Pepsi Hurt Small Businesses by Giving Big-Box Retailer Financial Advantages, the FTC Claims

The Federal Trade Commission (FTC) has filed a lawsuit against PepsiCo, accusing the beverage and snack giant of engaging in illegal price discrimination by providing a significant financial advantage to a major retailer, reportedly Walmart, according to sources familiar with the case.

The FTC alleges that PepsiCo granted the retailer, whose name was redacted in official documents, exclusive promotional payments and advertising benefits unavailable to smaller businesses. These actions, the FTC claims, placed family-owned grocers, local convenience stores, and even some larger chains at a competitive disadvantage.

“When companies like PepsiCo favour massive retailers, it distorts competition, harms smaller businesses, and ultimately raises costs for American consumers,” FTC Chair Lina Khan stated in the commission’s announcement.

The lawsuit, filed in the U.S. District Court for the Southern District of New York, relies on the Robinson-Patman Act, a 1936 law designed to prevent large customers from receiving preferential treatment that disadvantages smaller competitors. The commission voted 3-2 to proceed with the case, with the two dissenting votes coming from Republican commissioners.

In a statement, PepsiCo strongly denied the allegations, criticizing the “partisan nature” of the lawsuit and asserting that it does not unfairly favour specific retailers. The company pledged to “vigorously defend” itself in court, describing the FTC’s interpretation of the Robinson-Patman Act as an “unprecedented expansion” of the law.

Commissioner Melissa Holyoak, one of the dissenting votes, described the case as rushed and lacking sufficient evidence, calling it the “worst case” she had encountered during her tenure at the FTC.

The lawsuit marks a renewed effort by the FTC to enforce the Robinson-Patman Act, a statute that has seen limited application since the 1980s. This move signals the agency’s broader crackdown on what it views as anticompetitive practices in the marketplace. Walmart, reportedly the retailer at the center of the case, declined to comment.