The Federal Trade Commission (FTC) filed a lawsuit against PepsiCo on Friday, accusing the company of engaging in illegal price discrimination with a major retailer. The FTC claims that the retailer, whose name was redacted, received unfair pricing advantages not extended to others. Sources close to the case have revealed that the retailer is Walmart.
PepsiCo allegedly provided Walmart with promotional payments and advertising benefits, which were not offered to smaller businesses such as family-owned grocers, local convenience stores, and other larger chains. The FTC argues that this practice undermines small businesses and ultimately leads to higher prices for consumers.
FTC Chair Lina Khan criticized the arrangement, stating that when large firms like Pepsi give preferential treatment to massive retailers, it creates an unbalanced marketplace. The commission invoked the 1936 Robinson-Patman Act, which prohibits offering such benefits to larger customers over smaller ones, to support its case.
The FTC voted 3-2 in favor of the lawsuit, which was filed in the U.S. District Court for the Southern District of New York. The two Republican commissioners dissented. In response, PepsiCo strongly denied the allegations, stating that it does not offer preferential treatment to certain customers and intends to defend its position in court.
Commissioner Melissa Holyoak, who dissented, called the lawsuit the “worst case” she had encountered during her time at the FTC. She argued that the case was rushed and lacked sufficient evidence.
This lawsuit marks an effort by the FTC to enforce the Robinson-Patman Act, which has not been actively used since the late 1980s. PepsiCo has described the lawsuit as an unprecedented expansion of the law.