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Federal Trade Commission Files Price Discrimination Lawsuit Against PepsiCo


— January 17, 2025

Dissenting FTC Commissioner Melissa Holyoak said that the agency’s case against PepsiCo is among “the worst case[s] I have seen in my time at the commission.”


The Federal Trade Commission has filed a lawsuit against PepsiCo, claiming that the company engages in illegal price discrimination by offering exclusive and heavy discounts to an unnamed retailer.

According to The Associated Press, the retailer wasn’t named in the Commission’s statement. However, a “source familiar with the case” told The Associated Press that the retailer is Walmart.

PepsiCo has since said that the lawsuit “is wrong on the facts and the law,” suggesting that the Federal Trade Commission misunderstands how companies collaborate with retailers to lower consumer prices.

“PepsiCo strongly disputes the FTC’s allegations and the partisan manner in which the suit was filed,” the company said in a statement. “We will vigorously present our case in court.”

In court filings, though, the Federal Trade Commission said that PepsiCo makes regular promotional payments to Walmart—payments that aren’t made to other large retail chains, or to smaller, family-owned businesses.

Daytime in a WalMart parking lot in Virgina.
Wal*Mart. Photo by Ben Schumin, courtesy of Wikimedia Commons. CC BY-SA 3.0

Attorneys for the FTC say that, while PepsiCo’s promotions give Walmart room to lower prices, they still hurt consumers who end up paying inflated prices when choosing to shop at other stores.

“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,” Federal Trade Commission Chair Lina Khan said. “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.”

Walmart has so far declined media requests for comment. PepsiCo, for its part, says that its practices “are in line with industry norms.”

“We do not favor certain customers by offering discounts or promotional support to some customers and not others,” PepsiCo said.

The Associated Press notes that the FTC’s decision to file suit was the result of a split 3-2 decision among the agency’s commissioners.

Melissa Holyoak, one of the two commissioners who dissented against the agency’s decision, said that the case against PepsiCo is among “the worst case[s] I have seen in my time at the commission.”

“Pepsi’s promotions to the retailer are not disguised discriminatory discounts but rather ordinary price concessions,” she said.

NBC News reports that the FTC has stated that a “substantial portion” of the lawsuit remains redacted, as PepsiCo and the retailer are entitled to certain legal protections. The Commission is now asking that these protections be rescinded or suspended.

Sources

Pepsi hurt small businesses by giving big-box retailer financial advantages, the FTC claims

Pepsi sued by federal regulators for giving Walmart preferential soft-drink pricing

US lawsuit accuses PepsiCo of price discrimination that favored Walmart over smaller stores

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