The Federal Trade Commission (FTC) has filed a lawsuit against PepsiCo, accusing the company of price discrimination that benefits Walmart over smaller retailers.
The lawsuit, filed in the U.S. District Court for the Southern District of New York, claims that PepsiCo provided Walmart with promotional payments and benefits that were not available to other grocery chains and convenience stores.
This practice, the FTC argues, leads to higher prices for consumers shopping at stores other than Walmart.
The lawsuit is based on the Robinson-Patman Act of 1936, a law designed to prevent unfair pricing practices that harm competition.
The act prohibits companies from offering discounts, rebates, or promotional incentives to large customers at the expense of smaller businesses.
The FTC alleges that PepsiCo’s pricing strategies violate this law by giving Walmart pricing advantages that smaller stores cannot access.
PepsiCo, headquartered in Purchase, New York, is a major player in the global food and beverage industry, producing popular brands such as Pepsi, Mountain Dew, Gatorade, Lay’s, Doritos, and Fritos, as well as Quaker Oats and various breakfast cereals.
In response to the lawsuit, PepsiCo stated that its pricing practices are consistent with industry norms and rejected the FTC’s claims, asserting that the company does not favor certain customers with discounts or promotional support.
The FTC argues that PepsiCo’s actions enable Walmart to offer lower prices on its products, drawing more customers to its stores.
FTC Chair Lina Khan highlighted the negative impact on small businesses and consumers, 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.”
PepsiCo intends to defend its case in court, with the company criticizing the FTC for filing the lawsuit in a partisan manner. The company disputes the allegations, claiming that its promotions to retailers are not discriminatory.
The vote to authorize the lawsuit was split along party lines, with a 3-2 outcome.
Dissenting commissioners, including Andrew Ferguson, described the case as flawed, with Ferguson calling it the “worst” he had seen during his tenure.
Commissioner Melissa Holyoak also disagreed with the majority, arguing that PepsiCo’s promotional practices were ordinary price concessions, not discriminatory discounts.
Walmart has declined to comment on the lawsuit, stating that it has “nothing to add at this time.”
