According to recent press, the Federal Trade Commission (FTC) is unsheathing yet another sword at its disposal in pursuit of its goal of more strict antitrust enforcement—an investigation of leading soft drink makers for potential violations of the Robinson-Patman Act. This follows in the wake of the FTC’s November 10, 2022 policy statement intended to significantly expand the scope of what the FTC considers “unfair methods of competition” under Section 5 of the FTC Act. There has been virtually no government enforcement of the Robinson-Patman Act for the last couple of decades. Indeed, in 2007, an Antitrust Modernization Commission recommended that the Act be repealed because it “appears antithetical to core antitrust principles” and “punishes the very price discounting and innovation in distribution methods that the antitrust laws otherwise encourage.”

In July 2021, however, President Joseph Biden’s Executive Order on Promoting Competition in the American Economy tasked the Secretary of Agriculture, in consultation with the FTC, to submit a report on the effect of retail concentration and retailers’ practices on competition in food industries, including specifically whether those practices may violate the Robinson-Patman Act. The recently reported investigation into price discrimination in the soft drink market is consistent with the FTC’s promise to use all available tools purportedly to protect competition.

The Robinson-Patman Act is a Great-Depression-era antitrust statute that was enacted to help smaller retailers compete against larger retailers that likely have more leverage to achieve price concessions from sellers.

“It shall be unlawful for any person engaged in commerce . . . to discriminate in price between different purchasers of commodities of like grade and quality . . . where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them . . . .” 15 U.S.C. § 13(a).

A price difference alone does not constitute a violation of the Robinson-Patman Act, and the statute does not ban all price differences charged to different purchasers of commodities of like grade and quality. Instead, according to the Supreme Court, price discrimination is illegal “only to the extent that it threatens to injure competition.” There are also various statutory defenses to claims of illegal price discrimination, such as functional discounts.

On January 9, 2023, it was reported that the FTC is preliminarily investigating soft drink manufacturers The Coca-Cola Company (Coca-Cola) and PepsiCo, Inc. The alleged focus of the investigation is potential price discrimination in the United States’ soft drink market. Reporting indicates that the FTC has been contacting large retailers and seeking data and information regarding how they purchase and price soft drinks. Typically, documents requested in an investigation such as this would include data on pricing, rebates, promotions and discounts offered to large retailers as well as smaller ones. Coca-Cola has issued a statement denying any allegations of illegal price discrimination.

Given the relative lack of government enforcement of the Robinson-Patman Act over the last several years, and the significant hurdles for private claims in the courts, businesses may not have focused as much on Robinson-Patman Act compliance recently as they had in the past. Companies should consult with experienced counsel to help them navigate this newly developing landscape.