FTC Dismisses Price Discrimination Case Against Pepsi

A lawsuit filed by the Federal Trade Commission (FTC) against PepsiCo has been dropped. In January, the FTC accused the beverage giant of price discrimination in favor of Walmart, potentially hurting smaller vendors.

Pepsi was thrilled with the lawsuit’s dismissal. Walmart, however, has not commented on the case update.

“PepsiCo has always and will continue to provide all customers with fair, competitive, and non-discriminatory pricing, discounts and promotional value,” stated the company, per AP News.

The FTC’s lawsuit was based on a 1936 piece of federal legislation called the Robinson-Patman Act. Under the law, companies cannot give promotional incentive payments to large customers without offering the same to small ones.

The Robinson-Patman Act keeps a large company, which can often make sizable inventory purchases, from edging out a smaller company. The same pricing must be offered by the seller to both, regardless of size.

FTC Votes To Drop Pepsi Lawsuit

The FTC filed the lawsuit when Lina Khan was the chairwoman of the agency. Commissioners Rebecca Slaughter and Alvaro Bedoya supported the FTC’s legal action. However, two other commissioners, Andrew Ferguson and Melissa Holyoak, were not in favor of it.

Khan resigned her position shortly after President Donald Trump was inaugurated, and Ferguson took the agency’s top job. Slaughter and Bedoya were later terminated by the commander-in-chief.

Now in charge of the FTC, Ferguson recommended dropping the lawsuit, claiming it was a “partisan stunt” and a waste of taxpayer money. The chairman said the agency’s resources are needed elsewhere.

“The Biden-Harris FTC rushed to authorize this case just three days before President Trump’s inauguration in a nakedly political effort to commit this administration to pursuing little more than a hunch that Pepsi had violated the law,” said Ferguson in the FTC’s press release.

According to Commissioner Holyoak, the lawsuit didn’t have a chance to succeed. Dropping the case allows the agency to pursue other, more valid legal actions.  

Originally filed in the U.S. District Court for the Southern District of New York, the vote to withdraw the lawsuit was unanimous, 3 to 0. While the Robinson-Patman Act was created nearly a century ago, it has gone largely unenforced.