By Dave Michaels and Laura Cooper

The Federal Trade Commission on Friday sued PepsiCo in a last-minute blitz of lawsuits before the end of the Biden administration, alleging that the beverage giant forced many consumers to pay higher prices by giving Walmart unfair pricing advantages.

The FTC, whose legal filing was sealed, said PepsiCo provided promotional pricing deals to a single "big-box" customer. Walmart was the recipient of those incentives, according to people familiar with the matter. The agency said PepsiCo didn't give the same pricing incentives to smaller retail outlets, which "led to inflated prices for American families."

PepsiCo disputed the allegations. Walmart declined to comment. Walmart is PepsiCo's largest retail customer. Including Walmart affiliates like Sam's Club, sales to Walmart represented 14% of PepsiCo's 2023 revenue.

"PepsiCo's practices are in line with industry norms and we do not favor certain customers by offering discounts or promotional support to some customers and not others," PepsiCo said.

The FTC's lawsuit, filed in Manhattan federal court, is premised on a decades-old law that forbids suppliers from selling goods at different prices to retailers. The statute, which dates from the 1930s, sought to preserve a level playing field between small retailers and bigger sellers such as grocery chains.

The FTC under Chair Lina Khan sought to revive enforcement of the law, which withered during the 1980s as critics argued it effectively disallowed discounting and resulted in higher prices. It is common for manufacturers to offer different prices to preferred retailers, in part because of the volume of sales a large retailer can provide.

The five-member FTC voted to approve the lawsuit against PepsiCo in a 3-2 vote, with its two Republicans voting against the case. Commissioner Melissa Holyoak, one of the Republicans, wrote that it represents "the worst case I have seen in my time at the commission." The court complaint, which is still under seal, is so weak that it likely will be dismissed early by a judge, Holyoak wrote.

Friday's lawsuit is part of a raft of measures that Khan has filed during her last week in office, with Republican commissioners dissenting on many of them. Khan on Thursday announced that she had referred a complaint about Snap, the social-media company, to the Justice Department over concerns that its artificial-intelligence chatbot could harm young users.

The agency sued heavy equipment maker Deere on Wednesday despite having been in settlement talks with the company, according to Deere and FTC Commissioner Andrew Ferguson, who is the agency's incoming chairman.

The FTC's 11th-hour array of lawsuits, referrals and reports ignores the change in approach that voters voted for in November, said Ferguson, who dissented on the Deere case.

Democrats shouldn't "be surprised or outraged when the incoming majority implements President Trump's vision with equal vigor," he wrote.

--Sarah Nassauer contributed to this article.

Write to Dave Michaels at dave.michaels@wsj.com and Laura Cooper at laura.cooper@wsj.com

(END) Dow Jones Newswires

January 17, 2025 13:17 ET (18:17 GMT)

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