USA | The Federal Trade Commission has sued PepsiCo, Inc. (Pepsi), alleging that it has engaged in illegal price discrimination by providing one customer—a large, big box retailer—with unfair pricing advantages while raising prices for competing retailers and customers.
For years, Pepsi has disadvantaged retailers, ranging from large grocery chains to independent, local convenience stores competing with one of its largest big box customers. The FTC's complaint alleged that Pepsi consistently gave that favoured large, big box retailer customers key benefits and advantages, such as promotional payment while denying those same benefits to its competitors.
Pepsi’s unfair practices have led to inflated prices for American families while denying competing retailers the ability to compete fairly. The complaint alleged that Pepsi’s illegal conduct violated the Robinson-Patman Act (RPA).
“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 RPA, specifically sections 2(d) and 2(e), sellers are prohibited from engaging in price discrimination by using advertising and promotional allowances—financial incentives manufacturers give retailers to promote a product or brand—to favour large customers over small businesses.
The lawsuit alleged that Pepsi violated the RPA by engaging in price discrimination, using advertising and promotional allowances, among other tactics, to favour one large, big-box retailer customer over other businesses.
This case marked the FTC’s latest RPA enforcement action since the Commission sued Southern Glazer, the most significant U.S. wine and spirits distributor, in December 2024.
The complaint redacted a substantial portion of the law violations alleged by the FTC due to the legal protections afforded to both Pepsi and its preferred customer, the large, big-box retailer.
The FTC staff will swiftly seek to lift the redactions to show how Pepsi violated the RPA on behalf of their preferred customer and how those violations raised prices for Pepsi products for competing retailers.
Until Pepsi has remediated its conduct, its anti-competitive actions will continue to create an uneven playing field by denying competing retailers, including family-owned neighbourhood grocery stores, the chance to compete fairly against Pepsi’s favoured large, big-box retailer customers.
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