The Robinson-Patman Act, passed by the U.S. Congress in 1936, prohibits anticompetitive actions by U.S. firms, especially price discrimination. Mostly, it seeks to prevent manufacturers and sellers from entering into unfair, preferential contracts, such as with big retail chains, to give them better wholesale prices. Doing so might benefit the big manufacturer and retailer, but it harms smaller retailers, which must pay higher prices to obtain the products. It also harms consumers, whose purchase choices are thus limited and who ultimately will pay higher prices themselves, due to the reduced competitiveness that such tactics create.

It may be nearly a century old, but the Robinson-Patman Act is still in effect, and the Federal Trade Commission (FTC) continues to use the legislation in its efforts to protect consumers. Recently, the FTC alleged in a federal lawsuit that PepsiCo has been engaged in just the sort of illegal price discrimination outlawed by the act. The complaint specifically accuses Pepsi of giving unfair price advantages and promotional payments to an unnamed big box retailer, at the expense of other vendors. Although the name of the retailer was redacted from the formal complaint, observers seem to believe that it is Walmart.

The FTC further claims that U.S. consumers are being directly harmed and bearing the burden of these practices, because by offering lower prices and better promotions to the unnamed national retailer, Pepsi is artificially inflating prices for its brands, including Frito-Lay, Gatorade, and Quaker, as well as Pepsi-branded beverages, in other stores. In addition to the harms to consumers, the suit carefully details the damages that the price discrimination can do to competitors, and particularly small, local grocery stores.

In its public response, PepsiCo claims the lawsuit misunderstands and misrepresents the standard partnerships that consumer product goods companies often build with large retailers. It also called out the suit as a partisan effort; dissent among FTC commissioners notably appears to fall along existing political divisions. Thus, the ultimate outcome remains in question.

For our purposes though, the relevance remains: Laws governing price decisions and strategies remain in place. Whether PepsiCo actually violated the Robinson-Patman Act or not, it remains in retailers’, marketers’, and manufacturers’ best interest to follow all applicable laws—and make sure that they are constantly working in consumers’ best interest too.

Discussion Questions

1. How does price discrimination, like the practices alleged in the lawsuit, affect consumer choice?
2. If PepsiCo is found guilty, what punitive measures might the FTC take to change corporate behavior? Are such punishments are effective?

Sources: Auzinea Bacon, “Pepsi Hurt Small Businesses by Giving Big-Box Retailer Financial Advantages, FTC Says,” CNN, January 17, 2025; Alexandra Koch, “FTC Sues PepsiCo, Alleges ‘Rigged’ Soft Drink Competition,” FOX Business, January 17, 2025; Dee-Ann Durbin, “US Lawsuit Accuses PepsiCo of Price Discrimination that Favored Walmart Over Smaller Stores,” Associated Press, January 17, 2025; “FTC Sues PepsiCo for Rigging Soft Drink Competition,” Federal Trade Commission, January 17, 2025