FTC Probing Coke, Pepsi For Price Discrimination: Report

Coca-Cola and PepsiCo are under preliminary investigation by the US Federal Trade Commission (FTC) over potential price discrimination in the soft drink market, Politico reported on Monday.

The companies’ pricing strategies are being scrutinized under an obscure law known as the Robinson-Patman Act, the people said. 

The law prohibits suppliers from offering better prices to large retailers at the expense of their smaller competitors. The largely dormant 1936 law is aimed at promoting a level playing field between small retailers and large chain stores.

For at least the last month the FTC has reached out to large retailers, including Walmart, seeking data and other information on how they purchase and price soft drinks, two of the people said. Walmart is not currently a target in the investigation, one of the people said.

Related: FTC Approves PepsiCo’s Rockstar Energy $3.85B Buy

The new investigation is the latest sign that the Biden administration is expanding its efforts to rein in big companies and flex its antitrust muscles, and not just in the technology world. 

Under Lina Khan, the FTC has reached deep into the antitrust playbook, dusting off long quiescent laws in the hopes of curtailing the growth of the world’s biggest firms, from relative newcomers like Apple and Google, and now to more traditional Fortune 500 stalwarts like Pepsi and Coke.

The Robinson-Patman Act was enforced regularly for decades by the FTC then all but abandoned more than 20 years ago. The agency’s last case under the law was a settlement with spice company McCormick. Prior to that its most recent case was from 1988 against book publishers including Simon & Schuster and Random House. 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.