The Huge Lawsuit That Could Affect Pepsi And Walmart: What You Need To Know

Pepsi and Walmart are two of the biggest brands in American food, and if a new lawsuit is successful, they just might be making history, but not in a way either would like. The lawsuit has been filed against PepsiCo by the Federal Trade Commission (FTC) accusing the beverage behemoth of engaging in illegal price discrimination. The suit claims that Pepsi broke the law by offering special promotional pricing to a big-box retailer while not offering the same deal to other retailers, which the FTC says discriminates against other stores. The big-box store was not named in the lawsuit and is not the target of the suit, but according to reporting from the Associated Press, a source confirmed that the store was Walmart.

In a statement from the FTC, the agency claims that by making special deals with large retailers, PepsiCo reduces competition in the market, leading to inflated prices elsewhere for American consumers. FTC chair Lina M. Khan says, "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." In a statement of its own, PepsiCo disputed the lawsuits, calling it "wrong on the facts and the law," and adding "we will vigorously present our case in court," via A.P. With Pepsi owning many large and small brands, like Quaker Oats, Lay's, and Gatorade, the outcome of the lawsuit could have huge implications on how it's able to sell its products.

Under the Biden administration, the FTC (which also handles unfair and deceptive franchisors) has stepped up antitrust lawsuits, alleging that a lack of enforcement against large companies has hurt customers and the economy. In recent years the agency has sued big companies like Google, Meta, and Visa for acting as monopolies. They recently scored a big victory in successfully halting the proposed Kroger-Albertsons merger, which it said would have driven up prices by stifling competition.

As part of its efforts to make grocery prices more affordable, the FTC has been trying to revive enforcement of an old law, the 1936 Robinson-Patman Act, which PepsiCo is now being sued under. The law banned manufacturers and wholesalers from favoring large retailers over smaller ones in businesses dealings; however, the law has mostly gone unenforced in recent decades, as part of the long-term scaling back of most antitrust enforcement.

Organizations like the National Grocers Association, which represents many independent and local grocery stores, have been calling for increased enforcement of the Robinson-Patman act as a way to fight back against big corporations using their influence to give themselves an unfair competitive advantage. However, the lawsuit may not be long lived. Two Republican FTC commissioners dissented in the vote to bring the suit, including one member who is the incoming administration's pick to lead the FTC. So while this could be a major moment in antitrust enforcement, this suit could also be dead in the water.