Antitrust Class Action Lawsuit Accuses Pepsi, Walmart of Scheme to Stifle Soft Drink Competition

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PepsiCo and Walmart face a proposed class action lawsuit that alleges that the companies unlawfully worked together to squash wholesale and retail competition for Pepsi soft drinks, thereby allowing both companies to charge inflated prices for Pepsi products.

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The 77-page antitrust lawsuit describes an apparent two-pronged scheme whereby Pepsi, since at least 2018, agreed to “police” retail prices at Walmart’s competitors and prevent them from selling Pepsi products for less than Walmart’s prices. Per the complaint, competitors that did not raise their retail prices to match Walmart’s faced “a series of escalating, targeting wholesale price increases” by Pepsi until maintaining a lower price than Walmart became “infeasible.”

Second, in exchange for Pepsi’s effort to stifle competition, Walmart accepted Pepsi’s higher wholesale prices, the class action lawsuit alleges. However, when Pepsi failed to force competitors to raise their prices, Walmart required Pepsi to fund forced “rollback” price cuts until Walmart could match the lower, competing price without compromising its profits, the suit claims.

“If Pepsi did take action to inflate competing retailers to Walmart’s preferred price, Walmart agreed to accept Pepsi’s preferred wholesale prices; and if Pepsi failed to do so, Walmart would force a wholesale price cut leading to lower wholesale and retail prices for Pepsi soft drinks,” the filing summarizes.

Without this unlawful agreement between Pepsi and Walmart, the case contends, Walmart would have “no choice” but to lower retail prices for Pepsi products, a decision that the suit says would spur competitors in the highly concentrated soft drink market to lower their prices, which would quickly lead to “lower, more competitive pricing on soft drinks across the entire market.”

Instead, the filing states, Pepsi’s alleged collusion with Walmart essentially created “price floors,” making it difficult for other retailers to sell Pepsi products below Walmart’s retail price. Additionally, the complaint alleges that the pricing scheme emboldened Pepsi to raise prices for all customers, which “would not have been possible absent the [pricing] scheme.”

Per the complaint, “the greatest potential threats” to the alleged pricing scheme were Pepsi’s direct competitors, Coca-Cola and Keurig Dr. Pepper. However, the filing relays that the soft drink industry follows a standard of “tacit coordination.” Coca-Cola uses a “meet-the-competition” pricing strategy, intentionally matching its prices to those of competitors, the suit mentions.

Coca-Cola and Dr. Pepper have little to gain from trying to undercut Pepsi’s prices, the filing explains, primarily because doing so risks “intense” price competition that could threaten profits for all three companies. Instead, Coca-Cola and Dr. Pepper can monitor Pepsi’s pricing based on the Walmart retail price and adjust their prices accordingly, the filing states.

Pepsi’s price increases “cannot be explained by competitive market forces, such as demand increases, cost increases, or general inflation,” the suit states. The case cites an industry report stating that the price of two-liter soda bottles has increased by 62 percent since 2020, well above the 25 percent inflation rate. Retail prices for soft drinks have increased dramatically across the board, rising by over 70 percent between 2019 and 2023, the filing relays.

The plaintiffs in this case assert that the unlawful pricing agreement between Pepsi and Walmart eliminated pricing competition and led to artificially inflated soft drink prices.

The Pepsi/Walmart antitrust class action lawsuit seeks to cover any individual in a qualifying jurisdiction who indirectly purchased Pepsi soft drinks for their own use and not for resale at any time from January 1, 2018 until Pepsi ceases its challenged conduct.

Individuals are eligible to join the proposed class action if they live in one of the following jurisdictions: Arizona, California, Colorado, Connecticut, District of Columbia, Florida, Hawaii, Idaho, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, New York, North Carolina, North Dakota, Oregon, Puerto Rico, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, West Virginia, and Wisconsin. 

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