Cans of Pepsi are seen 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 said Friday it is filing charges PepsiCo for illegal price discrimination, alleging that the food and beverage giant gave an unnamed retailer more favorable prices than its competition.
Walmart is the unnamed retailer, people familiar with the matter told CNBC.
The FTC alleges that Pepsi violated the Robinson-Patman Act, which prohibits sellers from charging competing buyers different prices for the same “good” or selectively providing compensation, such as compensation for advertising. The agency alleges that Pepsi provided Walmart with promotional payments and allowances, as well as advertising and promotional resources, that it did not offer to the retail giant's rivals.
Pepsi denied the allegations and said the FTC's lawsuit is both factually and legally incorrect.
“PepsiCo strongly disputes the FTC's allegations and the biased manner in which the lawsuit was filed. We will vigorously pursue our case in court,” the company said in a statement to CNBC. “PepsiCo's practices are consistent with industry standards 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 complaint, filed in the Southern District of New York, is currently sealed.
The FTC also said a “substantial portion” of the alleged violations in the lawsuit are being redacted, citing the legal protections given to Pepsi and the major retailer. The committee is seeking to lift the redactions to show how Pepsi broke the law and how these alleged actions led to higher prices for competing retailers.
The Robinson-Patman Act was passed in 1936, but the federal government stopped enforcing it during the deregulation of the 1980s. The FTC resumed enforcement in December when it sued Southern Glazer's, the largest U.S. distributor of wine and spirits.
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 time as chair of the FTC. Her Republican successor, Andrew Ferguson, currently serves on the committee and has issued a statement opposing the decision to sue Pepsi.
The Biden administration has taken a series of legal actions against companies and business leaders in recent days, targeting Capital One, Southwest Airlines and Elon Musk, among others.
-CNBCs Maria Catharina Wellons contributed reporting for this story.