By: John Carroll, Leo Caseria & Malika Levarlet (Sheppard Mullin)
According to people with knowledge of the matter, the Federal Trade Commission is conducting a preliminary investigation of Coca-Cola and PepsiCo to determine whether their pricing practices in the soft drink market segment violate the price discrimination prohibitions of the Robinson-Patman Act (the “RPA”). Section 2(a) of the RPA makes it unlawful for a supplier to discriminate in price between competing resellers of “commodities of like grade and quality” when the effect of such discrimination is to injure competition.
Enacted in 1936, the purpose of the RPA was to prevent suppliers from granting lower prices to high volume competitors to the detriment of small businesses. Although initially enforced by the FTC, the RPA has been criticized as a special interest law that, while benefitting small businesses, actually had the effect of increasing prices thereby harming consumers. The Department of Justice announced in 1977 that it would stop enforcing the law. Although the FTC never made a similar announcement, its last enforcement action was a March 2020 Settlement with spice supplier McCormick & Co. Private litigation has continued under the RPA…
