The US Federal Trade Commission (FTC) has launched legal action against PepsiCo, accusing the company of engaging in “illegal price discrimination” within soft drinks.
According to the FTC’s allegations, the Mountain Dew maker provided “unfair pricing advantages” to a “large, big box retailer”, while increasing prices for other competing retailers and customers.
Go deeper with GlobalData
The FTC did not disclose the name of the retailer in question.
In a statement sent to Just Drinks, PepsiCo said that its “practices are in line with industry norms, and we do not favor certain customers by offering discounts or promotional support to some customers and not others”.
It added: “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.”
According to the FTC’s complaint, PepsiCo’s practices have disadvantaged various retailers, from large grocery chains to independent convenience stores, by consistently offering preferential benefits to the favoured retailer.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataThese benefits included promotional payments, which were not extended to competing businesses and violates the Robinson-Patman Act (RPA).
Furthermore, the FTC alleges that these “unfair practices” have resulted in inflated prices for American consumers and have hindered the ability of competing retailers to compete fairly.
FTC chair Lina M Khan said: “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.
“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.”
PepsiCo said the lawsuit was “wrong on the facts and the law” and the “unprecedented expansion of the RPA reflects the FTC’s fundamental misunderstanding of the omnichannel retail marketplace”.
The decision to file the lawsuit was made by a 3-2 vote from the five-member FTC, with commissioners Melissa Holyoak and Andrew Ferguson dissenting.
The lawsuit was filed in the US District Court for the Southern District of New York.
In December, the FTC also filed a lawsuit against wine and spirits distributor Southern Glazer’s over alleged “unlawful price discrimination”.
The FTC alleged that Southern Glazer’s “repeatedly discriminated in price between disfavoured independent purchasers” since 2018, favouring major retailers such as Kroger, Total Wine & More, and Costco.
Southern Glazer’s said at the time that it “strongly disputes the FTC’s allegations and will defend itself vigorously in this litigation”.
