“Pepsi’s illegal conduct has forced consumers, competing retailers to pay higher prices.”
The Federal Trade Commission (FTC) has filed a lawsuit against PepsiCo, accusing the company of engaging in illegal price discrimination by offering unfair pricing advantages to one of its biggest customers, a large big-box retailer, while raising prices for competing stores.
The FTC claims that Pepsi has been providing exclusive benefits to this major retailer, including promotional payments and advertising support, while denying similar perks to smaller businesses. These actions, according to the FTC, have caused inflated prices for consumers and made it harder for smaller retailers, including local grocery stores and independent convenience shops, to compete fairly.
“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,” said FTC Chair Lina M. Khan. “The FTC’s action will help ensure all grocers and other businesses—no matter the size—can get a fair shake and compete on the merits of their skill, efficiency, and talent.”
Under the Robinson-Patman Act (RPA), businesses are prohibited from offering special pricing advantages, such as promotional allowances, to large customers while withholding these benefits from smaller competitors. The FTC alleges Pepsi violated these laws by favoring one big-box retailer over others, ultimately harming competition.
Pepsi’s actions are said to have led to higher prices for consumers, as smaller retailers were unable to match the competitive pricing offered to the larger retailer. The FTC is seeking a permanent injunction and other legal remedies in the U.S. District Court for the Southern District of New York.
While the FTC didn’t name the retailer, many reports say the retailer is Walmart. “Walmart is the unnamed retailer, people familiar with the matter told CNBC,” wrote CNBC.
As stated in the press release, a substantial portion of the law violations alleged by the FTC are redacted in the complaint due to the legal protections afforded to both Pepsi and their preferred customer.
Pepsi provides its favored retailer customer with promotional payments and allowances without making these equally available to that customer’s competitors. Pepsi also provides this favored retailer with various advertising and promotional tools, known as services and facilities, without making those benefits available to its competitors on a similar basis.
The vote to authorize the lawsuit was close, with a 3-2 decision. Commissioners Melissa Holyoak and Andrew N. Ferguson dissented, but the FTC is moving forward with the case.
This lawsuit is part of a broader push by the FTC to enforce the Robinson-Patman Act. In December 2024, the Commission also sued Southern Glazer’s, the largest U.S. distributor of wine and spirits, for similar practices.
Pepsi’s unfair business practices are alleged to continue harming competition until they are addressed, leaving small retailers at a disadvantage and potentially raising costs for American consumers.