Cola Wars

Posted on Mar 4, 2025 by

When I was in college, my buddies and I played a ton of ‘Madden’ football on our Sega Genesis while downing Mountain Dew and family-sized bags of Cool Ranch Doritos. The soda and chips, both produced by PepsiCo, were staples in our college house. Thanks to the Federal Trade Commission, we may now have to pay a little bit more for them at a big-box grocery store if we decide to have a ‘Madden’ tournament at our 30th class reunion.

Earlier this year, the FTC sued PepsiCo for allegedly engaging in illegal price discrimination with a large retailer, whose name was redacted in the statement from commissioners. The suit, which was filed in the U.S. District Court for the Southern District of New York, alleges the retailer received “unfair pricing advantages” that were not made available to other retailers. According to CNN, an inside source claims the retailer is Walmart.

According to the suit, the big-box store “consistently” received promotional payments and advertising from PepsiCo, which also owns major brands including Frito-Lay, Quaker, Cap’n Crunch, Pearl Milling Company (formerly Aunt Jemima), Cracker Jacks, Aquafina water and Gatorade. These payments benefited the major retailer, while at the same time allegedly put family-owned grocers, local convenience stores and even larger chains at a competitive disadvantage.

FTC Chair Lina Khan issued a statement saying, “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.”

In FTC’s announcement, the agency asserted that PepsiCo’s actions violated the Robinson-Patman Act of 1936, which prohibits a seller from charging competing buyers different prices for the same “commodity.” It also precludes companies from discriminating in the provision of “allowances,” or compensation for advertising and other services, such as store displays, special packaging, prizes or free merchandise for promotional contests.

Basically, the Act requires that a seller treat all competing customers in a proportionately equal manner. It was passed to prevent giving favored customers an unfair advantage in the market. For the FTC to prevail in a lawsuit alleging a violation of the Robinson-Patman Act, the agency must prove that the products being sold must be of “like grade and quality,” there must be sales to at least two different purchasers within approximately the same time period, there must be the reasonable possibility of injury to competition, and the sales must involve interstate commerce (the relevant sales must cross state lines).

And PepsiCo isn’t necessarily the only target of the FTC’s ire. The Act provides that the big-box retailer benefiting from the discrimination violated the Act if it forced, or “induced,” the seller to grant a discriminatory price or knowingly received a discriminatory price.

“PepsiCo strongly disputes the FTC’s allegations, and the partisan manner in which the suit was filed,” the company said in a statement. PepsiCo insists that it “does not favor certain customers by offering discounts or promotional support” to some retailers over others. “We will vigorously present our case in court,” the statement concluded.

PepsiCo does have some legal defenses in the suit, which the company claims is an “unprecedented expansion” of the Robinson-Patman Act. First, a price difference is allowed if PepsiCo can justify it because of a volume discount. In addition, PepsiCo could have given a good faith price concession to the retailer to meet a competitor’s price, such as offering the same price for a case of soda offered by Coca-Cola.

It sounds as though PepsiCo is going all-in on this lawsuit and has all their chips on the table – they just have to be sure they’re charging everyone the same for them.



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Reg P. Wydeven

Elder Law and Estate Planning Attorney at McCarty Law LLP
Hoping to follow in his father’s footsteps from a young age, Reg’s practice primarily consists of advising individuals on estate planning, estate settlement and elder law matters. As Reg represents clients in matters like guardianship proceedings and long-term care admissions, he feels grateful to be able to offer families thorough legal help in their time of need.
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