Federal Trade Commission Abandons Lawsuit Initiated During Biden Administration Against PepsiCo
The Federal Trade Commission (FTC) has dismissed a lawsuit against PepsiCo, a move that accused the beverage giant of price discrimination in favor of large retailers, particularly Walmart. The lawsuit was initially filed in January 2025 under the Biden administration, with the Department of Justice alleging PepsiCo's promotional benefits, such as exclusive discounts or side payments, were given to Walmart at the expense of smaller competitors and consumers.
The allegations, based on the 1936 Robinson-Patman Act, suggested PepsiCo's practices violated the law by tilting the competitive landscape against smaller businesses and increasing costs for consumers. Lina Khan, the former FTC chair, had stated that the FTC's action would help ensure a fair playing field for businesses of all sizes.
However, due to political changes, Khan and the FTC's Democratic majority were replaced before Trump's presidency. The lawsuit's dismissal comes from the newly-appointed FTC chairman, Andrew Ferguson, who characterized the lawsuit as a "dubious partisan stunt" and criticized its rushed authorization. Ferguson argued that the complaint was legally questionable and misused taxpayer funds.
In his statement, Ferguson emphasized that the FTC would instead focus on enforcement actions with a stronger legal basis for violations. PepsiCo has indicated it is pleased with the government's decision to request a dismissal, stating that it has always and will continue to provide fair, competitive, and non-discriminatory pricing for all customers.
It's worth noting that, prior to the dismissal of this lawsuit, PepsiCo had faced increasing scrutiny for its business practices. For instance, in 2022, it acknowledged reducing the size of its Gatorade bottles from 32 ounces to 28 ounces, but did not provide a clear explanation for the price increase associated with the smaller size.
With the lawsuit dismissed without prejudice, there is a possibility that the FTC could refile the case if further grounds arise. However, for now, the focus will shift to the FTC's enforcement of competition laws with a stronger emphasis on a sound legal basis for claims.
The lawsuit's dismissal against PepsiCo in the price discrimination case has raised questions about the role of politics in business affairs, as the new FTC chairman, Andrew Ferguson, characterized the lawsuit as a "dubious partisan stunt." Regardless, the focus in finance and general-news now shifts to the FTC's concentration on enforcement actions with a stronger legal basis for violations, potentially impacting the competitive landscape of businesses in the beverage industry.
