PepsiCo Slammed by FTC Over Alleged Price Discrimination in Favor of Walmart

PepsiCo is in some trouble with the U.S. Federal Trade Commission (FTC). The agency is suing the beverage maker for allegedly engaging in illegal price discrimination, and apparently, it also involves one of the largest retailers on the planet.

In a complaint filed on Jan. 17, the FTC claims Pepsi gave unfair price advantages to an undisclosed retailer. However, reports indicate the unnamed retailer is none other than Walmart.

“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,” stated 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.”

The FTC is using the 1936 Robinson-Patman Act as the basis of its lawsuit. Under the act, companies cannot give promotional pricing to large-volume retailers without also offering the same to small retailers. Engaging in the practice puts the small rivals at an unfair disadvantage.

PepsiCo Responds to FTC Lawsuit

PepsiCo denies any wrongdoing and claims its practices are no different than others in the industry. According to the company, the FTC is incorrect “on the facts and the law.” The food giant plans to defend itself in court.

“We do not favor certain customers by offering discounts or promotional support to some customers and not others,” the company stated, per AP News.

Similar to Pepsi, the FTC sued Southern Glazer’s for violation of the Robinson-Patman Act in December. The agency claimed the alcohol distributor gave big retailers like Costco lower prices than small, independent liquor stores.

As yet, Walmart has not provided any comment verifying whether it is the unnamed “big box retailer” mentioned in the FTC complaint. With the size and strength of Walmart, it negotiates with all its suppliers, sometimes even using artificial intelligence to do it. Of course, bickering over prices is not illegal unless it involves a special deal that smaller retailers cannot get.