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FTC sues PepsiCo over price discrimination

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The US Federal Trade Commission (FTC) has initiated a lawsuit against PepsiCo, alleging illegal price discrimination.

Specifically, the FTC claims that PepsiCo provided Walmart with unfair advantages through “promotional payments and allowances” unavailable to other retailers.

People claim that this practice violates the Robinson-Patman Act, a law that prohibits price discrimination, although enforcement of it is quite rare.

Although the FTC did not explicitly name Walmart, sources confirm the retailer’s identity.

Moreover, the FTC asserts that PepsiCo offered Walmart various advertising and promotional tools that competitors did not receive.

FTC Chair Lina Khan states that these practices disadvantage smaller firms, creating an uneven playing field and increasing consumer prices.

Walmart leads the grocery market with a 21% sales share, leveraging its “everyday low prices” strategy, according to Numerator.

In 2023, Walmart accounted for 14% of PepsiCo’s net revenues, highlighting the retailer’s significant influence.

“The FTC decided to file the lawsuit after a split vote among commissioners, with a 3-2 outcome along party lines.

This move is part of a broader series of enforcement actions taken by the regulator just before Donald Trump assumes the presidency.

Republican commissioner Melissa Holyoak criticized the lawsuit, labeling it “the worst case” she has encountered.

She alleged that the majority rushed the case without sufficient evidence to substantiate the claims.

PepsiCo firmly disputes the FTC’s allegations, arguing that the lawsuit’s filing misrepresents its practices regarding customer discounts and promotions.

The FTC recently revived the Robinson-Patman Act, targeting Southern Glazer’s Wine and Spirits for alleged discriminatory practices in distribution.

Khan has prioritized addressing pricing irregularities and anti-competitive behavior that distort prices.

Although her term has expired, she has yet to announce her resignation, while Trump has nominated a new FTC chair.

Walmart has not commented on the ongoing lawsuit.