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The US Federal Trade Commission is suing PepsiCo over allegations that it engaged in illegal price discrimination by providing Walmart with unfair advantages.
The FTC’s lawsuit alleges that Pepsi violated the Robinson-Patman Act, which forbids price discrimination but is rarely invoked, by providing a retailer with “promotional payments and allowances” that were not available to others.
The FTC did not name the retailer but the chain was Walmart, according to a source familiar with the matter.
The agency also alleges that the beverage and snacks company provided the favoured retailer with “various advertising and promotional tools” that were not available to its competitors.
“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 Khan in a statement.
The world’s largest retailer is known for a strategy it calls “every day low prices” that consistently beats the prices of most competitors. It leads the US in groceries with a 21 per cent share of sales, according to Numerator, a market research company. Walmart accounted for 14 per cent of Pepsi’s net revenues in 2023.
FTC commissioners were split along party lines in a 3-2 vote to file the suit.
This is the latest in a number of enforcement actions rolled out by the regulator days before Donald Trump is sworn in as president on Monday.
Republican commissioner Melissa Holyoak called the lawsuit “the worst case” she has seen in her time at the agency and alleged that the “majority rushed the case out the door before it had evidence to support the allegations”.
“PepsiCo strongly disputes the FTC’s allegations, and the partisan manner in which the suit was filed. We will vigorously present our case in court,” PepsiCo said in a statement. “We do not favour certain customers by offering discounts or promotional support to some customers and not others.”
The FTC brought its first Robinson-Patman action in decades in December over allegations that alcohol distributor Southern Glazer’s Wine and Spirits forced small grocery and liquor stores to pay higher prices than big box retailers.
Khan has focused heavily on pricing irregularities, cracking down on anti-competitive conduct leading to price distortions. Although her term has already expired, she has not announced her departure but is expected to step down. Trump has nominated his own FTC chair.
Walmart did not respond to a request for comment.
Additional reporting by Gregory Meyer
