FTC Said to Probe Coca-Cola, PepsiCo on Price Discrimination
ALEXANDRIA, Va.—The US Federal Trade Commission (FTC) is reportedly investigating Coca-Cola and PepsiCo for possible price discrimination in the soft drink market, Politico reports. The commission is seeking to revive a law prohibiting the practice of price discrimination known as the Robinson-Patman Act.
The law prohibits suppliers from offering better prices to large retailers than to 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 recently contacted major retailers, including Walmart, for records and other information about how they buy and pay for soft drinks; however, Walmart is not under investigation, Politico reports.
Alvaro Bedoya, the FTC’s newest commissioner, wants to make enforcement of the Robinson-Patman Act a priority, according to Politico. The act has been in place for decades, but the FTC hasn’t enforced it in more than 20 years. The last case according to the law was in 2000, while before that there was a case in 1988.
The departure from Robinson-Patman enforcement came amid a growing focus at the FTC and Justice Department on harming consumers, namely higher prices, rather than harming competitors, Politico reports.
Bedoya has publicly criticized the FTC’s lack of enforcement of the Robinson-Patman Act and blamed it for a large increase in prices charged by small businesses throughout the economy.
FTC Chair Lina Khan also wants to revive enforcement of the Robinson-Patman Act. In a July 2022 bipartisan policy statement, FTC commissioners unanimously said the agency could use the law to target illegal prescription drug rebates that block patients’ access to lower-priced alternatives.
To revitalize the law, the FTC not only “needs to find a good test case, but it needs to rebuild its skills and expertise in conducting Robinson-Patman Act investigations,” said Bill Kovacic, a former commissioner and chairman of agency, for Politico. “Compared to the other things we were forced to do, it was a firm priority for the landlord,” 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 lower-income consumers,” Alden Abbott, a former FTC general counsel during the Trump administration, told Politico. Abbott said it is a “special interest bill” designed to support small businesses.
However, Bedoya made the connection between the implementation of Robinson-Patman and high food prices in rural areas, including on Native American reservations. “The idea that low prices at the big box store help everyone is not true in Pine Ridge [South Dakota], where 90% of the people don’t have cars,” he said of the 180-mile round trip to the nearest large grocery store. “I think there’s a line you can draw from that sweat law, to people in Pine Ridge not being able to buy fruit for their kids because prices have gone through the roof.”