Coke & Pepsi Facing FTC Pricing Probe

The Federal Trade Commission is investigating Coca-Cola and PepsiCo for possible violations of the Robinson-Patman Act, which prohibits suppliers from offering better prices to large retailers at the expense of smaller competitors. The FTC has requested information on how soft drinks are purchased and priced from large retailers, including Walmart, which is not a target in the probe. Coca-Cola says it is committed to fair and lawful competition in the marketplace and has not done anything illegal. If the FTC finds evidence of a violation, it could serve an administrative complaint and a cease-and-desist order could be issued. The FTC is viewed as looking for a good test case to demonstrate the Robinson-Patman Act as an underutilized tool for protecting small businesses, as part of the Biden administration's push for structural changes in antitrust law enforcement.

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The FTC is now investigating or there's a preliminary investigation of Coke and Pepsi relative to something called price discrimination. Which runs afoul of the Robinson Patman Act. When I read that I thought Matt Stoller who I know also works at the American economics Liberties project couldn't have had probably a bigger smile on his face on that day. Everything I know about Patman I know from reading his book. Explain to us what this is and what the implications of this is. And what the implications of Reviving The Robinson Patman act are. The interesting thing about this is that for years I mean going back to 2014 2015 maybe 20 even earlier when there was this sort of nascent Revival which I know you were a part of at a different outfit, a nascent Revival of antitrust. And I would interview people about it and everyone was saying like we don't need to pass any new laws. It is really just basically all these tools that are there. It's just people have to decide that they're going to use a hammer again as a hammer instead of like you know I don't know a paperweight. or yeah a door you know like a way to keep a door open. and that seems like it's happening now with this Administration. Tell us about this price discrimination investigation and the Robinson Patman Act. Yeah, I think non-competes are pretty straightforward and simple. The Robinson Patman Act is a little bit more complicated. So earlier or I guess towards the middle of last year the FTC took its first step to start reinvigorating the Robinson Patman act. and they looked at Pharmacy benefit managers. so they looked at drug prices. The Robinson Patman Act prohibits not only price discrimination but also commercial bribery. and so the fee structure between drug manufacturers and Pharmacy benefit managers potentially something the FTC is investigating is in violation of the Robin's Patman act and its prohibition on Commercial bribery.