The Federal Trade Commission (FTC) has taken legal action against PepsiCo, alleging that the company engaged in illegal price discrimination with a major retailer. The lawsuit claims that the unnamed retailer, believed to be Walmart according to a source familiar with the case, received preferential pricing that was not offered to other competitors. Responding to inquiries, a spokesperson for Walmart declined to comment on the matter.
According to the FTC, the retailer in question consistently benefited from promotional payments and advertising arrangements with PepsiCo, which owns popular brands such as Frito Lay, Quaker, and Gatorade. These alleged advantages disadvantaged smaller businesses, including family-owned grocers and local convenience stores, as well as larger chains, by creating an uneven playing field in the market and potentially leading to higher prices for consumers.
FTC Chair Lina Khan emphasized the negative impact of such practices, stating, “When firms like Pepsi give massive retailers a leg up, it tilts the playing field against small firms and ultimately inflates prices for American consumers.” The commission invoked the 1936 Robinson-Patman Act, which prohibits discriminatory practices favoring larger customers over smaller businesses, in support of its allegations.
The FTC’s decision to pursue legal action was not unanimous, with a 3-2 vote in favor of the lawsuit. Two Republican commissioners dissented, questioning the evidence and the speed with which the case was brought forward. In response to the allegations, PepsiCo issued a statement vehemently denying the claims and criticizing the partisan nature of the lawsuit. The company asserted that it does not show favoritism to specific customers through discounts or promotional support.
Commissioner Melissa Holyoak, one of the dissenting voices, characterized the case against PepsiCo as the “worst case” she has encountered during her tenure at the FTC. Holyoak raised concerns about the rushed nature of the lawsuit and the purported lack of sufficient evidence to support the allegations.
This legal action is part of the FTC’s broader efforts to address anticompetitive practices under the Robinson-Patman Act, which has seen limited enforcement since the late 1980s. PepsiCo views the FTC’s interpretation of the act as an “unprecedented expansion” and plans to vigorously defend its position in court.
CNN’s Matt Egan contributed to the coverage of this development. For the latest news and updates, visit CNN.com and explore their newsletter offerings.
