Washington Monthly: Has Trump’s FTC Abandoned Fair Markets?
Has Trump’s FTC Abandoned Fair Markets?
A decision to drop a lawsuit against Pepsi may signal Trump’s embrace of corporate bullies.
by Ron Knox June 25, 2025
Back to Bork? Andrew Ferguson, Chairman of the Federal Trade Commission (FTC), killed the FTC’s first price discrimination case in over 20 years, claiming a two-year investigation into PepsiCo was based on “little more than a hunch.” Credit: Associated Press
All RF Buche wants is a fair shake. For a few months earlier this year, it seemed he might get one.
Buche runs a family-owned grocery chain in rural South Dakota that’s been in business since 1905. In Buche’s 25 years at the helm of Buche Foods, he rarely, if ever, got a fair deal from big food and drink manufacturers, many of whom are the same conglomerates that sell their goods to the behemoth chain stores.
Buche sells a lot of soda, he told Senator Chris Murphy during a recent live-streamed conversation. “If I compare my Pepsi sales to Dollar General’s Pepsi sales in any given town, I know I sell more,” he says. But Buche can’t get the wholesale price that chains like Walmart and the dollar stores pay. He says he buys his 12 packs for $8.52; meanwhile, a Dollar General near one of his stores can sell the same 12-pack to customers for $5.
This dynamic is not unique to South Dakota. Buche says grocers face the same battle across the Midwest. “What’s going to happen to these small towns when the local grocers dry up?” he asked Murphy. For Buche’s location on the Pine Ridge Indian Reservation in southwest South Dakota, where poverty is so extreme that most people don’t own cars and the next-nearest grocery store is nearly 40 miles away, the answer to his question is particularly crucial.
Bottom of the food chain: The “monopsony” power of giants like Walmart means that prices are higher and shortages more frequent at RF Buche’s (left) grocery store on the Pine Ridge Indian Reservation. Credit: Courtesy of the GF Buche Company
The Joe Biden-era Federal Trade Commission addressed Buche’s problem in its final months. A landmark antitrust case against PepsiCo accused the beverage giant of illegally offering steep discounts to Walmart—its largest customer—while overcharging smaller outfits like Buche’s for Pepsi, Doritos, Cracker Jack, and the Purchase, New York based company’s dozens of other brands. The agency cited the Robinson-Patman Act, a New Deal-era law banning price discrimination.
It was the first Robinson-Patman enforcement in more than 20 years, and a signal that the FTC, under its then-chair, Lina Khan, intended to dust off an old but once-effective tool its toolbox of statutes used to ensure fair markets for smaller businesses.
Then, last month, the PepsiCo case ended just as quickly as it began.
In May, the FTC withdrew the lawsuit against PepsiCo, a global company with 319,000 employees and a market capitalization of $177.5 billion, ending its most substantial and potentially impactful price discrimination prosecution in decades. The agency’s new chair, Republican commissioner Andrew Ferguson, who had opposed the lawsuit before he ascended to Khan’s post claimed that the case lacked evidence. He and the other GOP commissioners, Mark Meador and Melissa Holyoak, pulled the lawsuit from court.
Ferguson, the former solicitor general of Virginia and a GOP staffer on Capitol Hill with extensive corporate experience, claimed that, despite a two-year investigation, the FTC’s evidence wouldn’t survive in court. He called the case “rushed” and that it was based on “little more than a hunch that Pepsi violated the law.”
Proving a Robinson-Patman violation should be straightforward, but much of the FTC’s initial lawsuit was redacted, including how Walmart purportedly benefited and perhaps directed PepsiCo’s price discrimination scheme. But the FTC killed the lawsuit just days before the court could have made the full, unredacted complaint public. Unless someone sues and wins access to the lawsuit, we’ll never know the full scope of the agency’s evidence.
Typically, the public would also have heard counterarguments from minority-party commissioners Alvaro Bedoya and Rebecca Kelly Slaughter, the Democrats on the FTC. But Trump fired both, perhaps unlawfully, in March.
Congress passed the Robinson-Patman Act in the 1930s to prevent precisely this kind of corporate practice, which had become common alongside the rise of supermarket chains like Kroger and A&P. While Robinson Patman does not outlaw all discounts—for example, discounts for buying in bulk rather than less-than-truckload volumes are still permitted—it does ban suppliers from offering different prices for different customers based solely on their relative market power.
The Federal Trade Commission used the law for decades, from its passage through the 1970s, to ensure fair competition in the retail industry. It worked. Big, often unionized chain supermarkets operated alongside smaller grocers in towns everywhere. Workers made a decent living, while opening and running a store often provided a pathway to the middle class, especially for immigrant families.
Then came the Ronald Reagan revolution.
A generation of academics, policymakers, and enforcers came to believe bigness would best deliver deals to shoppers—even if cheaper prices were largely the result of their power to squeeze their suppliers and workers, not the result of superior productivity. The intellectual godfather of this movement, the late jurist Robert Bork, had dubbed it “the antitrust paradox,” and the “consumer welfare standard” is its progeny, a belief that if consumers are afforded lower prices, unfair competition is unimportant. Bork infamously characterized Robinson Patman Act as “the Typhoid Mary of Antitrust.”
The retail industry transformed when the Reagan-era FTC stopped enforcing Robinson-Patman, essentially lifting the ban on predatory price discrimination enshrined in the law. Above all others, Walmart understood how unshackled its power truly was and began squeezing its suppliers. The Bentonville, Arkansas-based company took root everywhere, using its power to squeeze its suppliers. (It now has a market cap of $716 billion.) When those suppliers hiked prices to smaller grocers, many independent stores were forced to shutter, hollowing out main streets and often cutting off communities’ access to fresh food.
Under constant pressure from their largest customer, those suppliers merged, expanding already-powerful consumer goods conglomerates like Unilever, ConAgra, and PepsiCo.
PepsiCo has existed since the 1960s, when it bought snack company Frito-Lay, but since the late 1990s, PepsiCo has spent billions acquiring or buying a major stake in dozens of brands, from drinks companies Gatorade, Tropicana (which it eventually sold), Rockstar, Celsius and, this March, upstart soda maker Poppi; to food brands Quaker Oats, Sabra and others. Former PepsiCo chief executive Indra Nooyi once told investors about a face-to-face meeting with her Walmart counterpart. “I don’t think the Wal-Mart CEO is going to spend time with me if PepsiCo is not so big and so important,” she said.
ConAgra’s growth into a vertically-integrated food titan happened in lockstep with Walmart’s rise; by the early 1990s, the conglomerate was averaging 35 acquisitions or other corporate deals every year. “That’s just the way of the world,” Gary Rodkin, ConAgra’s former chief executive, told Reuters when discussing consolidation in the food industry. “ The big get bigger.” Even long-established conglomerates, like 150 year-old Procter & Gamble, made blockbuster deals in the 1990s and 2000s. When P&G paid a staggering $56 billion to buy leading razor maker Gillette in 2005, the Associated Press said the deal would ensure P&G “would have even greater clout against mass-market retailers like Wal-Mart Stores Inc., which have been pressuring consumer product suppliers to keep costs low.”
As consumer goods companies began merging to keep up with Walmart, other grocers struck their own deals to match might with their suppliers. A merger wave in the mid-to-late-1990s rapidly consolidated the industry. Supermarket chain Fred Meyer, for example, bought out smaller rivals Smith’s, Ralphs, and Quality Food Centers before finally merging with Kroger. Safeway, meanwhile, spent billions buying Vons, Dominick’s, and Randall’s before being absorbed into the growing Albertsons empire. At mid-century, when Robison-Patman enforcement was active, the combined market share of the four largest grocers remained below a combined 25 percent. Today, they control more than half of the market. Sales at independent grocers have likewise plummeted, from more than 50 percent of all food sales in the early 1980s to just 22 percent in 2017.
The loss of small town and urban independent grocers meant chain supermarkets could also leave those communities. With no local store to compete with, Walmart and the other big chains shuttered many of their smaller, local stores, focusing instead on the biggest supercenters in regional hubs nationwide. Many folks in small towns today must drive miles to reach the nearest full-service supermarket. Food deserts—a post-Robinson Patman retail economy invention—spread to epidemic levels nationwide. The damage price discrimination has inflicted has been particularly acute in rural America, where local grocers have shuttered en masse and, today, a full third of low-income people outside of major cities live in food deserts (which, for rural areas, is when a certain number and/or percent of a population lives without a grocery store within 10 miles, according to the USDA).
Small business and consumer advocates say the agency’s withdrawal from the Pepsi case signals to the corporate giants—Walmart, Amazon, Kroger, and their massive suppliers—that they can resume corporate practices favoring bigger businesses. Stacy Mitchell, the co-director of the Institute for Local Self-Reliance, where I work, called the decision “a fundamental abandonment of the commission’s responsibility to ensure a level playing field for small businesses.” Analysts at law firm Faegre Drinker Biddle & Reath said that while FTC’s decision did not mean the end of all Robinson Patman enforcement, it “marks a sharp redirection from Biden-era enforcement tactics.”
When Covid struck in 2020, the true power of today’s ultra-concentrated retail food industry became too much to ignore. Supply issues initially sent prices higher, but those prices never came back down even after supply chains were back up to speed. Corporate bosses bragged to investors that shoppers have no choice but to pay higher prices. Their profits soared, including at PepsiCo, which hiked prices by double digits seven quarters in a row while raking in billions more than before the pandemic. A months-long FTC investigation found that retailers like Walmart and Kroger put prices up far above their total costs and kept them there—a brazen display of their power and a recognition of how little competition they face.
Neither the FTC’s deep retail market investigation nor its subsequent investigation of Pepsi’s business stopped Chair Ferguson from killing the PepsiCo lawsuit. This sent a message to retailers and suppliers—along with every small grocer struggling to survive—that corporate bullying is back.
Is the FTC’s decision to kill the PepsiCo lawsuit a sign that it abandoned Robinson Patman again? Maybe — but the agency’s other Robinson Patman lawsuit against powerful wine and spirits distributor Southern Glazer’s continues, at least for now. Instead, dropping the Pepsi suit feels like a political decision rather than a legal one. Did PepsiCo or aligned trade groups push Trump to kill the lawsuit? Or did Walmart, whose name was about to be mentioned dozens of times in the Pepsi lawsuit, push someone in the administration to quash the case before it was made fully public?
For local grocers like Buche, why the FTC pulled the lawsuit matters less than whether the agency has again rejected competitive markets as a goal of the antitrust laws and re-embraced Borkian economics. The fate of an open economy, particularly in small towns and rural communities hit hardest by the past half-century of corporate concentration, rests on the answer.
Original article: Has Trump’s FTC Abandoned Fair Markets? | Washington Monthly