The Federal Trade Commission (FTC) filed a lawsuit against PepsiCo (PEP) on Friday, accusing the beverage giant of providing Walmart (WMT) with unfair pricing advantages that allegedly inflated costs for smaller retailers and their customers. This legal action comes as part of a last-minute flurry of measures by outgoing FTC Chair Lina Khan during her final week in office. Walmart, PepsiCo’s largest retail partner, accounted for 14% of the company’s 2023 revenue, including sales to its affiliates such as Sam’s Club.
PepsiCo has strongly denied the allegations, maintaining that its practices align with industry norms and do not favor specific retailers. The lawsuit is based on a statute from the 1930s designed to ensure fair competition between smaller retailers and larger chains by prohibiting price discrimination. Critics of the law argue that it discourages discounting and may lead to higher prices overall, but Khan sought to reinvigorate its enforcement, drawing dissent from FTC Republicans.
Market Overview:- FTC files lawsuit accusing PepsiCo of unfair pricing practices benefiting Walmart.
- PepsiCo denies allegations, asserting compliance with industry standards.
- Outgoing FTC Chair Lina Khan pushes aggressive enforcement of 1930s price discrimination laws.
- PepsiCo’s sales to Walmart represented 14% of its 2023 revenue.
- The FTC’s case was approved in a 3-2 vote, with dissent from Republican commissioners.
- Commissioner Melissa Holyoak criticized the case as weak and likely to be dismissed.
- The lawsuit may face early dismissal due to insufficient legal standing.
- Incoming FTC Chair Andrew Ferguson signals a shift in regulatory priorities.
- Khan’s final measures, including actions against Snapchat (SNAP) and Deere (DE), set the stage for partisan clashes.
The FTC’s lawsuit underscores broader tensions between regulatory enforcement and corporate practices, with Walmart declining to comment on the matter. The legal filing is part of a broader effort by Khan to reshape antitrust enforcement before the incoming Trump administration likely shifts focus. Alongside this lawsuit, the FTC referred a complaint against Snap to the Justice Department and filed an action against Deere, further amplifying partisan divisions within the commission.
As the leadership transition approaches, the case against PepsiCo may serve as an early test of the new FTC chair’s priorities. With regulatory scrutiny increasingly tied to political shifts, the outcome of this lawsuit could carry implications for future enforcement of competition laws, particularly under a more business-friendly administration.
