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The Federal Trade Commission (FTC) has filed a lawsuit against PepsiCo, accusing the company of engaging in illegal price discrimination.

The FTC alleges that Pepsi has provided unfair pricing advantages to a large big box retailer, while increasing prices for competing retailers and customers.

According to the FTC’s allegations, Pepsi has consistently favoured one of its largest big box customers by offering promotional payments and other benefits not extended to smaller competitors, including local convenience stores and larger grocery chains. These practices, the FTC argues, have led to inflated prices for American families and undermined fair competition.

FTC's chair, Lina M. Khan, said: “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. 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.”

The lawsuit cites violations of the Robinson-Patman Act (RPA), which prohibits price discrimination through the use of advertising and promotional allowances that favour larger customers over smaller businesses. The FTC alleges that Pepsi has engaged in these practices, using financial incentives to benefit one large retailer at the expense of others.

Certain portions of the FTC’s complaint remain redacted due to legal protections for both Pepsi and its preferred big box retailer. The FTC staff will move to lift these redactions to provide a clearer view of Pepsi’s alleged violations and how these actions have impacted competing retailers.