to draw such a connection in response to TWM’s objections. These Specifications

should be stricken or limited to data or information that relate to TWM’s business with Southern.

Second, the Specifications that ask TWM to produce “all documents” are overbroad and

unreasonably burdensome. These Specifications seek “all documents” for a period covering fiveplus years related to competition, TWM’s negotiations and interactions with all distributors (not

just Southern), its inventory management processes and methods, and the allocation of any

distributor's product. See Appendix A at 2, 5–7. Such Specifications are especially overbroad

given their marginal relevance to the FTC’s investigation of potential Robinson-Patman Act

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violations by Southern. These and similar requests for “all documents” should be limited in time

frame and scope to information that the Commission targets with more specificity, including the

set of Southern products in question.

In short, especially as a third party, TWM should not be required to comply with the CID’s

overbroad specifications––for which a valid explanation of relevance does not exist––and cannot

do so without “disrupting” and “seriously hindering” TWM’s time-sensitive business initiatives,

as described more below. See FTC v. Texaco, Inc., 555 F.2d 862, 882 (D.C. Cir. 1977).

Respectfully, the CID should be limited in the manner described in this Petition. Alternatively,

TWM is willing to continue discussing with Staff its efforts to comply with the CID, including by

withdrawing this Petition, so long as it is not required to waive its rights by doing so.

II.

History of Conferrals

On February 27, 2023, the FTC served the CID. During meet and confers on March 13,

15, 23, and April 4, the Company explained its concerns about the breadth of the CID and the

unreasonable burdens that the CID, as drafted, would inflict on the Company, especially as a third

party. During two such conferrals, Staff conceded that if Southern violated the Robinson-Patman

Act, TWM might be a ”victim” of such violations.

During the Company’s meeting with Staff on March 15, Staff identified four “priority”

Specifications––Nos. 2, 10, 18, and 19–that it requested the Company focus on for production

before the other Specifications. The Company agreed to focus on these Specifications and to

discuss them, including any concerns, on the call scheduled for March 22. The Company then

discussed the priority Specifications with Staff on March 22 and indicated that the Company could

produce certain information responsive to Specifications Nos. 2, 18, and 19 before the next call

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scheduled for April 4. The Company also described the massive effort that would be required to

comply with Specification 10, which, when limited to products purchased from Southern alone,

sought data regarding the Company’s sales of more than 18,000 products. Staff suggested that the

Company produce a sample of the data so that it could evaluate both the sufficiency of the data

fields and its needs regarding the remainder of Specification 10. On April 3, the Company

submitted a 31-page letter, along with the requested sample data set and other information Staff

requested, along with numerous objections to Definitions and Specifications. See Appendix B.

On April 4, the Company and Staff engaged in multiple discussions to try to avoid, or at

least defer and narrow the scope of this Petition. The parties made progress. The Company

clarified that it did not want to file this Petition and that it did not need the Staff to waive any of

its rights with regard to compliance with the CID while discussions continued. The Company

believed there was an understanding that, in return for a further extension of the April 7 petition

deadline, TWM would provide the requested data for all 18,000 products within three months and

other information responsive to Specification 11 within 45 days. 2 The Company further believed

that the parties would continue to engage in further good faith discussions over the next thirty days

to reach an agreement on limiting and sequencing the Company’s production of other data sought

under the remaining specifications.

After the calls, Staff informed the Company by email that there would be no extension of

the April 7 petition deadline. Because the Company is unwilling to waive its rights––a point

repeatedly conveyed to Staff, including on April 4––it is now forced to file this Petition.

TWM’s prior data analysis suggested that it purchased over 21,000 wines or spirits from Southern since 2018,

which is the figure TWM conveyed to Staff. However, recent verification efforts revealed that the number is over

18,000. See Appendix D ¶ 9.

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Staff then sent TWM a letter on April 5 that failed to mention any of the concessions and

proposals that TWM had made to reasonably limit the overbroad Specifications (among other

material omissions). To date, the Staff has not granted a single modification to the CID other than

granting a minimal extension of the return/petition deadlines.

III.

Legal Standards

The FTC’s subpoena power is not without “limits.” Texaco, 55 F.2d at 903. A CID must

be reasonable relative to the “nature, purposes, and scope of the inquiry.” See Okla. Press Pub.

Co. v. Walling, 327 U.S. 186, 209 (1946). The “disclosure sought” by an agency subpoena “should

not be unreasonable.” Id. Sufficient justification for sweeping investigations exists only if “the

inquiry is within the authority of the agency, the demand is not too indefinite, and the information

sought is reasonably relevant.” U.S. v. Morton Salt, 338 U.S. 632, 652 (1950).

In addition to the relevance requirements, a CID demand will not be enforced if it is

“unduly burdensome or unreasonably broad,” which occurs where “compliance threatens to

unduly disrupt or seriously hinder normal operations of a business.” Okla. Press, 327 U.S. at 209.

When evaluating burden, courts weigh compliance costs inflicted on third parties (like TWM)

more heavily, especially when the information sought might be duplicative of information

available from other sources. FTC v. Carter, 464 F. Supp. 633, 641 (D.C. Cir. 1979) (quashing

subpoenas issued to third-party researchers as unduly burdensome upon finding it would “‘disrupt

(and) unduly hinder the normal operations’ of these research corporations to search all their files

for subpoenaed materials that other respondents would be producing.”); see also EEOC v. Packard

Electric Division, 569 F.2d 315, 318–19 (5th Cir. 1978).

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Unreasonably short response dates are unduly burdensome and should be extended by the

Commission to facilitate compliance and reduce burden. See 16 C.F.R. § 2.7; In re CID to Beam

Fin., Inc., Dated May 21, 2020, 2020 WL 5037434, at *4 (FTC Aug. 17, 2020). Ultimately, the

Commission or a court is authorized to impose reasonable conditions and restrictions with respect

to the production of data, documents, and other materials designated in agency subpoenas. See

generally, FCC v. Cohn, 154 F. Supp. 899, 913 (S.D.N.Y. 1957); Willing v. Am. Rolbal Corp., 135

F.2d 1003, 1005 (2d Cir. 1943); Goldberg v. Truck Drivers, 293 F.2d 807, 812 (6th Cir. 1961).

IV.

The CID Seeks Irrelevant Information and is Unduly Burdensome.

As explained in greater detail below, the CID has at least three fatal flaws that require

limitations from or quashing by the Commission.

First, the CID improperly defines “Distributor” and “Relevant Products” to include

distributors and products that are not relevant to an investigation into Southern. Not only do the

terms seek irrelevant information, but they impose undue and substantial real-world burdens on

TWM. Since these overly broad terms are used in all but one of the Specifications, TWM is unable

to continue its efforts of compliance with the CID except as described in Part IV.4 below. Both

terms should be limited to Southern and the wines and spirits that Southern has sold to TWM.

Such limitations will allow TWM to substantially comply with the CID.

Second, certain Specifications, by their own terms, seek confidential and proprietary data

and information that is unrelated to Southern and its products. Those Specifications should be

limited accordingly or quashed entirely.

Third, and finally, certain specifications seek “all documents” on various topics. Despite

TWM’s objections, Staff has refused to agree to any limitation on such obvious overreach.

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For these reasons and those stated below, TWM respectfully requests that the Commission

greatly limit or quash the CID.

The Threshold Definitions Framing the Entire CID Are Flawed and Must Be

Limited.

TWM objected to the CID’s definitions of “Distributor” and “Relevant Products” as

overbroad because neither is limited to Southern or the products that Southern distributes and,

therefore, when applied to the Specifications, call for the production of irrelevant data and

documents that would inflict unnecessary and unreasonable burdens on the Company. See

Appendix B.

The fact that both definitions call for irrelevant data and documents should be obvious.

The CID is clear that the FTC’s investigation is focused only on Southern. See Appendix A at 1. Staff

repeated this singular focus during prior calls. Therefore, the term “Distributor” should be limited to

Southern.

Defining such a term in a manner that includes irrelevant information about other

distributors or the wine and spirit products they distribute for suppliers is overbroad and would

unnecessarily add significant burdens to TWM that are disproportionate to any conceivable relevance.

The term “Relevant Products” should be similarly limited to the products that Southern distributes.

TWM’s position is based on both federal statutes and case law.

As explained in the

Introduction above, the FTC may only seek by CID information from third parties “relevant to unfair

or deceptive acts or practices,” 15 U.S. Code § 57b–1(emphasis added), and “relating to any matter

under investigation.” 15 U.S.C. § 49 (emphasis added). The matter under investigation here is

Southern, and the evidence that the FTC seeks should be limited accordingly. Further, federal

courts have held that if “the things sought by [an administrative] subpoena do not relate to the

[third parties’] business with the [target company] under investigation, then the [agency] does not

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have the right to obtain them.” Servitron, 380 F. Supp. at 1346 (emphasis added). This

proposition is anchored in Supreme Court precedent. The high Court in both Oklahoma Press and

Morton Salt held that relevance matters. Ok. Press, 327 U.S. at 209. Morton Salt, 338 U.S. at

652. And here, Staff pegged relevance to Southern since Southern is the undisputed target of the

investigation. 3

At a minimum, the above showing should shift the burden back to Staff to articulate why

other distributors and non-Southern wine and spirit products have any relevance to the

investigation. Staff failed. In the only written articulation of its relevance theory for these

definitions, Staff claim that every distributor and every wine and spirit bought and sold is relevant

due to “Staff’s need for information into its investigation into the distribution of wine and spirits.”

Appendix C at 5. This theory of relevance is no theory at all, contradicts the FTC’s own CID, and

finds no basis in the enabling statute, as the FTC Act does not give the FTC free reign to investigate

industries carte blanche.

The burdens that flow from the CID’s improper definition of “Distributor”

and ”Reasonable Products” are extensive and grossly disproportionate to the Staff's needs. For

example, Specification 10 seeks detailed product-level data about sales of all wine and spirit

products that the Company purchased from any distributor (not limited to Southern) over 64

months and in 27 states. See Appendix A at 5. As described in the attached Declaration of Tom

Kooser, TWM has purchased over 18,000 different wine or spirit products from Southern alone

since 2018. See Appendix D ¶ 9. Weekly sales data for just those products over the 272 weeks

Specification 17 is doubly irrelevant because the law is clear that product allocations by a supplier are not a

cognizable theory under the Robinson Patman Act. See, e.g., Diehl & Sons, Inc. v. International Harvester Co., 426

F. Supp. 110, 123 (E.D.N.Y. 1976) (recognizing that “discrimination in the allocation or timeliness of deliveries does

not constitute a Robinson-Patman violation”).

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since January 1, 2018 will result in approximately 5.7 million transaction-level entries, each of

which then requires additional data points for product description, dollars sold, units sold, costs,

and other information requested by the Specification. 4 Id. ¶ 10. Thus, tens of millions of

datapoints are implicated for Specification No. 10 alone, even if the terms “Distributor” and

“Relevant Products” are limited. And then once the data is queried and pulled using expensive

cloud-computing software, TWM then must redeploy substantial employee resources to review

and validate such data prior to production to the FTC. Id. This pulling and validation process is

a cross-functional effort involving hundreds of hours.

Id. ¶¶ 8–10.

TWM estimates that

undertaking full compliance with the CID as written would disrupt strategic and critically

important projects currently underway. Id. ¶¶ 4–12. 5

Despite these burdens, TWM has not refused to engage with Staff. On April 4, and in light

of the above-described burdens, TWM produced sample sales data for the top-five selling wines and

top-five selling spirits, as determined by Nielson Global Solutions, that are predominately distributed

by SG (the “Nielson Sample”). That production included 7.5 million data points and took a crossfunctional team nearly a week of time to pull and validate. Id. ¶ 10. But TWM did not stop there. It

offered to use its resources to produce additional samples of data that would extend the Nielson sample

to the Top 100 or Top 300 selling wines or spirits. See Appendix B. TWM even extended its offer to

produce thousands of additional Southern products if it received assurances from Staff that further data

On April 4, Staff discussed deferring production of weekly data and accepting monthly data instead, but has not

modified the CID to do so as of this date. Nor would such a modification, if granted, eliminate the unreasonable

burden associated with the request. See Appendix D ¶¶ 4–12.

While Staff claims that TWM has no right to validate as accurate and reliable the data before production to the FTC

(and cannot rely on the validation exercise as part of its burden), that position is unreasonable and unprecedented.

TWN has every right to reasonably ensure the accuracy of information provided to a government agency, and the

Commission should not break new ground here. See, e.g. footnote 2.

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productions would not be needed. Staff refused, insisting that they were entitled to data on every wine

or spirit product that TWM has ever sold since January 2018.

To be clear, the dispute over Specification 10 is the natural by-product of the CID’s

overbroad definitions for “Distributor” and “Relevant Products” and, therefore, reflective of the

parties’ disputes over every Specification that uses one or both of those terms. If Staff and TWM

could reach an alignment on the proper definitions, the rest of the disputes would fall to the side

because those disputes flow from TWM’s belief that information related to non-Southern products

or business activities is irrelevant. TWM does not believe it is necessary to describe in detail the

burden associated with complying with each Specification as written, given the CID’s failure to

properly define the terms that it uses throughout each Specification. 6

Certain Specifications Make No Attempt At Targeting Relevant Information.

At least five Specifications do not even pretend to ask for documents or data related to the

FTC’s investigation of Southern. These Specifications include:

•

Specification 8, which seeks consolidated, Company-wide financial data, such as

operating and net income;

•

Specification 12, which seeks internal Company documents about competition at

the retail level;

•

Specification 13, which seeks all documents provided to TWM’s board and

executive leaders;

On the April 4 call, Staff discussed deferring production of data and other information about products not purchased

from Southern—and deferring data and other information for states in which TWM does not purchase products from

Southern. Staff has not formalized any of those modifications to the CID to date. Regardless, even with this proposed

deferral, Staff’s concept would leave the CID unbounded and, therefore, subject to unreasonable burdens in the future,

especially without the Company’s right to file a petition to limit the CID.

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•

Specification 14, which seeks data and information about facilities where TWM

stores the products it purchases; and

•

Specification 15, which seeks internal documents about TWM’s inventory

strategies. See Appendix A.

The data and information sought by these five Specifications has nothing to do with

Southern.

This is obvious from the face of the Specifications themselves.

But if further

confirmation is needed, Staff provided it in the April 5 letter. For Specifications 12 through 15,

Staff’s lone relevance theory is the “Commission’s need for information in its investigation into

the distribution of wine and spirits under the FTC Act and the Robinson-Patman Act.” Appendix

C at 6. As explained above, Staff’s unsupported claim of “need for information” does not

somehow prove that the information is also relevant. Federal statutes and the Supreme Court

establish that relevance matters.

As for Specification 8, Staff’s purported theory of relevance is even less justifiable. Staff

claims that consolidated financial data is “highly relevant to understanding Total Wine’s place in

the market subject to the Commission’s investigation under the FTC Act and the Robinson-Patman

Act.” Again, Staff is wrong. The market subject to the FTC’s investigation is wholesale

distribution of wines and spirits, which is apparent given that the target of the FTC’s investigation

is a distributor. TWM does not distribute wines and spirits. In fact, in every state where it operates,

TWM is prohibited by state law from distributing wines and spirits. TWM is a retailer. Neither

the retail market nor TWM are under investigation. TWM offered to produce materials in response

to 8(a) and 8(b), which are more than sufficient to address the question of the Company’s size, but

Staff rejected our proposal.

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3. Specifications that Require Production of “All Documents”, Including for a 5-Plus

Year Time Frame, Are Oppressive and Overly Broad.

The CID’s requests for “all documents” related to competition or the purchase or sale of

any products (not limited to Southern’s products) (Specifications 12 and 13), to the Company’s

negotiations and interactions with all distributors (not just Southern) (Specifications 3 and 16), and

to its inventory management processes and methods (Specification 15), at a bare minimum should

be limited both in time frame (no more than three years) and in scope to information that the Staff

identifies with more specificity, including about the specific Southern products in question. Again,

“[i]f the things sought by the subpoena do not relate to the [CID recipient’s] business with the

[companies] under investigation, then the Commission does not have the right to obtain them.”

Servitron, 380 F. Supp. at 1346–47.

Prior to being left with no choice except to file this Petition, the Company proposed an

expeditious timeline (i.e., within the next 30 days) to discuss with Staff the nature and scope of

searches of the Company’s files in response to specifications requiring production of “all

documents related to” a broad range of topics, including the appropriateness of word searches of

certain custodians’ files. The Company remains willing to engage in those discussions in the hopes

of mooting this part of the Petition. For example, regarding Specification 3, which requests all

documents related to agreements with distributors, the CID’s request for “all documents” could be

read to require TWM to retrieve and produce five years of purchase orders and wholesaler invoices.

That is because, in the wine and spirits industry, retailers generally do not have “agreements” with

distributors in the same way that suppliers or manufacturers have distribution or franchise

agreements with wholesalers. Rather, it is standard practice for retailers to order wines and spirits

from licensed wholesalers through purchase orders; for wholesalers to fulfill those orders by

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delivering the goods in the quantities and at the prices specified in the purchase order; and for the

wholesaler upon delivery, to tender an invoice payable upon receipt or within a short period

thereafter based on applicable state law.

While purchase orders, once accepted, form an

enforceable “agreement” between the wholesaler and the retailer, standard contract terms (e.g.,

terms of delivery, acceptance, and rejection) are often prescribed by state law. Given that TWM

will provide the same information for Southern products in response to other CID data

specifications, the cost and burden of producing these purely transactional documents would

substantially outweigh their minimum probative value.

But, if Staff is not prepared to engage in discussions about potential custodians and search

terms while this Petition is pending, the Commission should limit the requirements of these

specifications to documents (i) pertaining to Southern's activities or products for which Staff

provides more specificity, and (ii) prepared since January 1, 2020. Staff has not articulated the

relevance of information that goes back before 2020, and such information is not necessary or

relevant to the issue of whether Southern. Indeed, to seek an injunction under FTC Act, Section

13(b) against Southern’s conduct, or a cease and desist order in Part 3 proceedings, the FTC must

show that Southern at least threatens to engage in unlawful conduct. Historical information, much

less before January 2020, does not reflect Southern’s current business practices and has

substantially less probative value than more recent information for evaluating whether Southern’s

current practices are unlawful.

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TWM Is Still Complying With Certain Parts of the CID.

In the spirit of cooperation, TWM intends, while this Petition is pending, to honor its

commitment made on April 4 to produce voluminous information regarding all Southern products.

TWM will provide on or before May 5 narrative responses to Specifications 4, 5, and 9 as

limited by the April 3 letter. Staff’s April 5 letter failed to address any of these Specifications.

TWM will also produce within three months an extension of the prior data set produced in response

to Specification 10, but expanded to include all 18,000+ products that TWM has purchased from

Southern since 2018. Finally, TWM will also produce on or before May 5 an export reflecting

certain data sought by Specification 11. The export will show the total annual purchases of

anonymized loyalty card holders and their respective zip codes.

***

For the reasons described above, TWM respectfully requests that the Commissioners limit

or quash the CID. A simple solution is at hand: Should the Commissioners agree with TWM that

“Distributor” and “Relevant Products” should be redefined to mean only Southern and the wines

and spirits that it sells to TWM, then TWM is confident that it will be able to reach a resolution

with Staff on all outstanding Specifications within 21 days.

At a minimum, the Commission should extend the CID’s unreasonably short and unduly

burdensome petition date beyond April 7 pursuant to Rule 2.7 of the FTC Rules of Practice, which

requires a CID to allow “a reasonable period of time” to respond. 16 C.F.R. § 2.7(b). The CID’s

current April 7 return/petition date is unreasonable on its face and violative of Rule 2.7(b). A new,

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reasonable return/petition date for the CID should be issued, depending on the breadth of the CID

after the Commission’s decision on this Petition.

Respectfully submitted,

Dated April 7, 2023

________________________________

Stephen Weissman

Logan Billman

Gibson, Dunn & Crutcher LLP

1050 Connecticut Avenue, N.W.

Washington, D.C. 200036

Telephone: 202.955.8500

SWeissman@gibsondunn.com

LBillman@gibsondunn.com

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APPENDIX A

RECEIVED

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United States of America

Federal Trade Commission

CIVIL INVEST/GA TIVE DEMAND

1. TO

FEB Z7 2023

1a. MATTER NUM

Retail Services & Systems , Inc. d/b/a Total Wine & More

6600 Rockledge Drive

Suite 150

Bethesda, MD 20817

FTC File No. 211-0155

c/o Robert Shaffer

This demand is issued pursuant to Section 20 of the Federal Trade Commission Act, 15 U.S.C. § 57b-1, in the course

of an investigation to determine whether there is, has been, or may be a violation of any laws administered by the

Federal Trade Commission by conduct, activities or proposed action as described in Item 3.

2. ACTION REQUIRED

D You are required to appear and testify.

OCATION OF HEARING

YOUR APPEARANCE WILL BE BEFORE

No appearance required .

DATE AND TIME OF HEARING OR DEPOSITION

You are requi red to produce all docu111ents d escribed in the attache d sch edule th at are in your possession, custody, or control, and to make them

available at your address indica ted ab ove fo r inspection and copying or reproduction at the date and time specified below.

'X7 You a re requi red to answer the interrogatories o r provide the written report described on the attached schedule. Answer each interrogatory or re port

~ sepa rately an d fully in writing . Submit your answers or report to the Records Custodian named in Item 4 on or before the date specified below.

□

You are required to p roduce the tang ible things described on the attached schedule. Produce such things to the Records Custod ian named in Item 4

on or before the date specified below.

DATE AND TIME THE DOCUMENTS , ANSWERS TO INTERROGATORIES, REPORTS , AND/OR TANGIBLE THINGS MUST BE AVAILABLE

March 25, 2023 by 5pm ET

3. SUBJECT OF INVESTIGATION

See Attached Schedule (Subject of the Investigation) and Resolution Directing Use Of

Compulsory Process Regarding Acts Or Practices Affecting Labor Or Small Business Operators

4. RECORDS CUSTODIAN/DEPUTY RECORDS CUSTODIAN

5. COMMISSION COUNSEL

Geoffrey M. Green, Assistant Director

Patricia M. McDermott, Deputy Ass~stant

Director

J. Wells Harrell

Federal Trade Commission

600 Pennsylvania Avenue NW

Washington, DC 20580

(202) 326-3211 I jharrell@ftc.gov

DATE ISSUED

02/23/2023

COMMISSIONER'S SIGNATURE

INSTRUCTIONS AND NOTICES

The delivery of this demand to you by any method prescribed by the Commission's

Rules of Practice Is legal service and may subject you lo a penalty Imposed by law for

failure to comply, The productloh of documents or the submission of answers and report

In response to lhis demand must be made under a sworn certificate, ln the form printed

on the second page of this demand , b.y the person to whom this demand is directed or, If

not a natural person, by a person or persons having knowledge or the facts and

circumsta nces of sucn production or responsible Jor answering each Interrogatory or

report question. This demand does nol require approval by 0MB under the Paperwork

Reduction Act of 1980.

J. t/4/

YOUR RIGHTS TO REGULATORY ENFORCEMENT FAIRNESS '

The FTC has a longstanding commitment lo a fair regulatory enforcement environment.

If you are a small business (under Small Business Administration standards), you have

a right to contact the Small Business Administration's National Ombudsman at 1-888REGFAIR (1·88.8-734-3247) or www.sba .gov/ombudsman regardlng the fairness of the

compliance and enforcement activities orthe agency. You should understand, however,

that the National Ombudsman cannot change, stop, or delay a federal agency

enforcement action .

The FTC strictly forbids retaliatory acts by its employees, and you will not be penalized

for expressing a concern about these activities .

PETITION TO LIMIT OR QUASH

TRAVEL EXPENSES

The Commission's Ru les of Practice require that any petition to limit or quash \his

demand be filed within 20 days after service, or, tt the retun, date Is less than 20 days

after service, prior to the return dale. The original and twelve copies ct the petlllon must

be filed wtth the Secretary of the Federal Trade Commission, and one copy should be

sent to the Commission Counsel named in Item 5.

Use the enclosed travel voucher to claim compensation to which you are entitled as a

witness for lhe Commission. The completed travel voucher and thls demand should be

presented to Commission Counsel for payment. If you are permanently or ter;iporarily

Jiving somewhere other than the address on lhls demand and II would require excessive

travel for you to appear, you must gel prior approval from Commission Counsel.

A copy or the Commission's Rules of Practice is available online at http://biUy/

FTCSRu1esofPraclice. Paper copies are available upon request.

FTC Form 144 (rev 11/17)

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Form of Certificate of Compliance*

I/We do certify that all of the documents, information and tangible things required by the attached Civil Investigative Demand

which are in the possession , custody, control, or knowledge of the person to whom the demand is directed have been

submitted to a custodian named herein.

If a document or tangible thing responsive to this Civil Investigative Demand has not been submitted, the objections to its

submission and the reasons for the objection have been stated.

If an interrogatory or a portion of the request has not been fully answered or a portion of the report has not been completed,

the objections to its submission and the reasons for the objections have been stated.

Signature

Title

Sworn to before me this day

Notary Public

•In the event that more than one person is responsible for complying with this demand, the certificate shall identify the

documents for which each certifying individual was responsible . In place of a sworn statement, the above certificate of

compliance may be supported by an unsworn declaration as provided for by 28 U.S .C. § 1746.

FTC Form 144-Back (rev. 11/17)

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CIVIL INVESTIGATIVE DEMAND

ISSUED TO RETAIL SERVICES & SYSTEMS, INC. D/B/A TOTAL WINE & MORE

FTC File No. 211-0155

Unless modified by agreement with the staff of the Federal Trade Commission ("the

Commission" or "the FTC"), each Specification of this Civil Investigative Demand ("CID")

requires a complete search of the Company as defined in the Definitions that appear after the

following Specifications. Pursuant to the Commission's Rules of Practice, 16 C.F.R. § 2.7(k),

Company representatives must confer with the Commission representative identified in

Instruction 1.15 of this CID within 14 days after receipt of this CID. If the Company believes that

the required search or any other part of the CID can be narrowed in any way that is consistent

with the Commission's need for information, you are encouraged to discuss such questions and

possible modifications with the Commission representative. All modifications to this CID must

be agreed to in writing pursuant to the Commission's Rules of Practice, 16 C.F.R. § 2.7(1).

SUBJECT OF THE INVESTIGATION

Whether Southern Glazer's Wine and Spirits, LLC or its affiliates have: (1) engaged in

unfair methods of competition in violation of Section 5 of the Federal Trade Commission Act, 15

U.S.C. § 45, as amended, through unfair, deceptive, anticompetitive, collusive, coercive,

predatory, exploitative, or exclusionary conduct, including exclusive dealing, tying, and related

conduct; and/or (2) engaged in discriminatory practices in violation of the Robinson-Patman Act,

15 U.S.C. § 13, as amended. See also the attached resolution.

SPECIFICATIONS

For each calendar year from 2018 to 2022:

(a)

identify by state each Relevant Product sold by the Company;

(b)

state separately by state for each Relevant Product the volume sold by the

Company in dollars and units; and

(c)

identify all Distributors from which the Company purchased each Relevant

Product in each state.

t Submit an electronic spreadsheet listing each Company store in the Relevant Area that

sells or has sold any Relevant Product at any time from January 1, 2018 to present. For

each such Company store, provide the following information:

(a)

the store number and any other unique number, code, value, or name used by the

Company to identify or refer to the store;

(b)

the street address, city, county, state, and zip code;

(c)

the name of any department that sells or has sold any Relevant Product;

(d)

the operating region, metropolitan statistical area, or micropolitan statistical area

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served;

(e)

the primary trade or draw areas (i.e., the smallest geographic area closest to the

store where approximately 50% and 85% of the store's customers reside);

(f)

annual sales, by units and dollars, of all spirits products;

(g)

annual sales, by units and dollars, of all wine products;

(h)

the date originally opened, or projected to open, and the date closed, or expected

to close, as applicable;

(i)

the number of distinct Relevant Products, by SKUs, UPCs, or unique products if

SKU information is not available, the store sells or has sold annually, broken out

separately by spirits and wines and by year;

the name, address, and contact information for any Distributor that sells or has

sold any Relevant Product to the store;

(k)

the name and address of any Company distribution center, warehouse, sortation

center, or storage facility that services or has serviced the store, or that receives or

holds inventory of any Relevant Product for any period of time for the store;

(1)

the name and address of all competing off-premise retail stores engaged in the

sale of any Relevant Product; and

(m)

variables or metrics used in the ordinary course of business to evaluate the store's

competitive position, including market share.

S9bmit:

(a)

all Agreements and Proposed Agreements between the Company and any

Distributor or any supplier relating to any Relevant Product;

(b)

all documents relating to the negotiation, drafting, or evaluation of any such

Agreement or Proposed Agreement; and

(c)

all documents relating to negotiations or discussions between the Company and

Southern or any supplier regarding the availability, price, or quantity of any

Relevant Product available for purchase by the Company.

Describe in detail the process by which the Company negotiates for or is notified of

available pricing, discounts, rebates, promotions, coupons, scanbacks, price adjustments,

or other concessions for any Relevant Product purchased from Southern or any supplier.

Submit and identify by document control number all documents used to prepare the

response to this Specification.

Describe in detail each service Southern or any supplier furnishes, has furnished,

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contracted to furnish, contributed to furnishing, offered to furnish, or that the Company

has requested Southern or any supplier furnish, to the Company from January 1, 2018 to

the present. Submit and identify by document control number all documents used to

prepare the response to this Specification.

t For each service identified in response to Specification 5 above, submit documents, an

electronic spreadsheet, or a Data Set sufficient to show:

(a)

the provider or offeror of the service;

(b)

the service provided or offered;

(c)

the date(s) or time period(s) during which the service was provided or offered;

(d)

the Relevant Product(s) involved;

(e)

the store location(s), geographic area(s), and state(s) in which the service was

provided or offered;

(f)

the name, title, and affiliation of any person who acted as a provider, offeror,

receiver, or offeree of the service;

(g)

the method by which the Company was notified of the availability of the service

provided or offered;

(h)

the date(s) of, participants in, and substance of any communication with Southern

or any supplier about the service; and

(i)

any consideration the Company provided for the service.

t For each Relevant Product purchased from any Distributor, submit a Data Set or

electronic spreadsheet that includes the following, from January 1, 2018 to present:

(a)

SKU, UPC, or any other item number;

(b)

product description and other product information (e.g., brand, flavor, bottle size,

package type);

(c)

product manufacturer or supplier;

(d)

order date(s);

(e)

the Distributor receiving the order, including the Distributor's name and the

geographic location of the Distributor's facility receiving, shipping, or delivering

the order (e.g., address of the facility, city, state, county, and/or Metropolitan

Statistical Area);

(f)

information on how the order was placed (e.g., method of communication,

distributor contact name);

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(g)

dollars paid, promised, or owed to the Distributor (e.g., purchase price),

separately by SKU and fee type;

(h)

quantity ordered;

(i)

quantity ordered as expressed in equivalent units;

(j)

all quantity discounts available when the purchase was made;

(k)

all quantity discounts applied to the purchase;

(I)

all other discounts, rebates, promotions, coupons, scanbacks, price reductions,

price adjustments, or other concessions available when the purchase was made;

(m)

all other discounts, rebates, promotions, coupons, scanbacks, price reductions,

price adjustments, or other concessions applied to the purchase;

(n)

the name and address (including zip code) of the Company facility that received

the delivery;

(o)

the name and address (including zip code) of each Company facility that

warehoused, stored, stocked, displayed, offered for sale, or sold at retail the

Relevant Product; and

(p)

date fulfilled, also noting if an order is not fulfilled.

Submit for each month from January 1, 2018 to the present, and separately for Relevant

Products and for the Company as a whole, the Company's:

(a)

gross and net sales dollars, separately by revenue source;

(b)

cost of sales, separately by revenue source;

(c)

gross profit;

(d)

any other fixed or variable costs, separately by type;

(e)

operating income; and

(f)

net income.

Identify each electronic database (including data sources used in or processed by the

database) used or maintained by the Company that contains information concerning the

Company's sales of Relevant Products. For each such database, submit a data dictionary

that includes:

(a)

a list of field names and a definition for each field contained in the Data Set;

(b)

the meaning of each code that appears as a field value in the Data Set; and

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(c)

10.

the primary key in the Data Set or table that defines a unique observation.

t Submit a Data Set or electronic spreadsheet reporting the Company's sales of Relevant

Products by Company store, by SKU/UPC/item number, by week, and from January 1,

2018 to present, including:

11.

(a)

a description of the product (e.g., brand, flavor, bottle size, package type);

(b)

gross sales in units and dollars;

(c)

total discounts, rebates, promotions, coupons, scanbacks, returns, price

reductions, or other adjustments, listed separately by type;

(d)

net sales in units and dollars, after accounting for all discounts, rebates,

promotions, coupons, scanbacks, returns, price reductions, or other adjustments;

(e)

the cost of goods sold;

(f)

any adjustments (e.g., slotting allowances, merchandising allowances, marketing

development funds, volume discounts) to cost of goods sold (specified and listed

separately); and

(g)

the advertised sales price of the product.

t Submit a Data Set or electronic spreadsheet that captures the following information

tracked for loyalty card cardholders who have purchased any Relevant Product from the

Company since January 1, 2018, including:

12.

(a)

store identification valu~, as identified in response to Specification 2 above;

(b)

unique identifying value for the individual;

(c)

unique household identifier;

(d)

the 5 digit zip code of the individual's residential address; and

(e)

total monthly purchases of Relevant Products in dollars separately at each store.

Submit all documents related to competition in the market for retail sale of Relevant

Products, including documents related to:

(a)

the market share, competitive position, and relative strengths and weaknesses of

the Company and each of its actual or potential competitors, including all market

share analyses related to the retail of Relevant Products prepared by the Company

or any other analyst;

(b)

opportunities or attempts to win customers from any actual or potential

competitor, or, threatened or actual losses of customers to any actual or potential

competitor;

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13.

14.

(c)

the Company's or any other person's price lists, pricing plans, pricing policies,

pricing forecasts, pricing strategies, pricing analyses, and pricing decisions related

to any Relevant Product;

(d)

the current and future requirements and barriers to entry or expansion in the retail

sale of any Relevant Product;

(e)

the actual or potential entry, expansion, exit, or contraction, of any actual or

potential competitor, including the contemplated or actual effect of such entry,

expansion, exit, or contraction on the Company's sales, pricing, costs, product

offering, or performance; or

(f)

the capacity, product volume, number of retail locations, amount of square

footage, or other factors required to attain any available cost savings or other

efficiencies necessary to compete profitably in the retail sale of Relevant

Products.

Submit all documents prepared by or for, or delivered to, the Company's officers,

directors, department leadership, investors, or owners relating to the Company's

strategies, plans, or budgets for:

(a)

the purchase of any Relevant Product from any Distributor; or

(b)

the sale at retail of any Relevant Product by the Company.

t Submit an electronic spreadsheet identifying each Company distribution center,

warehouse, or storage facility that has received, or has stored for any period of time, any

Relevant Product purchased from a distributor or supplier. For each such facility, provide

the following information:

(a)

the number or any other unique number, code, or name used by the Company to

identify or refer to the facility;

(b)

the dates during which the facility has operated;

(c)

the street address, city, county, state, and zip code of the facility;

(d)

the Company stores supplied or supported by the facility;

(e)

the operating region, metropolitan statistical area, or micropolitan statistical area

served or supported by the facility;

(f)

the total annual volume of Relevant Products, from 2018 until the present, in both

dollar value and equivalent cases, distributed from the facility to each Company

Store supported or served by the facility;

(g)

the annual cost, from 2018 until the present, incurred by transporting Relevant

Products from the facility to each Company store supported or served by the

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facility; and

(h)

15.

16.

the annual cost to operate the facility from 2018 until the present.

Submit all documents relating to the Company's strategies, practices, or policies

regarding its management of inventory of Relevant Products, including the processes or

methods by which the Company:

(a)

decides which Company facility will receive each delivery of Relevant Products;

(b)

tracks the physical location of Relevant Products ordered by the Company while

they remain in the Distributor's possession, custody, or control; or

(c)

tracks the physical location of the Relevant Products in the Company's

possession, custody, or control.

Submit all documents relating to the Company's strategies, practices, or policies

regarding its relationships and interactions with any supplier of a Relevant Product,

including:

(a)

acts by suppliers to promote or market Relevant Products to the Company;

(b)

discounts, rebates, electronic coupons, scanbacks, price reductions, or price

adjustments provided by suppliers related to any Relevant Product;

(c)

communications between the Company and suppliers regarding the Company's

expected demands or orders for any Relevant Product; or

(d)

sale or delivery of any Relevant Product from suppliers to Distributors in

anticipation of, or in response to, orders of such product from the Company.

17.

Submit all documents relating to the allocation of any Relevant Product by Southern, any

supplier, or the Company, including decisions by Southern or any supplier to limit the

volume of any Relevant Product available for purchase by the Company or another

retailer.

18.

Submit one copy of each organizational chart and personnel directory for the U.S.

operations of the Company, including for each of the Company's subsidiaries, facilities,

or divisions involved in the Distribution, marketing, promotion, or sale of any Relevant

Product.

19.

List each employee of the Company with managerial, supervisory, strategic, or decision

making responsibilities for selecting, negotiating Agreements with, purchasing from, or

managing the Company's relationship with any Distributor or any supplier of any

Relevant Product, and for each identify:

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(a)

the specific responsibilities of the employee;

(b)

the dates the employee held such responsibilities for or participated in such

activity;

(c)

the employee's job title(s) during such period; and

(d)

the name of the person to whom the employee reported during such period.

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DEFINITIONS

For the purposes of this CID, the following definitions apply:

D.1.

The term "Company" means Retail Services & Systems, Inc. d/b/a Total Wine & More

and its directors, officers, trustees, employees, attorneys, agents, consultants, and

representatives, its domestic and foreign parents, predecessors, divisions, subsidiaries,

affiliates, partnerships, and joint ventures, and the directors, officers, trustees, employees,

attorneys, agents, consultants, and representatives of its predecessors, divisions, parents,

subsidiaries, affiliates, partnerships, and joint ventures.

D.2.

The term "Agreement" means any oral, written, or implied contract, arrangement,

understanding, or plan, or term thereof, whether formal or informal, between two or more

persons, together with all modifications or amendments thereto.

D.3.

The terms "and" and "or" shall be construed both conjunctively and disjunctively, as

necessary, in order to bring within the scope of any Specification all information that

otherwise might be construed to be outside the scope of the Specification.

D.4.

The term "communication" means any transmittal, exchange, transfer, or dissemination

of information, regardless of the means by which it is accomplished, and includes all

communications, whether written or oral, and all discussions, meetings, telephone

communications, communications via text message, chat program, or social media

application, or email contacts.

D.5.

The term "Data Set" means data held by, or accessible to, the Company in the ordinary

course of business that is provided by the Company to respond to any Specification in

this CID, in the form and with the accompanying information called for in Instruction

I.7(c).

D.6.

The terms "Distribution," "Distribute," and "Distributing" mean:

(a)

the purchase of a Relevant Product from a supplier for distribution or wholesale in

the Relevant Area;

(b)

the purchase of a Relevant Product from a Distributor for sale at retail by a

retailer;

(c)

the provision of distribution, wholesale, or brokerage services to a supplier in

connection with the sale of any Relevant Product in the Relevant Area; or

(d)

any other arrangement to deliver a Relevant Product from a supplier to a retailer,

including any arrangement to move a Relevant Product through the second tier of

the three-tier alcohol distribution system in the United States.

For the avoidance of doubt, "Distribution," "Distribute," and "Distributing" include a

retailer's purchase of a Relevant Product from a Distributor.

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D.7.

The term "Distributor" means any person that Distributes a Relevant Product.

D.8.

The term "documents" means any information, on paper or in electronic format,

including written, recorded, and graphic materials of every kind, in the possession,

custody, or control of the Company. The term "documents" includes, without limitation:

computer files; email messages; audio files; instant messages, including instant messages

sent via intraoffice message or chat programs or via social media applications; text

messages; documents contained in collaborative work environments used to create, edit,

review, approve, store, organize, share, and access documents and information by and

among authorized users, such as Microsoft Sharepoint sites, OneNote, Google Docs,

eRooms, document management systems (e.g., iManage), intranets, web content

management systems ("CMS") (e.g., Drupal), wikis, and biogs; drafts of documents;

metadata and other bibliographic or historical data describing or relating to documents

created, revised, or distributed electronically; copies of documents that are not identical

duplicates of the originals in that person's files; and copies of documents the originals of

which are not in the possession, custody, or control of the Company.

(a)

(b)

Unless otherwise specified, the term "documents" excludes:

architectural plans and engineering blueprints;

11.

documents solely relating to environmental, tax, OSHA, or ERJSA issues;

and

Ill.

relational and enterprise databases, except as required to comply with an

individual Specification.

The term "computer files" includes information stored in, or accessible through,

computer or other information retrieval systems. Thus, the Company should

produce documents that exist in machine-readable form, including documents

stored in personal computers, portable computers, workstations, minicomputers,

mobile devices, mainframes, servers, backup disks and tapes, archive disks and

tapes, and other forms of offline storage, whether on or off Company premises. If

the Company believes that the required search of backup disks and tapes and

archive disks and tapes can be narrowed in any way that is consistent with the

Commission's need for documents and information, you are encouraged to

discuss a possible modification to this Definition with the Commission

representatives identified on the last page of this CID. The Commission

representative will consider modifying this Definition to:

exclude the search and production of files from backup disks and tapes and

archive disks and tapes unless it appears that files are missing from files

that exist in personal computers, portable computers, workstations,

minicomputers, mainframes, and servers searched by the Company;

11.

limit the portion of backup disks and tapes and archive disks and tapes that

needs to be searched and produced to certain key individuals, or certain

time periods or certain Specifications identified by Commission

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representatives; or

HI.

(c)

D.9.

include other proposals consistent with Commission policy and the facts of

the case.

If the Company intends to utilize any de-duplication, near-de-duplication, or

email threading software or services when collecting or reviewing information

that is stored in the Company's computer systems or electronic storage media in

response to this CID, or if the Company's computer systems contain or utilize

such software, the Company must contact Commission representatives to

determine, with the assistance of the appropriate government technical officials,

whether and in what manner the Company may use such software or services

when producing materials in response to this CID.

The terms "each," "every," "any," and "all" mean "each and every."

D.10. The term "order" means any communication from the Company to a Distributor to

facilitate the Company's purchase of a Relevant Product.

D.11. The term "person" includes the Company and means any natural person, corporate

entity, partnership, association, joint venture, government entity, or trust.

D.12. The term "Proposed Agreement" means any Agreement or term thereof that a person

has offered, requested, or otherwise proposed, including any expressions of interest or

intent to enter into an Agreement.

D .13. The term "relating to" means in whole or in part constituting, containing, concerning,

embodying, reflecting, discussing, explaining, describing, analyzing, identifying, stating,

reporting, forecasting, referring to, dealing with, or in any way pertaining to.

D.14. The term "Relevant Area" means any state.

D.15. The term "Relevant Product" means, and information shall be provided separately for

(a) wine Distributed, purchased, or sold at the retail level and (b) spirits Distributed,

purchased, or sold at the retail level. For the avoidance of doubt, the term "Relevant

Product" includes wine and spirits intended for both off-premises and on-premises sales.

D.16. The term "retailer" means any person that sells any Relevant Product at retail, including

on-premises and off-premises sales.

D .1 7. The term "service" means any act, financial or other support, monetary allowance, or

provision of facilities by Southern-other than the mere delivery of any Relevant Product

to the Company's premises-connected with the Company's processing, handling,

marketing, sale, or offering for sale of any Relevant Product, including labor, advice,

allowance, funding, or other assistance with respect to shelf stocking, design of store

schematics or planograms, discounts, rebates, construction of promotional displays,

inventory resets, marketing, warehousing, and inventory availability guarantees.

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D.18. The term "SKU" means a stock keeping unit or other unique code consisting of letters

and numbers used to identify characteristics about a product, including brand, flavor, and

package size. "

D.19. The term "Southern" means Southern Glazer's Wine and Spirits, LLC, and its directors,

officers, trustees, employees, attorneys, agents, consultants, and representatives, parents,

predecessors, divisions, subsidiaries, affiliates, partnerships, and joint ventures, and the

directors, officers, trustees, employees, attorneys, agents, consultants, and representatives

of its parents, predecessors, divisions, subsidiaries, affiliates, partnerships, and joint

ventures.

D.20. The term "state" means any U.S. state or the District of Columbia.

D.21. The term "supplier" means any person that sells or otherwise transfers any Relevant

Product to the second tier of the three-tier alcohol distribution system in the United

States. The term "supplier" includes any person that produces or manufactures Relevant

Products in, or imports Relevant Products into, any Relevant Area.

D.22. The term "Technology Assisted Review" means any process that utilizes a computer

algorithm to limit the number of potentially responsive documents subject to manual

review. A keyword search of documents with no further automated processing is not a

Technology Assisted Review.

D.23. The term "units" refers to quantities in nine-liter cases or nine-liter case equivalents.

D.24. The term "UPC" means Universal Product Code. A UPC is a 12-digit identifier that

includes a number and a barcode. It identifies unique products sold by retailers in the

United States.

D.25. The singular form of a noun or pronoun includes its plural form, and vice versa; and the

present tense of a verb includes the past tense, and vice versa.

D.26. Any word or term that the Company considers vague or insufficiently defined has the

meaning most frequently assigned to it by the Company in the ordinary course of

business.

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INSTRUCTIONS

For purposes of this CID, the following Instructions apply:

1.1.

All references to year refer to calendar year. Unless otherwise specified, each of the

Specifications calls for documents and information dated, created, modified, sent,

received, or in effect from January 1, 2018 to the present. Where information, rather than

documents, is requested, provide it separately for each year; where yearly data is not yet

available, provide data for the calendar year to date. If calendar year information is not

available, supply the Company's fiscal year data indicating the 12-month period covered,

and provide the Company's best estimate of calendar year data.

1.2.

This CID shall be deemed continuing in nature so as to require production of all

documents responsive to any Specification included in this CID produced or obtained by

the Company up to 45 calendar days prior to the date of the Company's full compliance

with this CID.

1.3.

Unless otherwise specified, each Specification calls for documents and information

limited to the United States.

1.4.

Compliance with this CID requires a search of all documents in the possession, custody,

or control of the Company including, without limitation, those documents held by any of

the Company's officers, directors, employees, agents, representatives, or legal counsel,

whether or not such documents are on the premises of the Company. If any person is

unwilling to have his or her files searched, or is unwilling to produce responsive

documents, the Company must provide the Commission with the following information

as to each such person: his or her name, address, telephone number, and relationship to

the Company. In addition to hard copy documents, the search must include all of the

Company's Electronically Stored Information.

1.5.

Do not destroy or dispose of documents responsive to this CID, or any other documents

relating to the subject matter of this CID. The destruction or disposal of such documents

during the pendency of this investigation may constitute a felony in violation of 18

U.S.C. § 1505 and 18 U.S.C. § 1512. The Company shall preserve documents responsive

to this CID created or received after the issuance of this CID until a Commission

representative notifies the Company that the investigation has ended.

1.6.

Do not produce any Sensitive Personally Identifiable Information ("Sensitive PII") or

Sensitive Health Information ("SHI") prior to discussing the information with a

Commission representative. If any document responsive to a particular Specification

contains unresponsive Sensitive PII or SHI, redact the unresponsive Sensitive PII or SHI

prior to producing the document.

The term "Sensitive Personally Identifiable Information" means an individual's Social

Security Number alone; or an individual's name, address, or phone number in

combination with one or more of the following:

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•

date of birth

•

driver's license number or other state identification number, or a foreign country

equivalent

•

passport number

•

financial account number

•

credit or debit card number

The term "Sensitive Health Information" includes medical records and other individually

identifiable health information, whether on paper, in electronic form, or communicated

orally. Sensitive Health Information relates to the past, present, or future physical or

mental health or condition of an individual, the provision of health care to an individual,

or the past, present, or future payment for the provision of health care to an individual.

1.7.

Form of production: the Company shall submit documents as instructed below absent

written consent.

(a)

Except for privileged material, the Company shall produce each responsive

document in its entirety by including all attachments and all pages, regardless of

whether they directly relate to the specified subject matter. The Company shall

submit any appendix, table, or other attachment by either attaching it to the

responsive document or clearly marking it to indicate the responsive document to

which it corresponds. Except for privileged material , the Company will not redact,

mask, cut, expunge edit, or delete any responsive document or portion thereof in

any manner.

(b)

Documents stored in electronic or hard copy formats in the ordinary course of

business shall be submitted in the following electronic format provided that such

copies are true, correct, and complete copies of the original documents:

Submit Microsoft Excel, Access, and PowerPoint files in native format

with extracted text and metadata.

ii.

Submit emails in TIFF (Group IV) format with extracted text and the

following metadata and information:

Metadata/Document

Information

Description

Alternative Custodian

List of custodians where the document has

been removed as a duplicate.

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Metadata/Document

Information

Description

Bates Begin

Beginning document control (or "Bates")

number of the email.

Bates End

Bates number of the last page of the email.

Beg Attach

First Bates number of attachment range.

End Attach

Ending Bates number of attachment range.

Custodian

Name of the person from whom the email

was obtained.

Email BCC

Names of person(s) blind copied on the

email.

Email CC

Names of person(s) copied on the email.

Email Date Received

Date the email was received.

[MM/DD/YYYY]

Email Date Sent

Date the email was sent. [MM/DD/YYYY]

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Metadataillocument

Information

Description

Email From

Names of the person who authored the

email.

Email Message ID

Microsoft Outlook Message ID or similar

value in other message systems.

Email Subject

Subject line of the email.

Email Time Received

Time email was received. [HH:MM:SS

AM/PM]

Email To

Recipients(s) of the email.

Email Time Sent

Time email was sent. [HH:MM:SS

AM/PM]

Page count

Number of pages in record .

File size

Size of document in KB .

File Extension

File extension type (e.g., docx, xlsx).

Folder

File path/folder location of email.

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Metadata/Document

Information

Description

Hash

Identifying value used for deduplication typically SHAI or MD5.

Text Link

relative path to submitted text file.

Example: \TEXT\001\FTC0003090.txt

iii.

Submit email attachments other than those described in subpart (a)(i) in

TIFF (Group IV) format. For all email attachments, provide extracted text

and the following metadata and information as applicable:

Metadata/Document

Information

Description

Alternative Custodian

List of custodians where the document has

been removed as a duplicate.

Bates Begin

Beginning Bates number of the document.

Bates End

Last Bates number of the document.

Beg Attach

First Bates number of attachment range.

End Attach

Ending Bates number of attachment range.

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Metadata/Document

Information

Description

Custodian

Name of person from whom the file was

obtained.

Date Created

Date the file was created. [MM/DD/YYY]

Date Modified

Date the file was last changed and saved.

[MM/DD/YYYY]

Page count

Number of pages in record.

File size

Size of document in KB.

File Extension

File extension type (e.g., docx, xlsx).

Filename with

extension

Name of the original native file with file

extension.

Hash

Identifying value used for deduplication typically SHA! or MD5.

Native Link

relative file path to submitted native or near

native files.

Example: \NATIVES\001 \FTC0003090.xls

Parent ID

Document ID or beginning Bates number of

the parent email.

Text Link

relative path to submitted text file.

Example: \TEXT\001 \FTC0003090.txt

Time Created

Time file was created. [HH:MM:SS

AM/PM]

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Metadata/Document

Information

Time Modified

iv.

Description

Time file was saved. [HH:MM:SS AM/PM]

Submit all other electronic documents, other than those described in

subpart (a)(i), in TIFF (Group IV) format accompanied by extracted text

and the following metadata and information:

Metadata/Document

Information

Description

Alternative Custodian

List of custodians where the document has

been removed as a duplicate.

Bates Begin

Beginning Bates number of the document.

Bates End

Last Bates number of the document.

Beg Attach

First Bates number of attachment range.

End Attach

Ending Bates number of attachment range.

Custodian

Name of the original custodian of the file .

Date Created

Date the file was created. [MM/DD/YYY]

Date Modified

Date the file was last changed and saved.

[MM/DD/YYYY HH:MM:SS AM/PM]

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Metadata/Document

Information

Description

Page count

Number of pages in record.

File size

Size of document in KB .

File Extension

File extension type (e.g., docx, xlsx).

Filename with

extension

Name of the original native file with file

extension.

Hash

Identifying value used for deduplication typically SHAl or MD5 .

Originating Path

File path of the file as it resided in its

original environment.

Production Link

relative path to submitted native or near

native files.

Example: \NATIVES\001 \FTC0003090.xls

Text Link

relative path to submitted text file .

Example: \TEXT\001 \FTC-0003090 .txt

Time Created

Time file was created. [HH:MM:SS

AM/PM]

Time Modified

Time file was saved. [HH:MM:SS AM/PM]

Submit documents stored in hard copy in TIFF (Group IV) format

accomplished by OCR with the following information:

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Metadata/Document

Information

vi.

Description

Bates Begin

Beginning Bates number of the document.

Bates End

Bates number of the last page of the

document.

Custodian

Name of person from whom the file was

obtained.

Submit redacted documents in TIFF (Group IV) format accompanied by

OCR with the metadata and information required by relevant document

type in subparts (a)(i) through (a)(v) above. For example, if the redacted

file was originally an attachment to an email, provide the metadata and

information specified in subpart (a)(iii) above. Additionally, please provide

a basis for each privilege claim as detailed in Instruction I.l O.

(c)

Submit data compilations, Data Sets, and specifications marked with a dagger (t)

in electronic format, specifically Microsoft Excel spreadsheets or delimited text

formats, with all underlying data un-redacted and all underlying formulas and

algorithms intact. Submit data separately from document productions. AJI terms,

allocations, calculat ions, and methods of calculation must be clearly explained

and defined; costs must be disaggregated to the lowest level of detail possible and

fully allocated. Further, for each Data Set, identify the specific Company

databases from which these data were obtained and provide (i) a list of field

names and a definition for each field contained in the Data Set; (ii) the meaning of

each code that appears as a field value in the Data Set; (iii) the primary key in the

Data Set or table that defines a unique observation; and (iv) any programming

code used to calculate any of the data provided.

(d)

Produce electronic file and TIFF submissions as follows:

For productions over 10 gigabytes, use hard disk drives, formatted in

Microsoft Windows-compatible, uncompressed data in USB 2.0 or 3.0

external enclosure.

ii.

For productions under IO gigabytes, CD-ROM (CD-R, CD-RW) optical

disks and DVD-ROM (DVD+R, DVD+RW) optical disks for Windows21

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compatible personal computers, and USB 2.0 Flash Drives are acceptable

storage formats.

I.8.

All documents produced in electronic format shall be scanned for and free

of viruses prior to submission. The Commission will return any infected

media for replacement, which may affect the timing of the Company's

compliance with this CID.

1v.

Encryption of productions using NIST FIPS-Compliant cryptographic

hardware or software modules, with passwords sent under separate cover,

is strongly encouraged.

(e)

Each production shall be submitted with a transmittal letter that includes the FTC

matter number; production volume name; encryption method/software used; list

of custodians and document identification number range for each; total number of

documents; and a list of load file fields in the order in which they are organized in

the load file.

(f)

Ifthe Company intends to utilize any de-duplication or email threading software

or services when collecting or reviewing information that is stored in the

Company's computer systems or electronic storage media, or if the Company's

computer systems contain or utilize such software, the Company must contact a

Commission representative to determine, with the assistance of the appropriate

government technical officials, whether and in what manner the Company may

use such software or services when producing materials in response to this CID.

Before using software or technology (including search terms email threading,

Technology Assisted Review, deduplication, or similar technologies) to identify or

eliminate documents data, or information potent ially responsive to this CID, the

Company must submit a written description of such software or technology and any

related processes and workflows used to conduct any part of its search. In addition:

(a)

if you use Technology Assisted Review to identify documents and information

responsive to t11is CID or to exclude documents and information from further review,

describe your collection and review methodology, including:

i. how any software is used to identify responsive documents or exclude

nonresponsive documents;

ii. the process to identify and validate any seed set documents, if applicable;

m. the process to determine and validate accuracy of the automatic

determinations of responsiveness and nonresponsiveness; and

1v. the collection and review process for foreign language documents,

whether reviewed manually or by some technology-assisted method;

(b)

if you use search terms to identify documents and information responsive to the CID

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or to exclude documents or information from further review, then for each custodian,

search location, or document population provide:

1.9.

(i)

a list of proposed terms;

(ii)

a tally of all the terms that appear in the collection and the frequency of

each term;

(iii)

a list of stop words and operators for the platform being used; and

(iv)

a glossary of industry and company terminology;

(c)

provide recall, precision, and confidence-level statistics (or an equivalent);

(d)

provide access to randomized, statistically-significant samples of non-privileged

documents excluded from review or production by use of keyword search terms,

Technology Assisted Review software, or any other means;

(e)

identify the person(s) able to testify on your behalf about information known or

reasonably available to the organization relating to your use of software or technology

in responding to this CID.

All documents responsive to this CID:

(a)

shall be produced in complete form, un-redacted unless privileged, and in the

order in which they appear in the Company s files;

(b)

shall be marked on each page with corporate identification and consecutive

document control numbers when produced in TIFF format (e.g., ABC-00000001);

(c)

if written in a language other than English, shall be translated into English, with

the English translation attached to the foreign language document;

(d)

shall be produced in color;

(e)

shall be accompanied by an index that identifies: (i) the name of each person from

whom responsive documents are submitted; and (ii) the corresponding

consecutive document control number(s) used to identify that person s

documents. If the index exists as a computer file(s), provide the index both as a

printed hard copy and in machine-readable form (provided that, Commission

representatives determine prior to submission that the machine-readable form

would be in a format that allows the agency to use the computer files). The

Commission representative will provide a sample index upon request" and

(f)

shall be accompanied by an affidavit of an officer of the Company stating that the

copies are true correct, and complete copies of the original documents.

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1.10.

If any documents or parts of documents are withheld from production based on a claim of

privilege, provide a statement of the claim of privilege and all facts relied upon in support

thereof, in the form of a log that includes, in separate fields, a privilege identification

number; beginning and ending document control numbers; parent document control

numbers; attachments document control numbers; family range; number of pages; all

authors; all addressees; all blind copy recipients; all other recipients; all custodians; date

of the document; the title or subject line; an indication of whether it is redacted; the basis

for the privilege claim (e.g., attorney-client privilege), including the underlying privilege

claim if subject to a joint-defense or common-interest agreement; and a description of the

document's subject matter. Attachments to a document should be identified as such and

entered separately on the log. For each author, addressee, and recipient, state the person's

full name, title, and employer or firm, and denote all attorneys with an asterisk. The

description of the subject matter shall describe the nature of each document in a manner

that, though not revealing information itself privileged provides sufficiently detailed

information to enable Commission staff, the Commission, or a court to assess the

applicability of the privilege claimed. For each document or part of a document withheld

under a claim that it constitutes or contains attorney work product, also state whether the

Company asserts that the document was prepared in anticipation of litigation or for trial

and if so identify the anticipated litigation or trial upon which the assertion is based.

Submit all non-privileged portions of any responsive document (including non-privileged

or redactable attachments) for which a claim of privilege is asserted (except where the

only non-privileged information has already been produced in response to this

Instruction), noting where redactions in the document have been made. Documents

authored by outside lawyers representing the Company that were not directly or indirectly

furnished to the Company or any third party, such as internal law firm memoranda, may

be omitted from the log. Provide the log in Microsoft Excel readable format.

1.11.

If the Company is unable to answer any question fully, supply such information and data

as are available. Explain why the answer is incomplete, the efforts made by the Company

to obtain the information and data, and the source from which the complete answer may

be obtained. If books and records that provide accurate answers are not available, enter

best estimates and describe how the estimates were derived, including the sources or

bases of such estimates. Estimated data should be followed by the notation "est." If there

is no reasonable way for the Company to make an estimate, provide an explanation.

1.12.

If documents responsive to a particular Specification no longer exist for reasons other

than the ordinary course of business or the implementation of the Company's document

retention policy, but the Company has reason to believe have been in existence, state the

circumstances under which they were lost or destroyed, describe the documents to the

fullest extent possible, state the Specification(s) to which they are responsive, and

identify the persons having knowledge of the content of such documents.

I. 13.

In order for the Company's response to this CID to be complete, the attached certification

form must be executed by the Company official supervising compliance with this CID

and submitted along with the responsive materials.

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1.14.

Responses to Specification 11, and any other responses that include PII, of this Request

shall be produced to the Bureau of Economics using the Commission's secure FTP. For

instructions on using this FTP, please contact the BE Data Support Center by phone at

(202) 326-3481 or (202) 326-2147 or by email at BE-DataMgt@ftc.gov. If using the FTP

is not feasible, the Company's responses to this Request shall be delivered, between 8:30

a.m. and 5:00 p.m., to the following address: BE Data Support Center, Attn: Kevin

Richardson and Constance Herasingh, Federal Trade Commission, 600 Pennsylvania

Avenue NW, Room H-285, Washington, DC 20580. Please notify the BE Data Support

Center in advance of each such delivery, and provide a confirmation or tracking number

for each delivery.

I.15.

Any questions you have relating to the scope or meaning of anything in this CID or

suggestions for possible modifications thereto should be directed to Altumash Mufti at

202-326-2157, amufti@ftc.gov. To obtain instructions for your delivery of responsive

documents and other information, please contact Rebecca Hyman at (202) 326-3563,

rhyman@ftc.gov.

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CERTIFICATION OF COMPLIANCE

Pursuant to 28 U.S.C. § 1746

I, _ _ _ __ _ __ _ _ __, certify the following with respect to the Federal Trade

Commission's ("FTC") Civil Investigative Demand issued to[·] (FTC File No. 211-0155) (the

"CID"):

1. The Company has identified all documents, information, and/or tangible things in the

Company's possession, custody, or control responsive to the CID and either:

a. provided such responsive information to the FTC; or

b. for any such responsive information not provided, given the FTC written

objections setting forth the basis for withholding the responsive information.

2. I verify that the responses to the CID are complete and true and correct to my knowledge.

I certify under penalty of perjury that the foregoing is true and correct.

Date:

--- ----- - - -

Signature

Printed Name

Title

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UNITED STATES OF AMERICA

BEFORE THE FEDERAL TRADE COMMISSION

COMMISSIONERS:

Lina M. Khan, Chair

Noah Joshua Phillips

Rohit Chopra

Rebecca Kelly Slaughter

Christine S. Wilson

RESOLUTION DIRECTING USE OF COMPULSORY PROCESS

REGARDING ACTS OR PRACTICES AFFECTING

LABOR OR SMALL BUSINESS OPERATORS

File No. P210100

Nature and Scope of Investigation:

To investigate whether any persons, partnerships, corporations, or others have

engaged or are engaging in unfair, deceptive, anticompetitive, collusive, coercive, predatory,

exploitative, or exclusionary acts or practices in, or affecting commerce targeting current or

prospective workers or small business operators, in violation of Section 5 of the Federal

Trade Commission Act, 15 U.S.C. § 45, as amended, or any statutes or rules enforced by the

Commission; and to determine the appropriate action or remedy, including whether monetary

relief would be in the public interest.

The Federal Trade Commission hereby resolves and directs that any and all

compulsory processes available to it, including subpoenas and orders to file special reports,

be used in connection with any inquiry withjn the nature and scope of this resolution for a

period not to exceed ten years. The expiration of this ten-year period shall not limit or

terminate the investigation or the legal effect of any compulsory process issued during the

ten-year period. The Federal Trade Commission specifically authorizes the filing or

continuation of actions to enforce any such compulsory process after the expiration of the

ten-year period.

Authority to Conduct Investigation:

Sections 6, 9, 10, and 20 of the Federal Trade Commission Act, 15 U.S.C. §§ 46, 49,

50, and 57b-l, as amended; and FTC Procedures and Rules of Practice, 16 C.F.R. § 1.1 et seq.,

and supplements thereto.

By direction of the Commission.

Issued: July 1, 2021

Expires: July 1, 2031

April J. Tabor

Secretary

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APPENDIX B

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Gibson, Dunn & Crutcher LLP

1050 Connecticut Avenue, N.W.

Washington, D.C. 20036-5306

Tel 202.955.8500

gibsondunn.com

April 3, 2023

Stephen Weissman

Direct: +1 202.955.8678

Fax: +1 202.530.9685

SWeissman@gibsondunn.com

Altumash Mufti

Federal Trade Commission

600 Pennsylvania Avenue NW

Washington, DC 20580

(202) 445-7917

amufti@ftc.gov

RE:

Civil Investigation Demand, FTC File No. 211-0155

Dear Al:

On behalf of Retail Services & Systems, Inc., d/b/a Total Wine & More (“TWM”), I

hereby provide via secure file transfer documents bearing Bates numbers TWM-CID-000001

through TWM-CID-0000017. TWM hereby designates all documents in this production as

“HIGHLY CONFIDENTIAL – TRADE SECRET INFORMATION” and respectfully

requests that the Federal Trade Commission (“FTC”) treat such documents accordingly and

as exempt from any FOIA requests, in accordance with the FTC Act and all applicable rules

and regulations.

During our March 15, 2023 meet and confer, the FTC identified Specification Nos. 2,

10, 18, and 19 as “priorities” on which TWM should focus in the short term. During our

March 22, 2023 meet and confer, we explained that TWM would focus on those priority

Specifications and would endeavor to diligently respond to them in the coming weeks. In

Part I below, we reaffirm our prior oral objection to the return date specified in the CID. In

Part II below, TWM provides objections and responses to the FTC’s priority Specifications.

TWM’s responses submitted with this letter include the production of the sample data sets

that your colleague, Wells Harrell, requested on March 22 as an interim step to assist Bureau

of Economics staff evaluate staff’s data needs from TWM. In Part III below, TWM provides

its preliminary comments and objections to the non-priority Specifications. The parties have

not yet had any substantive discussions about these non-priority Specifications, and TWM is

hopeful that the information in Part II will lead to discussions in the future.

TWM remains very concerned about the entirety of the scope of the CID, including

the substantial burdens it would inflict on its business operations and the need for certain

highly proprietary TWM information requested. Our sincere hope, however, is that, through

this letter and our upcoming meeting on April 4, Staff and TWM can make substantial

progress in reaching a resolution of TWM’s concerns about the CID consistent with the

Commission’s need for relevant information regarding its investigation of Southern Glazer’s

Wine and Spirits, LLC (“SG”). As reflected in the FTC’s letter dated March 24, 2023,

TWM’s current deadline to file a petition to limit or quash the CID is April 7, 2023. We are

Abu Dhabi  Beijing  Brussels  Century City  Dallas  Denver  Dubai  Frankfurt  Hong Kong  Houston  London  Los Angeles

Munich  New York  Orange County  Palo Alto  Paris  San Francisco  Singapore  Washington, D.C.

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prepared to make such a filing, but again, our strong preference is to work with you in good

faith to reach a global resolution of the CID’s requirements as to TWM.

Now that TWM has addressed in good faith the FTC’s priority Specifications and

offered its initial positions on the non-priority Specifications, we respectfully request that,

pursuant to 16 CFR § 2.10(a)(5), the FTC extend TWM’s deadline to file its petition to limit

or quash to May 5, 2023. This modest extension should provide the FTC time to evaluate the

information responsive to the priority Specifications and the parties sufficient time and

meaningful opportunity to discuss the scope and breadth of the remaining Specifications,

including non-priority Specifications, so we can both avoid the distraction and delays

associated with motions practice. As you have repeatedly stated, TWM is a non-party, nontarget of the Staff’s investigation. Consequently, we hope that you will work cooperatively

with us to get you the information you reasonably need from TWM while remaining

sensitive to the substantial burdens and distractions the CID would inflict on our client.

We look forward to discussing this letter and accompanying document production

during our meet and confer scheduled for April 4, 2023.

* * * *

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I. OBJECTIONS TO RESPONSE DATE IN CID, INCLUDING AS MINIMALLY

MODIFIED

Section 2.7(b) of the FTC Rules of Practice states, in relevant part, that CIDs for the

production of documentary material, including ESI, “shall . . . prescribe a return date

providing a reasonable period of time within which the material so demanded may be

assembled and made available for inspection and copying or reproduction.” (Emphasis

supplied). The CID, which was served on February 27, 2023, and had a return date of March

25, 2023 (since extended to April 7, 2023), contains nineteen different specifications with

numerous sub-parts, covering a period of more than five years. TWM, therefore, objects to

the return date (as minimally modified) as unreasonable on its face and in violation of Rule

2.7(b). TWM, nevertheless, will continue to work in good faith with the Staff to understand

the FTC’s needs and work to appropriately narrow the scope of certain Specifications, which

will facilitate the production of information on a reasonable timeframe contemplated by Rule

2.7(b).

II. PRIORITY SPECIFICATIONS

A. Objections to Definitions

Definition D.7

The term “Distributor” means any person that Distributes a Relevant Product.

TWM objects to this term as overbroad. As we explained during prior telephonic

meet and confers, any information related to TWM’s purchase and sale of wines or spirits not

distributed by SG is irrelevant, and production of such information would significantly

exacerbate the unduly burdensome nature of the CID. More details regarding such burdens

are described below in the discussion of the Specifications. The CID is clear that the FTC’s

investigation is focused only on SG. See CID pg. 1. Therefore, the term “Distributor”

should be limited to SG. Defining such a term in a manner that includes irrelevant

information about other distributors or the wine and spirit products they distribute for

suppliers is overbroad and would unnecessarily add significant burdens to TWM that are

disproportionate to any conceivable relevance.

Here, the need to limit the definition is especially warranted because TWM is a thirdparty witness, not a subject or target of FTC’s investigation. Federal courts provide third

parties protection from overbroad and burdensome discovery during civil litigation. E.g.,

FED. R. CIV. P. 45(d)(1) (“A party or attorney responsible for issuing and serving a subpoena

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must take reasonable steps to avoid imposing undue burden or expense on a person subject to

the subpoena.”). If the FTC needs information or data related to other distributors, it would

be more appropriate and efficient to obtain that information from the distributors directly.

Thus, TWM proposes to limit the definition of “Distributor” to SG unless expressly

stated differently in its responses to the Specifications set forth below. Moreover, we are

available to meet and confer with you to discuss certain requests for which you believe you

need information from TWM about distributors other than SG to address our objections

above. We request that you come prepared on April 4 to do so.

Definition D.15

The term “Relevant Product” means, and information shall be provided separately for

(a) wine Distributed, purchased, or sold at the retail level and (b) spirits Distributed,

purchased, or sold at the retail level. For the avoidance of doubt, the term “Relevant

Product” includes wine and spirits intended for both off-premises and on-premises

sales.

TWM objects to this term as overbroad and unduly burdensome, as described in more

detail below. TWM incorporates its objections to Definition D.7 above. TWM proposes to

limit the definition of “Relevant Product” to only wines or spirits distributed by SG unless

expressly stated differently in its responses to the Specifications set forth below. Moreover,

we are available to meet and confer with you to discuss certain requests for which you

believe you need information from TWM about products not distributed by SG to address

our objections above. We request that you come prepared on April 4 to do so.

Instruction 1.1

All references to year refer to calendar year. Unless otherwise specified, each of the

Specifications calls for documents and information dated, created, modified, sent,

received, or in effect from January 1, 2018 to the present. Where information, rather

than documents, is requested, provide it separately for each year; where yearly data is

not yet available, provide data for the calendar year to date. If calendar year

information is not available, supply the Company’s fiscal year data indicating the 12month period covered, and provide the Company’s best estimate of calendar year data.

TWM objects to the five-plus year date range (January 1, 2018, to present) for

documents and other information requested in the CID. This 64-month date range is overly

broad, unduly burdensome to comply with, and disproportionate to the needs of the

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investigation, especially given that TWM is a non-party to the investigation. Requiring

TWM to search for, collect, review, and then assemble for production 64 months’ worth of

materials would inflict hundreds of thousands of dollars in costs and distraction on TWM’s

business operations and divert TMW’s scarce IT and other resources from time-sensitive

business projects that are mid-stream and for which TWM already has committed substantial

investment dollars. TWM proposes to discuss appropriate time periods for each

specification, to which TWM will respond during our April 4, 2023, meeting.

B. Objections and Responses to Priority Specifications

Specification No. 2

Submit an electronic spreadsheet listing each Company store in the Relevant Area that

sells or has sold any Relevant Product at any time from January 1, 2018 to present. For

each such Company store, provide the following information:

(a) the store number and any other unique number, code, value, or name used

by the Company to identify or refer to the store;

(b) the street address, city, county, state, and zip code;

(d) the operating region, metropolitan statistical area, or micropolitan statistical

area served;

(e) the primary trade or draw areas (i.e., the smallest geographic area closest to

the store where approximately 50% and 85% of the store's customers

reside);

(f) annual sales, by units and dollars, of all spirits products;

(g) annual sales, by units and dollars, of all wine products;

(h) the date originally opened, or projected to open, and the date closed, or

expected to close, as applicable;

(i) the number of distinct Relevant Products, by SKUs, UPCs, or unique

products if SKU information is not available, the store sells or has sold

annually, broken out separately by spirits and wines and by year;

(j) the name, address, and contact information for any Distributor that sells or

has sold any Relevant Product to the store;

(k) the name and address of any Company distribution center, warehouse,

sortation center, or storage facility that services or has serviced the store, or

that receives or holds inventory of any Relevant Product for any period of

time for the store;

(l) the name and address of all competing off-premise retail stores engaged in

the sale of any Relevant Product; and

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(m) variables or metrics used in the ordinary course of business to evaluate the

store's Competitive position, including market share.

TWM incorporates its objections to the terms “Relevant Product” and “Distributor,”

as set forth above.

The document produced with Bates number TWM-CID-0000001 - TWM-CID0000016 contains information responsive to subparts (a), (b), (d), and (h) and reflects the

store numbers, addresses, operating region, and open/closed date for each store in the states

where TWM purchases wines or spirits from SG or its affiliates. Below is a list of each state

in which TWM sells wines and spirits that it purchased from SG or its affiliates, which is

information sought by subpart (j):

1. Arizona

2. California

3. Colorado

4. Delaware

5. Florida

6. Illinois

7. Indiana

8. Kentucky

9. Louisiana

10. Maryland

11. Michigan

12. Minnesota

13. Missouri

14. New Mexico

15. Nevada

16. New York

17. South Carolina

18. Texas

19. Washington1

Subject to reaching an agreed reasonable extension and resolution of the CID with

staff, TWM proposes to undertake the work necessary to assemble and produce data that

TWM operates stores in 8 states where it does not buy wines or spirits from SG. Those

states are Connecticut, Georgia, Massachusetts, North Carolina, New Jersey, Tennessee,

Virginia, and Wisconsin.

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reflects TWM’s marketing assessment of the geographic areas where 50% and 85% of the

customers for each store within the states where TWM purchases wines or spirits from SG or

its affiliates. Such data will be responsive to subpart (e).

For subpart (c), TWM does not have “departments” within its stores that sell or have

sold wines or spirits distributed by SG. Products within TWM’s stores are categorized by

type, such as “wine” or “spirit,” for organizational purposes, but structural departments for

purposes of sales do not exist.

Subparts (f), (g), and (i) call for store-level sales data that is reflected in other

Specifications, including Specification No. 10, but limited to SG. Therefore, TWM refers

the FTC to its responses to those Specifications.

For subpart (k), TWM does not own or operate any “distribution centers” or

“sortation centers” as we understand those terms. Recently, however, TMW began to utilize

warehouses in two states (i.e., California and Florida) to hold alcohol inventory that could

not be received in the stores due to insufficient storage capacity. The warehouses are used to

replenish inventories in the California or Florida stores when needed. With this exception,

TWM’s inventory is held in the stores where it sells the products. Further, where permitted

by state law, TWM will occasionally rebalance inventories between stores to meet demand

by transferring inventory from one store to another in the same state.

For subpart (l), TWM does not maintain comprehensive data sets that contain the

requested information about “all competing off-premise retail stores.” TWM can and has

identified competing retailers through various channels, such as the internet, advertisements,

physical locations, etc., but it does not maintain such comprehensive data, nor can it create

such data sets for the FTC in response to this Specification.

For subpart (m), TWM does not maintain business variables and metrics regarding

competitive positions or market shares on a store-by-store basis.

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Gibson, Dunn & Crutcher LLP

1050 Connecticut Avenue, N.W.

Washington, D.C. 20036-5306

Tel 202.955.8500

gibsondunn.com

Specification No. 10

Stephen Weissman

Direct: +1 202.955.8678

Fax: +1 202.530.9685

SWeissman@gibsondunn.com

Submit a Data Set or electronic spreadsheet reporting the Company’s sales of Relevant

Products by Company store, by SKU/UPC/item number, by week, and from January 1,

2018 to present, including:

(a) a description of the product (e.g., brand, flavor, bottle size, package type);

(b) gross sales in units and dollars;

reductions, or other adjustments, listed separately by type;

(d) net sales in units and dollars, after accounting for all discounts, rebates,

promotions, coupons, scanbacks, returns, price reductions, or other

adjustments;

(e) the cost of goods sold;

(f) any adjustments (e.g., slotting allowances, merchandising allowances, marketing

development funds, volume discounts) to cost of goods sold (specified and listed

separately); and

(g) the advertised sales price of the product.

TWM incorporates its objections to the terms “Relevant Product” and “Distributor,”

as set forth above.

TWM objects to this specification as overly broad and because compliance would

inflict unreasonable burdens on TWM. As we described on our March 22 call, during the

relevant time period, TWM has purchased over 21,000 different wine or spirit products from

SG alone. Weekly sales data for just those products over the 272 weeks since January 1,

2018––which is what Specification No. 10 seeks––will result in approximately 5.7 million

transaction-level entries, each of which then requires additional data points for product

description, dollars sold, units sold, costs, etc. Simply put, tens of millions of datapoints are

implicated for Specification No. 10 alone. And then once the data is queried and pulled

using expensive cloud-computing software, TWM then must redeploy substantial employee

resources to review and validate such data prior to production to the FTC. TWM is unable to

produce data that it has not validated as accurate and reliable. This pulling and validation

process is a cross-functional effort involving numerous employees critical to other

preexisting and ongoing business objectives. TWM estimates that undertaking such an

exercise for Specification No. 10 will cost hundreds of thousands of dollars in lost time and

productivity at a time when TWM also needs those computing and personnel resources to

support the immediate demands of its business. Such burdens exist even when limiting the

definitions of “Relevant Product” and “Distributor” to SG. Expanding these burdens to

include every wine or spirit that TWM has purchased from every distributor over more than

five years would be grossly overbroad, unduly burdensome, and disproportionate to the

needs of the investigation.

Abu Dhabi  Beijing  Brussels  Century City  Dallas  Denver  Dubai  Frankfurt  Hong Kong  Houston  London  Los Angeles

Munich  New York  Orange County  Palo Alto  Paris  San Francisco  Singapore  Washington, D.C.

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In response to Mr. Harrell’s request on March 22, 2023, TWM hereby produces as a

sample sales data for the top-five selling wines and top-five selling spirits, as determined by

Nielson Global Solutions, that are predominately distributed by SG (the “Nielson Sample”).

With minor variation, the data provided on these ten products represent purchases from SG.2

These ten products account for a substantial portion of the national sales at all retail channels.

For example, the five wines in the Nielson Sample are as follows:

1. Josh Cabernet Sauvignon California State, 750ml

2. Kendall-Jackson Vntrs RSV Chardonnay California State, 750ml

3. Meiomi Pinot Noir Monterey County, 750ml

4. Kim Crawford Sauvignon Blanc New Zealand, 750ml

5. Josh Chardonnay North Coast, 750ml

In the last 52 weeks ending February 4, 2023, these five wines accounted for $765 million in

sales, according to the latest publicly available data from Nielson.

The five spirits are as follows:

1. Tito’s Vodka 80 Proof, 1.75ml glass bottle

2. Tito’s Vodka 80 Proof, 750ml glass bottle

3. Patron Silver Tequila 80 Proof, 750ml glass bottle

4. Jameson Reg Irish Whiskey 80 Proof, 750ml glass bottle

5. Jameson Reg Irish Whiskey 80 Proof, 1.75ml glass bottle

In most states where TWM operates, SG is the exclusive distributor for these 10 products.

In a few states, we believe that SG, while the predominant distributor, is not exclusive. We

used a Nielsen Sample because quantifying variations by distributors is exceedingly difficult,

not performed in the ordinary course of business, and such an exercise would require a

product-by-product and state-by-state inquiry.

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In the last 52 weeks ending February 4, 2023, these five spirits accounted for $1.28 billion in

sales, according to the latest publicly available data from Nielson.

The document produced with Bates number TWM-CID-0000017 contains data for

retail sales of the Nielson Sample in the states where TWM purchases wines or spirits from

SG or its affiliates. The data is responsive to subparts (a), (b), (d), (e), and (g). The

following chart describes the column headers in TWM-CID-0000017:

Column Header

Description

FISCAL_YEAR

The fiscal year ranging from 2018 to 2023

FISCAL_WEEK

The fiscal week ranging from 1 to 52

STORE_NUM

The unique number that TWM assigns to each store

STORE_NAME

The unique name that TWM assigns to each store

STATE_ABBR

The state where the store is located

ITEM_CODE

The unique identifying number that TWM assigns to each

product

ITEM_NAME

The product name

UPC

The UPC

CLASS

The category of product

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SIZE

The volume of each unit

COGS_CS

The average weekly cost of goods sold, by case, for the fiscal

week, which is calculated as follows: AVG((Cost *

Units_Per_Case))

UCOGS

The average weekly cost of goods sold, by unit, for the fiscal

week, which is calculated as follows: AVG(Cost)

AD_PRICE

The average weekly posted price for the fiscal week:

AVG(Orig_Unit_Price)

TOT_UNITS_SOLD

The total number of units sold during the fiscal week, which is

calculated as follows: SUM(Quantity)

TOT_UCOGS

The total weekly cost of goods sold, by unit, for the fiscal

week, which is calculated as follows: SUM(Cost)

GROSS_SALES

The total sales for the fiscal week, which is calculated as

follows: SUM(Orig_Unit_Price * Quantity)

NET_SALES

The total sales for the fiscal week, less returns and

adjustments, which is calculated as follows:

SUM(Sales_Dollars)

Subpart (c) is an immensely burdensome and difficult request. While the terms used

in subpart (c) are somewhat imprecise––e.g., TWM does not maintain unique data called

“promotions”––the type of data sought by subpart (c) is not available in the main system that

TWM has used for other subparts discussed above. Based on a preliminary investigation,

TWM is uncertain whether historical data reflecting various adjustments to either laid-in-cost

from the wholesaler (e.g., single-purchase quantity discounts or cumulative quantity

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discounts based upon purchases that may occur over many months) or adjustments to retail

sales dollars and margin (e.g., advertised “limited time specials,” TWM or manufacturer

coupons), among others, is even available today from other business records or if it can be

tied to specific item transactions for the last 272 weeks, as the FTC requested. To be clear,

the total amount of adjustments is reflected in column Q’s “NET_SALES” (see TWM-CID0000017), but identifying each type of adjustment as required by subpart (c) (if that’s even

possible) would be a very tedious and costly undertaking for any third-party witness to have

to undertake and would far outweighed any probative value it may have on the FTC’s

investigation of SG.

Given our intentional focus on other areas, we are willing to continue to investigate

whether and how such data can be obtained from other records and/or systems and tied to

weekly sales in the manner requested by the FTC, and the likely cost of any such

effort. Subject to reaching a reasonable extension and resolution of the CID with Staff,

TWM is willing to continue its investigation of the availability of data necessary to respond

to subpart (c), and if feasible, it will separately produce a dataset that contains certain data

sought by subpart (c) along with, if necessary, an explanation of the data. It would be helpful

if the FTC could identify the data within subpart (c) that it considers a priority, which would

allow TWM to focus its efforts there. For example, if the FTC is primarily interested in data

on coupons, TWM can prioritize its collection, verification, and production of such data. If

the FTC is not interested in “returns” because such data is an adjustment to inventory and not

price (unlike the other components of subpart (c)), then TWM can redirect its efforts to more

important data.

Subpart (f) seeks data that is not reflected in the retail sales data that TWM maintains

in the ordinary course of business. As explained in Part III below, TWM is willing to

produce data related to its purchases from SG. See Specification No. 7 below. Data

reflecting returns and adjustments are reflected in the “NET_SALES” data point in TWMCID-0000017.

TWM is willing to consider expanding the size of the Nielson Sample to more than

ten products, but doing so is extremely burdensome and time-consuming. For example,

TWM-CID-0000017, by itself, contains over 442,000 rows of data and 17 columns. That

equates to over 7.5 million data points that TWM had to validate prior to production. This

produced data set consumed nearly a week of time from a cross-functional team comprised

of numerous employees who set aside business-critical efforts to assist with this project.

Extending the Nielson Sample to the top 100 or top 300 selling wines or spirits would

obviously increase the burden by orders of magnitude. However, if the FTC is willing to

identify a narrow set of wine or spirit products for additional data pulls, TWM would

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consider doing so in the spirit of cooperation and as part of a broader resolution of TWM’s

objections to the CID.

Specifications No. 18 & 19

Submit one copy of each organizational chart and personnel directory for the U.S.

operations of the Company, including for each of the Company's subsidiaries, facilities,

or divisions involved in the Distribution, marketing, promotion, or sale of any Relevant

Product.

List each employee of the Company with managerial, supervisory, strategic, or

decisionmaking responsibilities for selecting, negotiating Agreements with, purchasing

from, or managing the Company’s relationship with any Distributor or any supplier of

any Relevant Product, and for each identify:

(a) the specific responsibilities of the employee;

(b) the dates the employee held such responsibilities for or participated in such

activity;

(d) the name of the person to whom the employee reported during such period.

TWM incorporates its objections to the terms “Relevant Product” and “Distributor,”

as set forth above.

During the March 15, 2023, meet and confer, we agreed with FTC staff to prioritize

these Specifications to cover departments, managerial employees, and decisionmakers that

interact with SG. The relevant departments are Marketing Department, Supply Chain

Department, and Market Management Department. These departments, either individually

or collectively, provide services to TWM’s separate but affiliated store operating entities in

the areas of purchasing, marketing, promotion, or sale of SG’s wine and spirit products.

The below table contains information sought by Specification 19.3

During the March 15, 2023 meet and confer, we discussed the possibility of identifying

certain custodians who interact with SG on a regular basis, should the FTC decide to request

documents from those custodians. This process of identifying custodians is acceptable to

TWM, subject to TWM’s right to object to any specific requests for further documents based

upon scope, burden, or relevance. We are prepared to consider such requests and propose

custodians once we have reached agreement with Staff on a narrowing of the CID and

therefore understanding the scope of TWM’s production, as doing so now would be

premature and inefficient. The same is true with regard to proposed search terms with

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Name

Kevin

Tyldesley

Title

Dates in Role

Senior Director,

Market Management

Original Hire Date

08/31/2015

Direct Report

Thomas Trone

Time in Position

2 year(s), 0

month(s), 7 day(s)

Geoffrey

Sherren

Senior Director,

Market Management

Original Hire Date

04/16/2012

Thomas Trone

Time in Position

1 year(s), 11

month(s), 3 day(s)

Angela Weber

SVP Merchandising

Original Hire Date:

10/2/2006

Troy Rice

Travis Smith

SVP Merchandising

Original Hire Date:

3/1/2003

Troy Rice

respect to searches of any electronic files. Depending on TWM’s production of materials,

TWM may not need to use word searches to identify potentially responsive materials as part

of a reasonably diligent search because it can identify, collect, and review such materials

through approaches other than electronic word searches.

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Name

Paul Piho

Title

Dates in Role

VP New Store Group

Original Hire Date

01/01/1994

Direct Report

Chris Galletto

Time in Position

16 year(s), 7

month(s), 20 day(s)

Jen Burke

Senior Manager,

Market Management

Original Hire Date

01/03/2012

Geoffrey Sherren

Time in Position

1 year(s), 7

month(s), 27 day(s)

Nichole Miller Senior Manager,

Market Management

Original Hire Date

02/13/2012

Geoffrey Sherren

Time in Position

1 year(s), 7

month(s), 27 day(s)

Leonard

Giraldo

Senior Manager,

Market Management

Original Hire Date

08/02/2010

Time in Position

1 year(s), 7

month(s), 27 day(s)

Kevin Tyldesley

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Name

Nina Arend

Title

Manager, Market

Management

Dates in Role

Original Hire Date

02/03/2020

Direct Report

Kevin Tyldesley

Time in Position

1 year(s), 5

month(s), 18 day(s)

Nick Fraijo

Manager, Market

Management

Original Hire Date

07/06/2005

Jen Burke

Time in Position

0 year(s), 9

month(s), 23 day(s)

Rob Brosnan

Manager, Market

Management

Original Hire Date

03/05/2012

Kevin Tyldesley

Time in Position

1 year(s), 7

month(s), 27 day(s)

Meghan

Capasso

Manager, Market

Management

Original Hire Date

10/17/2016

Time in Position

1 year(s), 7

month(s), 27 day(s)

Geoffrey Sherren

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Name

Heather

Kitson

Title

Manager, Market

Management

Dates in Role

Original Hire Date

09/08/2020

Direct Report

Nichole Miller

Time in Position

0 year(s), 7

month(s), 28 day(s)

Erin Robertie

Manager, Market

Management

Original Hire Date

02/11/2019

Nichole Miller

Time in Position

1 year(s), 5

month(s), 18 day(s)

Bill Barnhart

Manager, Market

Management

Original Hire Date

02/17/1998

Geoffrey Sherren

Time in Position

1 year(s), 9

month(s), 8 day(s)

Marc Herman

Manager, Market

Management

Original Hire Date

06/20/2022

Time in Position

0 year(s), 9

month(s), 9 day(s)

Leonard Giraldo

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Name

Title

Dates in Role

Heather Lalla

Assistant Manager,

Store 801

Original Hire Date

07/12/2011

Direct Report

Nicholas Klinger

Time in Position

0 year(s), 6

month(s), 3 day(s)

James Porter

Assistant Manager,

Store 613

Original Hire Date

09/21/2007

Jen Parks

Time in Position

3 year(s), 0

month(s), 6 day(s)

Mike

McGuire

Manager, Store 2201

Original Hire Date

07/17/2017

Tom Shea

Time in Position

5 year(s), 8

month(s), 17 day(s)

Sharon Martin

Assistant Manager,

Store 701

Original Hire Date

09/06/2012

Time in Position

9 year(s), 6

month(s), 13 day(s)

William White

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Name

Title

Dates in Role

Thomas Trone

VP, Merchandising

Original Hire Date

03/31/2003

Direct Report

Angela Weber

Time in Position

1 year(s), 6

month(s), 2 day(s)

III.

NON-PRIORITY SPECIFICATIONS

As explained above, TWM has focused on and substantially completed responses to

the FTC’s priority Specifications, with the exception of Specification No. 10, for which, at

your suggestion, we have now provided a sample set of data on the agreed timeline. After

Staff analyzes those responses, and in furtherance of the FTC’s investigation of SG, TWM

would be willing to continue to discuss other Specifications and reasonable timelines for the

production of information as contemplated by the FTC Rules of Practice. See Section 2.7(b)

(requiring CIDs for the production of documentary material to “prescribe a return date

providing a reasonable period of time within which the material so demanded may be

assembled and made available for inspection and copying or reproduction.”) (emphasis

added).

TWM offers below its preliminary positions on the non-priority Specifications, even

though these Specifications are overbroad as written, unduly burdensome, and seek irrelevant

information. TWM incorporates by reference its objections to the unreasonable return date

in the CID (as modified) and the terms “Relevant Product” and “Distributor,” as set forth

above, for each of the non-priority Specifications listed below. TWM will work in good

faith with the FTC to understand the FTC’s needs and work to narrow the scope of certain

Specifications. In order to avoid inefficient, piecemeal collections and productions, TWM

wishes to reach an agreement with Staff on these non-priority Specifications before it begins

further preparing its responses and producing documents in response to the CID.

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Gibson, Dunn & Crutcher LLP

1050 Connecticut Avenue, N.W.

Washington, D.C. 20036-5306

Tel 202.955.8500

gibsondunn.com

A. Preliminary Positions on Non-Priority Specifications

Stephen Weissman

Direct: +1 202.955.8678

Fax: +1 202.530.9685

SWeissman@gibsondunn.com

Specification No. 1

For each calendar year from 2018 to 2022:

(a) identify by state each Relevant Product sold by the Company;

(b) state separately by state for each Relevant Product the volume sold by the

Company in dollars and units; and

Product in each state.

Subject to its objections to the terms “Relevant Product” and “Distributor,” TWM

believes that it will have provided all responsive information through its responses to

Specification Nos. 2 and 10.

Specification No. 3

Submit:

(a) all Agreements and Proposed Agreements between the Company and any

Distributor or any supplier relating to any Relevant Product;

(b) all documents relating to the negotiation, drafting, or evaluation of any such

Agreement or Proposed Agreement; and

Southern or any supplier regarding the availability, price, or quantity of any

Relevant Product available for purchase by the Company.

As an initial matter, TWM objects to the term “Agreement” as vague and ambiguous.

See CID at D.2. It is not limited to oral and written contracts, which could be the common

and ordinary understanding of “agreement.” Instead, it is expanded to an “understanding,”

which definition would not be an agreement. By way of example, TWM believed it had an

understanding with the Staff after the March 15, 2023 meet and confer that TWM would

prioritize responses to Specification Nos. 2, 10, 18, and 19, before further specifications and

responses to the CID would be discussed. Subsequent letter correspondence from the FTC

makes clear that whatever “understanding” we thought the parties had, it did not rise to the

level of an agreement. Further, this definition includes an attempted catchall with the phrase

“or term thereof,” which adds to the vagueness and ambiguity of the definition.

TWM proposes to limit the definition of “Agreement” to written agreements in the

nature of a contract or an amendment thereto, which includes purchase orders placed by the

store and invoices issued by SG as part of fulfilling a purchase order. Our understanding is

that FTC does not want us to attempt to retrieve and produce five years of POs and

wholesaler invoices, which would be difficult, costly, take a very long time, and impose

Abu Dhabi  Beijing  Brussels  Century City  Dallas  Denver  Dubai  Frankfurt  Hong Kong  Houston  London  Los Angeles

Munich  New York  Orange County  Palo Alto  Paris  San Francisco  Singapore  Washington, D.C.

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obligations on TWM that are disproportionate to the reasonable needs of the FTC’s

investigation.

TWM further objects to this Specification as overbroad since it seeks “all documents”

on the designated topics. In TWM’s experience, retailers generally do not have

“agreements” with distributors in the same way that suppliers or manufacturers might have

distribution or franchise agreements with wholesalers. As noted above, retailers order wines

and spirits from licensed wholesalers through purchase orders, and wholesalers fulfill those

orders by delivering the goods in the quantities and at the prices specified in the purchase

order. At the time of delivery, the wholesaler (or its agent) tenders an invoice payable upon

receipt or within a short period of time thereafter based on applicable state law. Purchase

orders, once accepted, form what one could regard as an “agreement” between the

wholesaler and the retailer. But whether and how goods may be delivered, accepted, and

rejected is often prescribed by state law, not by agreement between the parties.

This Specification calls for documents that are also within the possession of SG. In

the spirit of cooperation, and subject to reasonable extensions of the CID date and reaching

an agreement on other Specifications, if the FTC informs TWM that it was unable to obtain a

particular agreement or document related to TWM’s prior business dealings with SG, TWM

will conduct a reasonable search to locate such documents so long as the FTC provides the

relevant time period and other information to facilitate TWM’s efforts.

Specification No. 4

Describe in detail the process by which the Company negotiates for or is notified of

available pricing, discounts, rebates, promotions, coupons, scanbacks, price

adjustments, or other concessions for any Relevant Product purchased from Southern

or any supplier. Submit and identify by document control number all documents used

to prepare the response to this Specification.

TWM objects to this Specification because of the five-plus year time frame of the

request and the unreasonable return date. In the spirit of cooperation, and subject to a

reasonable extension of the CID return date and resolution of TWM’s objections, TWM

would undertake the work needed to assemble and provide a narrative response that explains

the requested business practices as they relate to SG for the states where TWM purchases

wines or spirits from SG.

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Specification No. 5

Describe in detail each service Southern or any supplier furnishes, has furnished,

contracted to furnish, contributed to furnishing, offered to furnish, or that the

Company has requested Southern or any supplier furnish, to the Company from

January 1, 2018 to the present. Submit and identify by document control number all

documents used to prepare the response to this Specification.

TWM objects to this Specification because of the five-plus year time frame of the

request and the unreasonable return date. In the spirit of cooperation, and subject to a

reasonable extension of the CID return date and resolution of TWM’s objections, TWM

would undertake the work needed to assemble and provide a narrative response that explains

the requested business practices as they relate to SG for the states where TWM purchases

wines or spirits from SG.

Specification No. 6

For each service identified in response to Specification 5 above, submit documents, an

electronic spreadsheet, or a Data Set sufficient to show:

(a) the provider or offeror of the service;

(b) the service provided or offered;

(d) the Relevant Product(s) involved;

(e) the store location(s), geographic area(s), and state(s) in which the service was

provided or offered;

(f) the name, title, and affiliation of any person who acted as a provider, offeror,

receiver, or offeree of the service;

(g) the method by which the Company was notified of the availability of the service

provided or offered;

(h) the date(s) of, participants in, and substance of any communication with

Southern or any supplier about the service; and

(i) any consideration the Company provided for the service.

TWM objects to this Specification because of the five-plus year time frame of the

request and the unreasonable return date. In the spirit of cooperation, and subject to a

reasonable extension of the CID return date and resolution of TWM’s objections, TWM

would undertake the work needed to assemble and provide a narrative description of the

types of services described in its response to Specification No. 5. TWM currently believes

that it does not maintain comprehensive data sets relating to specific services provided by SG

in each state where TWM’s business operates.

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Specification No. 7

For each Relevant Product purchased from any Distributor, submit a Data Set or

electronic spreadsheet that includes the following, from January 1, 2018 to present:

(a) SKU, UPC, or any other item number;

(b) product description and other product information (e.g., brand, flavor, bottle

size, package type);

(d) order date(s);

(e) the Distributor receiving the order, including the Distributor's name and the

geographic location of the Distributor's facility receiving, shipping, or delivering

the order (e.g., address of the facility, city, state, county, and/or Metropolitan

Statistical Area);

(f) information on how the order was placed (e.g., method of communication,

distributor contact name);

(g) dollars paid, promised, or owed to the Distributor (e.g., purchase price),

separately by SKU and fee type;

(h) quantity ordered;

(i) quantity ordered as expressed in equivalent units;

(j) all quantity discounts available when the purchase was made;

(k) all quantity discounts applied to the purchase;

(l) all other discounts, rebates, promotions, coupons, scanbacks, price reductions,

price adjustments, or other concessions available when the purchase was made;

(m) all other discounts, rebates, promotions, coupons, scanbacks, price reductions,

price adjustments, or other concessions applied to the purchase;

(n) the name and address (including zip code) of the Company facility that received

the delivery;

(o) the name and address (including zip code) of each Company facility that

warehoused, stored, stocked, displayed, offered for sale, or sold at retail the

Relevant Product; and

(p) date fulfilled, also noting if an order is not fulfilled.

TWM incorporates its objections to Specification No. 10, as set forth above. TWM

further objects because the information requested by this Specification is available directly

from SG, and it is therefore unfair, duplicative, and unnecessarily burdensome for TWM, a

third party, also to be required to undertake the work and expend the resources needed to

respond to this Specification.

In the spirit of cooperation, and subject to a reasonable extension of the CID return

date and reaching an agreement on other Specifications, TWM could produce a data set that

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reflects all purchases of the Nielson Sample (defined in the response to Specification No. 10)

within the states where TWM purchases wines or spirits from SG and would consider

reasonable Staff requests commensurate with a revised scope for Specification 10. To be

clear, the burdens described in the above response to Specification No. 10 exist here, too.

For subpart (e), TWM currently believes that it does not maintain comprehensive data

about the locations of SG’s facilities where the products were received, shipped, etc. As

indicated, such information is more appropriately requested from SG or other distributors.

For subpart (f), TWM places hundreds of thousands of orders from distributors each

year. Thus, TWM does not maintain comprehensive data about the method and manner in

which it placed each order. TWM typically conducts all transactions via written or electronic

purchase orders, and it is our understanding that the FTC does not want TWM to produce

each purchase order with a distributor, nor would doing so be reasonable or proportionate to

the needs of the investigation especially given the burden involved.

For subpart (o), and as explained elsewhere in these Responses, TWM will

occasionally transfer products between stores to meet demand where allowed under the state

law where those stores operate, and TWM occasionally utilizes a limited number of

warehouses in certain markets to manage an increased demand in those markets that cannot

be met by the space available in existing retail stores in those markets. Since the wines and

spirits that TWM purchases are fungible commodities and producers/manufacturers often

change distributors (or use different distributors in different states or regions), TWM does

not specifically track wine or spirit inventory from the point of purchase to the moment of

retail sale. Stated differently, when a retailer sells wines or spirits at retail, it is generally not

concerned where that unit originated––i.e., the distributor or distribution facility––and, as a

result, does not maintain comprehensive data linking distribution purchases to retail sales.4

However, we do track the laid-in-costs of our inventory utilizing a FIFO method of

accounting, which presumes that a quantity of goods acquired on February 1, 2022, will be

depleted before subsequently purchased inventory of that same good.

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Gibson, Dunn & Crutcher LLP

1050 Connecticut Avenue, N.W.

Washington, D.C. 20036-5306

Tel 202.955.8500

gibsondunn.com

Specification No. 8

Stephen Weissman

Direct: +1 202.955.8678

Fax: +1 202.530.9685

SWeissman@gibsondunn.com

Submit for each month from January 1, 2018 to the present, and separately for

Relevant Products and for the Company as a whole, the Company's:

(a) gross and net sales dollars, separately by revenue source;

(b) cost of sales, separately by revenue source;

(d) any other fixed or variable costs, separately by type;

(e) operating income; and

(f) net income.

TWM incorporates its objections to Specification No. 10, as set forth above. TWM

further objects to this Specification as irrelevant and, to the extent it asks for product-byproduct information because it would be unduly burdensome to comply with given the

number of SKUs at issue (as indicated above, TWM has purchased over 21,000 different

wine or spirit products from SG alone). Such financial sales and profit information is not

relevant to the FTC’s investigation into SG’s potential violation of the Robinson-Patman

Act, nor has the FTC provided any such theory of relevance. In terms of burden, TWM

estimates that undertaking the exercise of assembling, reviewing, and producing such data

will add substantially to the already hundreds of thousands of dollars in lost time and

productivity at a time when TWM also needs those computing and personnel resources to

support immediate demands of its business. Such burdens exist even when limiting the

definitions of “Relevant Product” and “Distributor” to SG. Expanding these burdens to

include every wine or spirit that TWM has purchased from every distributor over more than

five years would be grossly overbroad, unduly burdensome, and disproportionate to the

needs of the investigation.

Specification No. 9

Identify each electronic database (including data sources used in or processed by the

database) used or maintained by the Company that contains information concerning

the Company's sales of Relevant Products. For each such database, submit a data

dictionary

that includes:

(a) a list of field names and a definition for each field contained in the Data Set;

(b) the meaning of each code that appears as a field value in the Data Set; and

In the spirit of cooperation, subject to a reasonable extension of the CID return date,

and once we agree on the data set for Specification No. 10, TWM will provide the

information requested in this Specification, including descriptions of field names. TWM

does not currently possess a data dictionary for its databases.

Abu Dhabi  Beijing  Brussels  Century City  Dallas  Denver  Dubai  Frankfurt  Hong Kong  Houston  London  Los Angeles

Munich  New York  Orange County  Palo Alto  Paris  San Francisco  Singapore  Washington, D.C.

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Specification No. 11

Submit a Data Set or electronic spreadsheet that captures the following information

tracked for loyalty card cardholders who have purchased any Relevant Product from

the Company since January 1, 2018, including:

(a) store identification value, as identified in response to Specification 2 above;

(b) unique identifying value for the individual;

(d) the 5 digit zip code of the individual’s residential address; and

(e) total monthly purchases of Relevant Products in dollars separately at each store.

TWM objects to this Specification because of the five-plus year time frame of the

request and the unreasonable return date. TWM also objects to this Specification as

irrelevant. Comprehensive data related to TWM’s loyalty cardholders, including zip codes

of families, is not relevant to SG’s potential violation of the Robinson-Patman Act, nor has

the FTC provided any such theory of relevance.

Specification No. 12

Submit all documents related to competition in the market for retail sale of Relevant

Products, including documents related to:

(a) the market share, competitive position, and relative strengths and weaknesses of

the Company and each of its actual or potential competitors, including all

market share analyses related to the retail of Relevant Products prepared by the

Company or any other analyst;

(b) opportunities or attempts to win customers from any actual or potential

competitor, or, threatened or actual losses of customers to any actual or

potential competitor;

pricing forecasts, pricing strategies, pricing analyses, and pricing decisions

related to any Relevant Product;

(d) the current and future requirements and barriers to entry or expansion in the

retail sale of any Relevant Product;

(e) the actual or potential entry, expansion, exit, or contraction, of any actual or

potential competitor, including the contemplated or actual effect of such entry,

expansion, exit, or contraction on the Company’s sales, pricing, costs, product

offering, or performance; or

(f) the capacity, product volume, number of retail locations, amount of square

footage, or other factors required to attain any available cost savings or other

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efficiencies necessary to compete profitably in the retail sale of Relevant

Products.

TWM objects to this Specification as irrelevant, as well as overbroad and unduly

burdensome, as it seeks “all documents” on the designated topics over a period of more than

five years. TWM also objects to this Specification because of the unreasonable return date.

The FTC staff has provided no theory of relevance for these materials of TWM. In terms of

burden, TWM estimates that undertaking the exercise of assembling, reviewing, and

producing such materials will add hundreds of thousands of dollars, excluding attorneys’

fees, in lost time and productivity at a time when TWM also needs these resources to support

immediate demands of its business. The files requested are not centrally maintained and

would require a massive and time-consuming effort to locate the materials, before reviewing

them for responsiveness and privileged content. Estimated costs would be hundreds of

thousands of dollars in employee time and attorney time.

Specification No. 13

Submit all documents prepared by or for, or delivered to, the Company’s officers,

directors, department leadership, investors, or owners relating to the Company’s

strategies, plans, or budgets for:

(a) the purchase of any Relevant Product from any Distributor; or

(b) the sale at retail of any Relevant Product by the Company.

TWM objects to this Specification because of the five-plus year time frame of the

request and the unreasonable return date. TWM further objects to this Specification as

overbroad as it seeks “all documents” on the designated topics. TWM’s business is

predicated on buying wines and spirits from distributors and then selling those same products

at retail. Thus, subparts (a) and (b) cover nearly every aspect of TWM’s entire business

model and, therefore, is grossly overbroad and would inflict undue burdens on TWM, above

and beyond those described above with regard to Specification 12. TWM further objects to

this Specification as irrelevant. TWM’s board decks and other executive-level materials,

along with strategies, plans, and budgets, are not relevant to SG’s potential violation of the

Robinson-Patman Act, nor has the FTC provided any such theory of relevance. For example,

the materials provided to TWM’s board and executives predominately relate to topics such as

personnel matters, corporate governance, marketing, budgets, advertising, and a myriad of

other topics that are unrelated to the FTC’s investigation of SG. TWM’s interactions with

any distributor, let alone SG, are not a focus at the board level. Indeed, TWM’s purchases

from SG are heavily regulated under state law and provide few opportunities for business

strategy or decisions by TWM’s board or executives. See, e.g., U.S. Dept. of Treasury,

Competition in the Markets for Beer, Wine, and Spirits, February 2022 (“Some states require

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wholesalers to offer uniform pricing for a given product: a single price to all retailers in the

on-premise channel, and a single price to all retailers in the off-premise channel. These laws

limit retailers’ ability to play one distributor off another on price (limiting the ability of

distributors to compete on price), and they limit distributors’ ability to target particular

retailers for price increases or decreases.”).

Specification No. 14

Submit an electronic spreadsheet identifying each Company distribution center,

warehouse, or storage facility that has received, or has stored for any period of time,

any Relevant Product purchased from a distributor or supplier. For each such facility,

provide the following information:

(a) the number or any other unique number, code, or name used by the Company to

identify or refer to the facility;

(b) the dates during which the facility has operated;

(d) the Company stores supplied or supported by the facility;

(e) the operating region, metropolitan statistical area, or micropolitan statistical

area served or supported by the facility;

(f) the total annual volume of Relevant Products, from 2018 until the present, in

both dollar value and equivalent cases, distributed from the facility to each

Company Store supported or served by the facility;

(g) the annual cost, from 2018 until the present, incurred by transporting Relevant

Products from the facility to each Company store supported or served by the

facility; and

(h) the annual cost to operate the facility from 2018 until the present.

As explained in its response to Specification No. 2, TWM does not own or operate

any “distribution centers” as it understands that term. TWM’s inventory is primarily held in

the stores where it sells the products. However, in late 2022, TWM began to utilize

warehouse space in two states (i.e., California and Florida) to hold alcohol inventory that

could not be received in its retail stores in those states due to insufficient storage capacity.

With this exception, TWM’s inventory is held in the stores where it sells the products.

Where permitted by state law, TWM will occasionally rebalance inventories between stores

to meet demand by transferring inventory from one store to another in the same state.

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April 3, 2023

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Specification No. 15

Submit all documents relating to the Company's strategies, practices, or policies

regarding its management of inventory of Relevant Products, including the processes or

methods by which the Company:

(a) decides which Company facility will receive each delivery of Relevant Products;

(b) tracks the physical location of Relevant Products ordered by the Company while

they remain in the Distributor's possession, custody, or control; or

possession, custody, or control.

TWM objects to this Specification because of the five-plus year time frame of the

request and the unreasonable return date. TWM further objects to this Specification as

overbroad as it seeks “all documents” on the designated topics. TWM further objects to this

Specification as irrelevant. TWM’s inventory management is not relevant to SG’s potential

violation of the Robinson-Patman Act, nor has the FTC provided any such theory of

relevance.

Specification No. 16

Submit all documents relating to the Company’s strategies, practices, or policies

regarding its relationships and interactions with any supplier of a Relevant Product,

including:

(a) acts by suppliers to promote or market Relevant Products to the Company;

(b) discounts, rebates, electronic coupons, scan backs, price reductions, or price

adjustments provided by suppliers related to any Relevant Product;

expected demands or orders for any Relevant Product; or

(d) sale or delivery of any Relevant Product from suppliers to Distributors in

anticipation of, or in response to, orders of such product from the Company.

TWM objects to this Specification because of the five-plus year time frame of the

request and the unreasonable return date. TWM objects to this Specification as vague and

overbroad as it seeks “all documents” on the designated topics. In the spirit of cooperation,

and subject to a reasonable extension of the CID return date and reaching an agreement on

other Specifications, TWM would undertake the work and expend the resources needed to

provide a written narrative for subparts (b) and (d).

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