FTC Said to Probe Coca-Cola, PepsiCo on Price Discrimination

The agency reportedly wants to enforce the Robinson-Patman Act, which bans price discrimination between small and large retailers.

January 10, 2023

ALEXANDRIA, Va.—The U.S. Federal Trade Commission (FTC) is reportedly investigating Coca-Cola and PepsiCo for potential price discrimination in the soft drink market, reports Politico. The commission is looking to revive a law that bans the practice of price discrimination known as the Robinson-Patman Act.

The law bars suppliers from offering better prices to large retailers over smaller retailers. The purpose of the Robinson-Patman Act is to level the playing field between small retailers and large chain stores.

The FTC has contacted large retailers recently, including Walmart, to find data and other information on how they purchase and how much they pay for soft drinks; however, Walmart is not under investigation, reports Politico.

Alvaro Bedoya, the FTC’s newest commissioner, wants to make the enforcement of the Robinson-Patman Act a priority, according to Politico. The act was enforced for decades, but the FTC has not enforced it in over 20 years. The last case under the law was in 2000, and before that, there was a case in 1988.

The move away from Robinson-Patman enforcement came amid increasing focus at the FTC and Justice Department on harm to consumers, namely higher prices, rather than harm to competitors, reports Politico.

Bedoya has publicly criticized the FTC’s lack of enforcement of the Robinson-Patman Act and has blamed it for a steep increase in prices offered by small businesses across the economy.

FTC Chair Lina Khan also wants to revive the enforcement of the Robinson-Patman Act. In a July 2022 bipartisan policy statement, the FTC commissioners unanimously said the agency could use the law to target illegal prescription drug rebates that block patient access to lower-priced alternatives.

To reinvigorate the law, the FTC not only “must find a good test case, but it has to restore its skills and expertise in conducting Robinson-Patman Act investigations,” Bill Kovacic, a former commissioner and chairman of the agency, told Politico. “Compared to other things we were pressed to do, it was a decidedly lessor priority,” Kovacic said of his tenure at the agency.

Critics of the Robinson-Patman Act say it has the opposite of its intended effect.

“Bringing more Robinson-Patman Act cases would raise prices for the lowest income consumers,” Alden Abbott, a former FTC general counsel during the Trump Administration, told Politico. Abbott said it is a “special interest law” designed to prop up small businesses.

However, Bedoya made the connection between Robinson-Patman enforcement and high food prices in rural areas, including on Native American reservations. “The idea that low prices at the big box store help everybody isn’t true in Pine Ridge [South Dakota], where 90% of folks don’t have cars,” he said of the 180-mile round trip journey to the nearest large grocery store. “I think there’s a line you can draw from that law lying fallow, to people in Pine Ridge not being able to buy fruit for their kids because the prices have gone through the roof.”