Pepsi cans are displayed at a Target store in the Flatbush neighborhood of Brooklyn, New York, on February 9, 2024.
Miguel M. Santiago | fake images
The Federal Trade Commission said Friday that it is suing PepsiCo for unlawful price discrimination, alleging that the food and beverage giant gave an unnamed retailer more favorable prices than its competition.
Walmart is the unnamed retailer, people familiar with the matter told CNBC.
The FTC alleges that Pepsi violated the Robinson-Patman Act, which prohibits sellers from giving competing buyers different prices for the same “product” or from offering selective allocations, such as compensation for advertising. The agency argues that Pepsi gave Walmart payments and promotional subsidies, as well as advertising and promotional tools, that it did not offer to the retail giant's rivals.
Pepsi denied the allegations and said the FTC's lawsuit is incorrect, both in fact and in law.
“PepsiCo strongly disputes the FTC's allegations and the partisan manner in which the lawsuit was filed. We will vigorously present our case in court,” the company said in a statement to CNBC. “PepsiCo's practices are in line with industry standards and we do not favor certain customers by offering discounts or promotional support to some customers and not others.”
Walmart did not immediately respond to a request for comment from CNBC.
The complaint, which was filed in the Southern District of New York, is currently under seal.
The FTC also said that a “substantial portion” of the alleged violations are redacted in the complaint, citing legal protections afforded to Pepsi and the big-box retailer. The commission seeks to lift the censures to show how Pepsi violated the law and how those alleged actions led to higher prices for competing retailers.
The Robinson-Patman Act was passed in 1936, but the federal government stopped enforcing it during deregulation in the 1980s. The FTC resumed its enforcement of the law in December when it sued Southern Glazer's, the largest American distributor of wine and spirits. .
The lawsuit comes on the last business day before President-elect Donald Trump's inauguration on Monday, which will mark the end of Lina Khan's tenure as FTC chair. His Republican successor, Andrew Ferguson, currently sits on the commission and issued a statement disagreeing with the decision to sue Pepsi.
The Biden administration has taken a series of legal actions against companies and corporate executives in their final days, targeting Capital One, Southwest Airlines and Elon Musk, among others.
-CNBC Maria Catalina Wellons contributed reporting to this story.
