PepsiCo FTC Lawsuit on Price Discrimination

In early 2025, the Federal Trade Commission (FTC) filed a notable lawsuit against PepsiCo, Inc., alleging violations of the Robinson-Patman Act (RPA), a federal law that prohibits unfair price discrimination among buyers. The lawsuit claimed that PepsiCo had engaged in illegal price discrimination by giving preferential pricing and promotional allowances to a large retailer—widely reported to be Walmart—while charging higher prices to competing smaller retailers such as independent grocery stores and convenience stores.

This legal action represented part of the FTC’s broader initiative to address anti-competitive practices in the retail sector and to revive enforcement of the historically underutilized Robinson-Patman Act. However, the case faced significant opposition and was ultimately dismissed in May 2025, raising ongoing discussions about the law’s relevance and the agency’s enforcement priorities.

Background and Legal Context

The Robinson-Patman Act, enacted in 1936, is designed to protect small businesses from discriminatory pricing tactics by manufacturers and suppliers that favor large chain retailers. Sections 2(d) and 2(e) of the Act specifically prohibit discriminatory promotional allowances and services that may harm competition.

The FTC alleged that PepsiCo’s pricing strategy included volume discounts, advertising subsidies, and promotional funds disproportionately allocated to a dominant retailer. This allegedly resulted in market distortion, disadvantaging smaller competitors who could not access the same financial incentives.

Details of the FTC Allegations

The FTC’s complaint, filed in the U.S. District Court for the Southern District of New York, detailed how PepsiCo’s practices deprived smaller retailers of competitive opportunities, raising prices indirectly for consumers and undermining retail diversity.

Unlike other antitrust laws, the Robinson-Patman Act treats promotional allowance discrimination as a per se violation, meaning that proof of discriminatory treatment alone suffices to establish wrongdoing without a need to demonstrate actual harm to competition.

Industry and Political Reactions

FTC Chair Lina Khan advocated for the lawsuit, emphasizing the importance of protecting small businesses and consumers from anti-competitive practices. She stated that such actions threaten consumer welfare by consolidating market power and reducing retail competition.

However, the lawsuit generated strong criticism from Republican FTC commissioners Andrew Ferguson and Melissa Holyoak. They argued that the case lacked sufficient evidence and was politically motivated, pointing out concerns that reviving the RPA for modern markets could be both legally and economically misguided.

Legal Proceedings and Dismissal

Despite initial court acceptance of the case, the FTC voted unanimously in May 2025 to voluntarily dismiss the lawsuit without prejudice. This dismissal ended the FTC’s current pursuit but left the door open for potential future action.

Chair Andrew Ferguson described the case as a misuse of agency resources motivated by political considerations, emphasizing the need for enforcement actions grounded in solid evidence and clear consumer harm.

Ongoing Private Litigation and Broader Implications

While the government’s case was dropped, private class-action lawsuits alleging similar price discrimination practices by PepsiCo remain active. These suits focus on the same core issues of unfair retailer treatment and competitive disadvantages.

The lawsuit and its dismissal spotlight the challenges of enforcing the Robinson-Patman Act in a complex, modern retail environment dominated by giant chain stores and sophisticated pricing schemes.

Regulatory and Market Impact

The PepsiCo FTC lawsuit underscores the tension between efforts to protect small businesses and contemporary economic realities favoring scale and efficiency. The mixed signals from the FTC and the ongoing legal challenges emphasize that businesses must carefully structure pricing and promotional practices to remain compliant while remaining competitive.

The case reignited debate over whether the Robinson-Patman Act remains an effective tool in today’s marketplace or whether it should be revised or repealed to better align with current commercial landscapes.

Conclusion

The PepsiCo FTC price discrimination lawsuit of 2025 illustrates the complex intersection of antitrust law, retail dynamics, and regulatory priorities. Although the FTC shelved the case, the issues raised continue to resonate across the consumer packaged goods industry and the broader competition policy community.

Stakeholders should monitor future legal developments and regulatory guidance to understand evolving expectations around fair pricing and promotional activities in retail settings.