On May 22, 2025, the Federal Trade Commission (“FTC”) voted 3-0 to dismiss, without prejudice, its Robinson Patman Act (“RPA”) case against PepsiCo, Inc. (“Pepsi”). The lawsuit was initially filed in the U.S. District Court for the Southern District of New York on January 17, 2025, in the final days of the Biden-Harris administration, with the FTC voting 3-2 (along party lines) to authorize filing the case. Then-Republican Commissioners Ferguson and Holyoak issued dissenting statements. The FTC’s Complaint against Pepsi followed a similar case filed by the FTC against Southern Glazer’s Wine and Spirits, which was the first government enforcement action brought under the RPA in nearly a quarter century. The FTC alleged that Pepsi violated Section 5 of the Federal Trade Commission Act and RPA Sections 2(d) and 2(e), which prohibit firms from engaging in price discrimination by providing promotional allowances, such as discounts or services, to favored customers.
RPA Overview
As explained in our previous blog post about the Southern Glazers case, Congress passed the RPA in 1936 to prevent large retail chains from receiving lower prices from suppliers than the prices offered to small independent businesses. Specifically, Section 2(a) of the RPA prohibits sellers from offering discriminatory prices to favored customers, while Section 2(f) prohibits buyers from inducing or receiving a discriminatory price. Sections 2(c), 2(d), and 2(e) prohibit sellers and buyers from using brokerage, allowances, and services to accomplish indirectly what Sections 2(a) and 2(f) prohibit directly.
The RPA protects a seller’s competitors from “primary line” injury, which occurs when a seller harms its competitors by reducing prices in a specific geographic area for a sustained period. It also protects buyers from “secondary line” injury, which occurs when a seller gives price advantages to favored customers over its customers’ competitors.
Complaint
The FTC’s Complaint alleged that Pepsi violated the RPA by providing one of its customers—a large, big box retailer—with allegedly unfair pricing advantages, such as advertising and promotional allowances, while denying those same benefits to, and essentially raising prices for, that customer’s competitors. The Complaint also alleged that Pepsi provided its favored retailer customer with various advertising and promotional tools, known as services and facilities, without making those benefits available to that customer’s competitors on proportionally equal terms. The FTC claimed that these practices harmed retailers, including family-owned neighborhood grocery stores that compete with Pepsi’s favored big box retailer customer, and inflated prices for American consumers.
Statement of Chairman Andrew N. Ferguson Joined by Commissioner Melissa Holyoak
Chairman Ferguson issued a statement joined by Commissioner Holyoak on the decision to dismiss the Complaint against Pepsi. The Statement highlighted Chairman Ferguson and Commissioner Holyoak’s prior dissenting statements issued when the FTC filed the Complaint in January 2025, and reiterated that the Complaint was “purely political” and that there was “no evidence” to support its allegations. The Statement acknowledged that the FTC is obligated to enforce the RPA, but only after a thorough investigation reveals that the FTC is “likely to prevail in litigation.”
Concurring Statement of Commissioner Mark R. Meador
Commissioner Meador issued a concurring statement that more vigorously defended the FTC’s obligation to enforce the RPA when there is clear consumer harm, but he too agreed with Chairman Ferguson and Commissioner Holyoak that the Complaint was hastily filed without the requisite investigation to support the allegations. The Statement specifically discussed how the Complaint against Pepsi did not provide a single example of Pepsi refusing to offer comparable pricing terms to other buyers, which Commissioner Meador explained is a “key element of any RPA claim.” Commissioner Meador also stated his opinion that the decision to dismiss the Complaint was “necessary to prevent lasting harm to our future antitrust enforcement efforts and the agency’s institutional credibility” and that the FTC’s prior action was “possibly the most reckless and irresponsible use of antitrust enforcement resources [he has] witnessed.”
Key Takeaways
The Commissioner statements in the Pepsi case confirm that the FTC under the new administration is open to enforcing the RPA against the right set of facts and evidence, but not in the pursuit of innovative cases. Especially in light of the challenges to successful RPA enforcement (which are discussed in more detail in our prior post on the Southern Glazers case), such as numerous potential defenses, lack of recent successful private actions, and limitation of applicability only to sales of tangible goods and not markets for services or technology, we do not expect to see an increase in RPA enforcement following the brief uptick that preceded the change in U.S. presidential administrations.
However, the dismissal of the case against Pepsi should not be read as a sign that the RPA will go dormant again, as both the majority and concurring opinions acknowledged the validity of the RPA, with Commissioner Meador even “applaud[ing] efforts to revive the RPA.” Chairman Ferguson also acknowledged that the FTC is obligated to enforce the RPA while noting that it will do so only when they are likely to win. The possibility therefore remains that more suitable facts could give rise to agency enforcement of the RPA in the future. In addition, private enforcement of the RPA is likely to continue, which, while historically unsuccessful, can be costly to litigate. It therefore remains prudent to seek antitrust guidance and evaluate whether certain defenses apply when considering differential pricing for similar products.