The Federal Trade Commission on Friday sued PepsiCo for allegedly engaging in illegal price discrimination with a large retailer.
The commission alleges that the retailer, whose name was redacted in the statement from commissioners, received “unfair pricing advantages” that were not made available to others. A source familiar with the case told that the retailer is Walmart.
A Walmart spokesperson told that the company did not have a comment about the lawsuit.
The big-box retailer “consistently” received promotional payments and advertising from PepsiCo, which owns major brands including Frito lay, Quaker and Gatorade, the FTC alleged. The benefits disadvantaged family-owned grocers, local convenience stores and even larger chains, according to the commission.
“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 Khan in the commission’s announcement.
The 1936 Robinson-Patman Act, which prohibits advertising and promotional allowances to favor large customers over small businesses, was cited in the FTC’s announcement.
The commission voted 3-2 in favor of the lawsuit, which was filed in the US District Court for the Southern District of New York, with the two Republican commissioners issuing dissenting votes.
“PepsiCo strongly disputes the FTC’s allegations, and the partisan manner in which the suit was filed. We will vigorously present our case in court,” the company said Friday in a statement, adding that it “does not favor certain customers by offering discounts or promotional support” to some retailers over others.
Commissioner Melissa Holyoak said in a dissenting statement that the claim against PepsiCo is the “worst case” she has seen in her time with the FTC. She argued that the lawsuit was “rushed” and that the commission did not have enough evidence.
This lawsuit adds to the FTC’s efforts to crack down on anticompetitive practices using the Robinson-Patman Act, which has rarely been enforced since the late 1980s. PepsiCo said this is an “unprecedented expansion” of the act.
