Pepsi cans are displayed at a Target store in the Flatbush neighborhood of Brooklyn, New York City on February 9, 2024.
Michael M. Santiago | Getty Images
The Federal Trade Commission announced Friday that it is suing PepsiCo for illegal price discrimination: The food and beverage giant offered an unnamed retailer lower prices than its competitors.
Walmart is the unnamed retailer, people familiar with the matter told CNBC.
The FTC accuses Pepsi of violating the Robinson-Patman Act, which prohibits sellers from offering competing buyers different prices for the same “goods” or selectively providing benefits, such as compensation for advertising. The agency argues that Pepsi provided Walmart with advertising payments and allowances, as well as advertising and promotional tools, that it did not offer to the retail giant's competitors.
Pepsi denied the allegations and said the FTC's lawsuit was incorrect both factually and legally.
“PepsiCo strongly disputes the FTC’s allegations and the biased manner in which the lawsuit was filed. We will vigorously argue our case in court,” the company said in a statement to CNBC. “PepsiCo's practices are consistent with industry norms and we do not favor certain customers by offering discounts or promotional support to some customers and not others.”
Walmart did not immediately respond to a request for comment from CNBC.
The lawsuit, filed in the Southern District of New York, is currently sealed.
The FTC also said that a “significant portion” of the alleged violations were redacted in the lawsuit, citing the legal protections afforded to Pepsi and the major retailer. The Commission wants to remove the redactions to show how Pepsi violated the law and how these alleged actions resulted in higher prices for competing retailers.
The Robinson-Patman Act was passed in 1936, but the federal government stopped enforcing it in the wake of deregulation in the 1980s. The FTC resumed enforcement in December when it sued Southern Glazer's, the largest U.S. wine and spirits retailer.
The lawsuit comes on the last business day before President-elect Donald Trump's inauguration on Monday, which will mark the end of Lina Khan's term as FTC chairwoman. Her Republican successor, Andrew Ferguson, is currently a member of the commission and released a statement opposing the decision to sue Pepsi.
The Biden administration has taken numerous legal actions against companies and corporate executives in recent days, targeting Capital One, Southwest Airlines and Elon Musk, among others.
—CNBC's Mary Catherine Wellons contributed reporting to this story.
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