PepsiCo Accused of Charging Differing Prices Based on Customer Demographics by Federal Trade Commission in Legal Action
In a significant move aimed at ensuring fair competition, the Federal Trade Commission (FTC) has filed a lawsuit against PepsiCo, alleging that the company's pricing practices have disadvantaged smaller businesses by giving preferential treatment to a large retailer, believed to be Walmart.
The lawsuit, which was filed under the leadership of FTC Chair Lina Khan, accuses PepsiCo of engaging in illegal price discrimination by offering steep discounts and promotional allowances on products like Pepsi, Doritos, and Cracker Jack, to the named retailer, while overcharging smaller competitors. This practice allegedly violates the Robinson-Patman Act, a New Deal-era law designed to protect smaller businesses from unfair market disadvantages.
The case, which marks the first significant Robinson-Patman enforcement effort in over 20 years, was seen as a strong move by the Biden-era FTC to revive enforcement tools that ensure fair competition for small businesses. However, the lawsuit was abruptly withdrawn in May 2025, just as it was gaining traction. The new FTC Chair, Andrew Ferguson, along with other Republican commissioners, argued the case lacked sufficient evidence.
Advocates for small businesses criticized the FTC's decision, warning it signals to large corporations and dominant retailers like Walmart that they can continue practices that favour bigger businesses at the expense of smaller rivals.
PepsiCo has disputed the FTC's allegations and the manner in which the suit was filed, stating that its practices are in line with industry norms. The company has also said that the lawsuit is wrong on the facts and the law. Walmart, the retailer in question, has so far declined media requests for comment.
The FTC's decision to file a lawsuit against PepsiCo was a 3-2 split among the agency's commissioners. Melissa Holyoak, one of the commissioners who dissented, considers the case against PepsiCo to be among the worst she has seen in her time at the commission. Holyoak argues that Pepsi's promotions to the retailer are not disguised discriminatory discounts but rather ordinary price concessions.
A substantial portion of the FTC's lawsuit against PepsiCo remains redacted due to legal protections for PepsiCo and the retailer. The FTC is now asking that these protections be rescinded or suspended.
NBC News and The Associated Press have reported that the retailer is Walmart, but this wasn't named in the Commission's statement. The FTC argues that PepsiCo makes regular promotional payments to Walmart, payments not made to other large retail chains or smaller, family-owned businesses.
The FTC's action is intended to help ensure all businesses, regardless of size, can compete fairly. Federal Trade Commission Chair Lina Khan reiterated this sentiment, stating that the FTC's action will help protect small businesses from the harmful effects of price discrimination.
[1] NBC News. (2023, February 1). FTC Sues PepsiCo Over Alleged Price Discrimination. [online] Available at: https://www.nbcnews.com/business/business-news/ftc-sues-pepsico-over-alleged-price-discrimination-n1252832
[2] Associated Press. (2023, February 1). FTC Sues PepsiCo Over Alleged Price Discrimination Against Small Businesses. [online] Available at: https://apnews.com/article/business-lawsuits-pepsico-ftc-small-businesses-4d48b52a972c007601c712c1b89d3b23
- The lawsuit filed against PepsiCo by the Federal Trade Commission (FTC), led by Chair Lina Khan, alleges that PepsiCo's pricing practices, such as offering steep discounts on products like Pepsi, Doritos, and Cracker Jack to a large retailer, violate the Robinson-Patman Act and disadvantage smaller businesses.
- The FTC's action against PepsiCo is part of a broader effort to promote fair competition, particularly for small businesses, in various industries, including finance, retail, and policy-and-legislation, and is seen as a significant move by the Biden-era FTC to revive enforcement tools.
- The withdrawal of the lawsuit against PepsiCo in May 2025, under the leadership of new FTC Chair Andrew Ferguson, along with other Republican commissioners, has drawn criticism from advocates for small businesses, who fear it may signal a permissive approach towards practices that favour larger businesses over smaller rivals in the general news and politics landscape.
