The Federal Trade Commission (FTC) is suing PepsiCo for allegedly working with an unnamed “large, big box retailer” to rig the market by offering “unfair pricing advantages” that can contribute to inflation.
“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,” FTC Chair Lina M. Khan said in a statement announcing the lawsuit Friday. “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.”
Insiders believing Walmart is Pepsi’s “likely” alleged beneficiary, according to NPR. The retail chain declined to comment.
The FTC contends that “for years” the world’s second-largest food company “engaged in illegal price discrimination” that provided unfair pricing advantages to one beneficiary, while raising prices for competing retailers. Its lawsuit alleges PepsiCo offered “promotional payments” to that unnamed retailer while denying those same perks to competing businesses.
The New York-headquartered snack and beverage giant calls the lawsuit “wrong on the facts and the law” and blames federal regulators for pursuing a “rushed and unjust process” before a new presidential administration takes power next week.
The feds contend Pepsi’s conduct violates the Robinson-Patman Act (RPA), which was put in place in 1936 to protect small businesses. Pepsi argues the nearly 90-year-old legislation is being applied in a way that fails to take into consideration modern-day retail and consumerism.
“This unprecedented expansion of the RPA reflects the FTC’s fundamental misunderstanding of the omnichannel retail marketplace and the important role that consumer product suppliers play in providing lower prices and value to consumers,” PepsiCo said.
Pepsi claims the lawsuit was filed in a “partisan manner” and plans to challenge the government’s charges in court if necessary.
Commissioner Andrew Ferguson, Trump’s pick to head the FTC when his administration takes charge, expressed disinterest in pursuing the matter in a statement released Thursday.
