FTC Dismisses Lawsuit Against PepsiCo Filed Under Biden Admin

The lawsuit had accused the food and beverage giant of illegal price discrimination.

Bottles of Pepsi at a grocery store in Pasadena, Calif., on July 11, 2017. Mario Anzuoni/Reuters

The Federal Trade Commission (FTC) voted Thursday to dismiss a lawsuit against PepsiCo that was filed in the final days of the Biden administration, which had accused the food and beverage giant of price discrimination.

The Republican-controlled agency voted 3–0 to dismiss the legal challenge without prejudice, meaning it could hypothetically be refiled against the company at a later date.

FTC Chairman Andrew Ferguson said the lawsuit had been “rushed” through by the previous administration.

“The Biden-Harris FTC rushed to authorize this case just three days before President Trump’s inauguration in a nakedly political effort to commit this administration to pursuing little more than a hunch that Pepsi had violated the law,” Ferguson said. “Taxpayer dollars should not be used for legally dubious partisan stunts. The FTC’s outstanding staff will instead get back to work protecting consumers and ensuring a fair and competitive business environment.”

The FTC initially filed the lawsuit in January, accusing PepsiCo of illegal price discrimination under the 1936 Robinson-Patman Act (RPA), a law it said was aimed at helping level the playing field that favored chain stores and other large enterprises over small businesses.

At the time the suit was filed, Lina Khan was the FTC’s chairwoman.

Democratic FTC Commissioners Rebecca Slaughter and Alvaro Bedoya supported Khan in filing the legal challenge while Commissioner Melissa Holyoak and then-Commissioner Ferguson dissented.

According to the FTC, Pepsi, the second-largest food company in the world, gave unfair price benefits, advantages, and special discounts to one customer, a large, big box retailer, while charging higher prices to competing stores.

In its lawsuit, the agency said such benefits allegedly included promotional payments, allowances, and services that were not made available to competitors on “proportionally equal terms.”

Pepsi’s unfair practices disadvantaged retailers who compete with the big box retailer in the resale of Pepsi soft drinks across the United States, including family-owned neighborhood grocery stores, local convenience stores, mid-tier grocers, and independent retailers, the lawsuit stated.

Pepsi’s Actions Led to Inflated Prices, Lawsuit Claims

Pepsi’s alleged behavior also forced retailers to raise costs, leading to inflated prices for American families, the FTC said.

“The competition that these retail businesses provide is a critical component of the American economy and offers valuable alternatives that benefit consumers and communities,” the agency wrote in its lawsuit.

The FTC had sought a permanent injunction against PepsiCo’s alleged anticompetitive behavior.

Just days after the lawsuit was filed, President Donald Trump took office, and Khan resigned.

Bedoya and Slaughter were fired by Trump in March, and they have since sued the administration over their removals.

Holyoak said staff at the FTC, including economists and lawyers, are “highly skilled professionals,” adding that the commission “should not have sent them into court to fight a losing battle.”

“Today’s dismissal allows our dedicated staff to focus on bringing enforcement actions where we have reason to believe the law has been violated, and where they can do what they do best—protect American consumers,” she said.

PepsiCo welcomed the FTC’s withdrawal of the lawsuit.

“PepsiCo has always and will continue to provide all customers with fair, competitive, and non-discriminatory pricing, discounts, and promotional value,” the company said in a statement.

The Associated Press contributed to this report.