Decades-Sealed Antitrust Law Unveiled... FTC Targets Coca-Cola and Pepsi

[Asia Economy Reporter Yujin Cho] Coca-Cola, the undisputed number one in the cola industry, and its rival Pepsi are facing antitrust investigations in the United States. The antitrust regulatory focus, which had been concentrated on big tech, is now spreading comprehensively to retailers.

The Wall Street Journal (WSJ) reported on the 10th (local time) that the U.S. Federal Trade Commission (FTC) is conducting an investigation into the pricing practices of Coca-Cola and Pepsi in the beverage market. Sources familiar with the matter said that the investigation is still in the preliminary stage, focusing on price discrimination practices.

FTC Chair Lina Khan.
Photo by Reuters Yonhap News

The FTC is investigating whether Coca-Cola and Pepsi, the oligopolistic companies in the cola market, have violated the Robinson-Patman Act, which prohibits anti-competitive price discrimination.

The Robinson-Patman Act requires producers to supply goods to all buyers at the same price. According to this law, allegations that Coca-Cola or Pepsi supply products to large retailers at lower prices constitute a violation.

The Robinson-Patman Act is highly technical in its application and has been subject to much legal dispute. Since its enactment in 1936, it has been virtually unused and has gathered dust for decades.

Foreign media have pointed out that this law has not been used since 2000 and, contrary to its intention to help small retailers compete, it only raises the prices of products sold by large retailers without producing significant effects.

Olden Abbott, a senior fellow at the Mercatus Center at George Mason University and former FTC legal advisor during the Donald Trump administration, argued, "Reviving the Robinson-Patman Act will only increase living costs for low-income consumers."

The FTC's investigation is aggressive. Led by Lina Khan, the FTC under the Joe Biden administration has indicated aggressive enforcement against monopolistic and oligopolistic markets, filing antitrust lawsuits targeting big tech companies such as Amazon and Microsoft (MS).

The FTC is reportedly already requesting transaction data with Coca-Cola and Pepsi from large retailers, including Walmart.

A Coca-Cola spokesperson denied the allegations, stating, "We are committed to fair and legal competition in the market." They also said, "Claims that we have engaged in any illegal activities in sales or distribution are unfounded, and we are prepared to defend against specific allegations."

According to Euromonitor International, Coca-Cola maintained a 46% market share in the U.S. soft drink market as of 2021, holding the number one position. Pepsi follows with a 26% share.

This content was produced with the assistance of AI translation services.