US lawsuit accuses Pepsi of favouring Walmart over smaller stores

The Federal Trade Commission sued PepsiCo on Friday, alleging that it has engaged in illegal price discrimination by giving unfair price advantages to one big-box retailer at the expense of other vendors and consumers.

The benefiting customer wasn't named in an FTC statement about the lawsuit. But a source familiar with the case, who asked not to be named because they were not authorised to it, said the retailer was Walmart.

PepsiCo said the lawsuit is wrong on the facts and the law and misunderstands the way consumer product companies help retailers provide lower prices.

PepsiCo strongly disputes the FTC's allegations, and the partisan manner in which the suit was filed. We will vigorously present our case in court, the company said in a statement.

The FTC said PepsiCo's practices included making promotional payments to Walmart but not to large grocery chains or independent convenience stores. The FTC said that allows Walmart to lower its prices, but forces Americans to pay inflated prices for PepsiCo products unless they shop at Walmart.

When firms like Pepsi give massive retailers a leg up, it tilts the playing field against small firms and ultimately inflates prices for American consumers, FTC Chair Lina Khan said in the statement. 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.

PepsiCo said its practices are in line with industry norms.

We do not favour certain customers by offering discounts or promotional support to some customers and not others, the company said.

The FTC sued PepsiCo under the rarely enforced 1936 Robinson-Patman Act. The FTC said the act prohibits companies from using promotional incentive payments to favour large customers over smaller ones.