The Federal Trade Commission (FTC) has filed a lawsuit against PepsiCo, accusing the company of violating federal laws by providing unfair pricing benefits to a large retailer, while leaving smaller stores at a disadvantage.
While the FTC did not name the retailer, sources have confirmed that it is Walmart.
FTC Accuses PepsiCo of Favoring Walmart with Unfair Pricing Practices
The FTC claims that PepsiCo made promotional payments and offered special advertising tools to Walmart, but did not provide similar support to other large grocery chains or smaller independent stores.
This, according to the FTC, allowed Walmart to offer lower prices on PepsiCo products, while consumers at other stores paid higher prices.
The FTC argues that this type of price discrimination harms both consumers and smaller retailers, who are unable to compete with the big box retailer, CBNC said.
PepsiCo has strongly denied the accusations, asserting that its pricing practices are in line with industry standards.
The company argues that the lawsuit is based on a misunderstanding of how promotional payments work in the retail industry.
PepsiCo emphasized that it does not provide special deals to some customers while ignoring others, and plans to defend itself vigorously in court.
FTC Sues PepsiCo Under 1936 Robinson-Patman Act for Alleged Price Discrimination
The FTC's lawsuit is based on the Robinson-Patman Act, a law passed in 1936 that prohibits companies from giving preferential pricing or promotional allowances to large buyers, which could harm competition.
According to AP, this is the second time in recent months that the FTC has used the Robinson-Patman Act in a lawsuit.
In December, the agency filed a similar lawsuit against Southern Glazer's Wine and Spirits, accusing the distributor of offering discounts to larger customers while harming smaller businesses.
PepsiCo, which is based in Purchase, New York, is one of the largest food and beverage companies in the world. Its product range includes famous brands like Pepsi, Mountain Dew, Gatorade, Lay's, and Doritos.
While the company has faced criticism in the past for its price increases, particularly during the pandemic, this new lawsuit brings further attention to the company's business practices.
The FTC's lawsuit, which was filed in the Southern District of New York, comes at a time when the agency has been more active in taking enforcement actions against companies for unfair practices.
The lawsuit is being pursued by the Biden administration, and it has sparked debate among the FTC commissioners.
While three commissioners voted to move forward with the case, two dissenting members, including Andrew Ferguson, who is set to become the new chair of the FTC, opposed the decision, arguing that there was not enough evidence to support the claims.
