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The FTC Does Not Agree With the Prices of Coke and Pepsi — Orders a Probe

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By Augustine Mbam - January 10, 2023 - 5 Mins Read

The Federal Trade Commission is probing beverage giants Coca-Cola and Pepsi over their pricing strategies. According to the commission, the beverage companies' process to increase their price is considered unfair.

Information coming from those who have a good knowledge of the recent probes, the Federal Trade Commission is employing a decades-old but largely dormant law to take legal action. The investigation will be undertaken to find a potential fault in a perceived pricing discrimination policy being implemented by the company. 

Those with knowledge of the issue said that the decades-old but largely dormant law which will be used to investigate Coca-Cola and Pepsi is the Robinson-Patman Act. The Robinson-Patman Act stops suppliers of beverages from offering better prices to large retailers at the expense of their smaller competitors. 

The Robinson-Patman Act has existed since 1936 and has always been trying to prevent discrimination between small retailers and large chain stores. Assuming the law is not in existence, beverage giants such as Pepsi products and Coke prices should not be increased discriminatively. 

With the investigation launched by the Federal Trade Commission last month, they have already reached out to large retailers requiring data on how they have been purchasing beverages from Coca-Cola and Pepsi brands. If Coca-Cola and Pepsi are found guilty of the investigated allegations, they might be fined, and a Coke price decrease may be in effect.

Nonetheless, the large retailers providing data to the Federal Trade Commission are not targets of legal action; it is only Coca-Cola and its rival Pepsi. 

Biden Administration Behind the Probe 

The recent probe of Coca-Cola, Pepsi, and other big businesses is part of the efforts by the Biden administration to prevent big companies from going outside the government's radar. Sometimes when big companies are not penalized for actions, they often behave in whatever manner they like, putting consumers at unnecessary risks.

The Federal Trade Commission has reached deep into the antitrust playbook with hopes to use some of the long-existing laws in the constitution to prevent bug companies from behaving in whatever way they want. Some of these laws are the Robinson-Patman Act which has been imposed on Pepsi products and Coca-Cola. 

Beverage giants aren't the only companies targeted by the Federal Trade Commission. Other technological giants such as Google and Apple are also under the radar of this commission. 

Robinson-Patman Act on the Rescue 

Robinson-Patman Act is the newest old law that has come to the rescue of the Federal Trade Commission. The law has existed for over 80 years, but many federal agencies have abandoned it until now. 

The Federal Trade Commission dug up the law again after it was discovered to be a good strategy for limiting how big companies flex their rights. Big companies in different sectors could create policies that pressure consumers if left unchecked. 

Coca-Cola is the largest United States soda company, with more than 46 percent of the market as of 2021, followed by Pepsi with a 26 percent share. The two beverage giants are under the federal government's radar, and investigations are already in their early stages. 

Those who are involved in this case have declined to comment on it. Coca-Cola and Pepsi spokespeople all declined to comment on the matter.

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