The FTC’s PepsiCo Case—and Why Economists Remain Skeptical

In May 2025, a federal court ordered the FTC's complaint against PepsiCo to be made public. This was a big change in the lawsuit. This happened after the agency decided to drop the case on its own. The unsealed filing said that Walmart was the preferred retailer and gave a general theory of price discrimination based on trade promotions instead of output, prices, or harm to customers.

The FTC v. PepsiCo case never went to court, but the unsealed complaint is now the FTC's most aggressive plan to bring the Robinson-Patman Act back to life. That vision brings up old problems that economists still haven't solved.

People who agree with the FTC's case say that it is a long-overdue effort to protect smaller stores from unfair pricing and limit the power of buyers. They say that giving big stores special discounts and promotional allowances hurts competition and, in the end, hurts customers.

Those worries are not silly. But the economic framework in the PepsiCo complaint is very different from how modern antitrust analysis works.

The FTC did not say that output went down, prices went up, or consumer welfare went down. Instead, it called competitive harm "relative disadvantage." According to the complaint, PepsiCo set up discounts and promotional payments in a way that made non-Walmart stores pay more for wholesale goods, which made Walmart look more competitive at the shelf.

The framing is the biggest problem when it comes to money.

Price discrimination is not inherently anticompetitive. In competitive markets, it often shows how different things affect bargaining power, demand elasticity, scale efficiencies, and risk allocation. Big stores get better deals because they spend a lot of money on advertising, lower shipping costs, and promise a lot of sales. Most of the time, these deals mean lower prices for customers, which means that prices at stores go down instead of up.

The FTC's complaint didn't really talk about that analysis. It thought that trade promotions, like marketing funds, discounts, and merchandising support, were suspicious parts of "price," and it put all of these contracts into one liability framework. It made normal practices that helped things run more smoothly into possible violations of antitrust laws without any real economic screens.

People who support the FTC often say that Robinson-Patman was never meant to put the needs of consumers first. That was true in the past. But that's exactly why courts have been skeptical of enforcing Robinson-Patman for a long time. If you protect your competitors instead of the competition, you are more likely to get false positives. If a business is worried about being sued for giving out personalized discounts or promotions, the best thing to do is to raise prices all around and cut back on discounts.

That result is bad for customers.

The PepsiCo case makes this conflict very clear. The FTC's theory didn't need proof of below-cost pricing, foreclosure, or output reduction; it only needed proof that some stores got worse deals than others. From a legal and economic point of view, that's not a strong enough reason to condemn behavior in competitive markets.

The FTC eventually dropped the case, probably because they saw these flaws. But the complaint that was made public is now a model for private lawsuits, where plaintiffs don't have to deal with as many institutional restrictions and don't have to think about the systemic costs of over-enforcement.

The lesson is clear for economists. The PepsiCo complaint shows that people are once again willing to put structural fairness ahead of efficiency, pass-through, and consumer welfare. That argument may be old, but it is far from over.

To bring back enforcement of Robinson-Patman in a way that courts will accept, we need to work with modern economics, not run away from it. That means showing less production, less investment, or harm to consumers, not just differences in results between competitors.

Skepticism is not ideological until then. It is about money.