Pepsi, Coke reportedly targeted in FTC probe over price discrimination

PepsiCo and Coca-Cola Company are reportedly under investigation at the Federal Trade Commission for a case related to possible price discrimination for their beverage products.

The probe was said to have been carried out as the federal agency wants to revive a decades-old price discrimination law that banned the practice.

According to Politico, four sources with knowledge of the matter said that PepsiCo and Coca-Cola are undergoing preliminary probes at the FTC. In this case, the beverage and snack manufacturing giants’ pricing schemes are being checked and carefully inspected under the unclear law called the Robinson-Patman Act.

Under this regulation, suppliers are not allowed to offer better prices to major retailers at the expense of smaller rivals. This law was said to have been created in 1936 but remained largely dormant. The main goal for the passing of the Robinson-Patman Act is to promote a level playing field between small and large retailers.

Moreover, it was revealed that the FTC also contacted Walmart and other big retailers in connection with the price discrimination probe. The agency is gathering data and information as to how they buy and price their soda beverages. The insiders clarified that despite being contacted, Walmart is not being investigated, nor is it being targeted like PepsiCo and Coca-Cola.

There are critics who say that the Robinson-Patman Act has the opposite effect and is not what it was intended to do when it was implemented. They said that while this law can boost small businesses, it may also unintentionally raise the prices at the large chains and harms the customers as a result.

“Bringing more Robinson-Patman Act cases would raise prices for the lowest income consumers,” former FTC general counsel, Alden Abbott, commented.

Meanwhile, the probe is still in the early stages, and people who have knowledge about it are still not allowed to discuss the matter.

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