Bigger the company the more power they have to dictate the purchasing price from producers and the cost for consumers. This is not just in the food industry it is also in retail such as Amazon.
Companies like Kroger are so big they dictate the purchase prices from farms. The farmers were better off in the past with multiple competitors creating a bidding war. Same with consumers, products had to be priced right to win their business.
A company I work for had to give free engineering labor in millions of dollars to get access to one of the largest retailers in the USA. Too big not-to-do-business-with harms everyone except the retailer.
> Bigger the company the more power they have to dictate the purchasing price from producers and the cost for consumers.
That wasn't always true. The Robinson-Patman Act made it illegal to give preferential treatment to large retailers specifically in order to prevent what we're seeing with walmart and amazon today. The US just stopped enforcing the law (and also anti-trust laws that would have protected local/small businesses) so here we are. At any point the US could decide that enough is enough and fix the situation but we'd probably have to make it actually illegal for corporations to bribe government officials before it stands a chance of happening.
It used to be illegal to bribe. Used to... Make a law impossible to enforce, and you suddenly transform the act to a totally legal one, at the expense of people losing trust in the system (specifically the U.S. Supreme Court and Congress). And at some point, the system breaks.
Don't you see, someone just has to say "this is not a bribe", and, like magic, they can finagle their way out of their corruption. "Bribery" has a very narrow definition, which conveniently doesn't apply to the corruption in question.
Does that work? Congress is so broken now that nothing happens. Sayings like “act of Congress” describing slow progress it would be simple for the lobbyist to just back another candidate to eliminate this “would be a shame” threat
Are there any countries that don't use the quid pro quo definition of bribery? At best, they try to keep a lid on it by capping campaign contributions, but that's not really "bribery is illegal" (if we accept the more liberal definition), more like "there's a limit on how much you can bribe".
The Ottoman Empire kind of acknowledged the futility of trying to suppress corruption, opting instead to codify it and set thresholds for excessive abuse.
Progressive for its day, it only partially succeeded since enforcement was no less prone to corrupt influence.
As the romans famously said, “Quis custodiet ipsos custodes?”
Literally: “Who will guard the guards themselves?”
It's why the 3 branches of government worked so well for the US for so long. They each want to protect themselves, and are effectively at odds with each other unless there is almost universal agreement on something.
However that has completely fallen apart with a toothless Congress, and a executive branch that can stack the 3rd branch with similar minded idealogues.
There are "bribes" and then there are "bribes as recognized by the law".
We all know bribes happen, but for the law to recognize a bribe as a bribe basically requires the two parties to have a signed and notorized legal document statating that they are knowingly entering into a quid pro quo, and that both parties are aware it's illegal to do so. Anything less than this, and it will never be prosecuted.
As Matt Levine points out, the revolving door often works in more interesting ways.
If you are a bureaucrat, the way to maximise your next paycheck is often to be especially tough on companies (and on the margin push for more complicated rules that you can be an expert in). Simplified, the logic is "See how tough I am, you better give me a good paycheck to make sure I'm playing on your team."
The beauty is: the bureaucrats at the regulator don't even need to consciously think this way. They can be tough out of the ideological and conscientious conviction at the bottom of their heart, and the mechanism that gives them comparatively higher pay afterwards still works. Being tough also raises your profile, when you are but a junior or middling drone.
The logic you are describing might work, but only for the most senior appointees who already have a high profile.
the logic they describe does work. A lot. The Rollback of Dodd-Frank [0]. Recent malpractice reform (in the wrong direction) [1]. Drilling leases [2]. Asbestos. And so on and so on [3].
Tiger's in the house, y'all. And the roof is on fire. And the water is unavailable because it all got sold to nestle [4].
But anything more than 1 vote assigned for your usage is quid pro quo (since you will get to enjoy policies that you "paid" for) when others only get a single vote.
> That wasn't always true. The Robinson-Patman Act made it illegal
"Legality" has never stopped big companies from doing these things. Google, Apple, Meta, etc has been receiving fines all day long and they still continue what they do.
Fines don't scale. The Australian mining company, fined a thousand bucks for every native rock drawing they destroy? They counted them up, paid the fine, and blasted a road through. All gone.
Fines becomes a business calculation. Not a deterrent, not if it matters to the big corporation. Which at some scale, it will become cost-effective.
Fines should be percentage of stock price. Applied to the owners of stock. Next time there is dividend or stock is transacted fine is collected. Still limits the liability to price of stock, but fully incentives stock owners to make sure the leadership will do their best to avoid fines.
I once saw a meme of a quote somewhere that said "if the only penalty for a crime is a fine, then it's only a deterrent for poor people" or something to that effect.
A "fine" or "tax" is not necessarly regulation, in that it can be avoided, as in paid for by other actions, or gamed. Regulation should be though of as an input to cause a result in a scenario. Work backwards from the desired result, accounting for gaming the system, to attempt a regulation action. Of course, politicians are motivated only to provide something, not to make it effective.
I imagine a world sometimes where punitive measures reflect the scope of crimes. If steal from a person is 1 year, then stealing from 1000 is 10 years and from a million is a lifetime. That’d put the end to political shenanigans, in my imagination.
Our legal system would rather do just about anything than bring companies to court. Unless they're, like, giving people HIV. And even then it's reluctant.
As someone proposed on here, instead of fines, punishment should be a percentage government ownership stake. This serves to 1. dilute the shares, punishing the people who can affect change (the shareholders) and 2. Put the government on the inside, a major pain in the ass and a stronger position for the government to know when, prevent, and/or punish these things in the future.
An irredeemable company/ownership will ultimately lose control over time.
>The Robinson-Patman Act made it illegal to give preferential treatment to large retailers specifically in order to prevent what we're seeing with walmart and amazon today.
Price collusion is illegal too, but happens all the time. There being a law for it just makes the rare fine a cost of doing business.
I wish that were true, but mass murderers like Johnson & Johnson, DuPont, Philip Morris, the Sackler family, etc. are allowed to keep on killing people and face no meaningful consequences for the deaths they cause. With enough money you can be a serial killer for decades and get away with it.
Corporate punishments can be applied on a fine grain. Every store, every instance, every choice becoming a 10k fine can rapidly make even relatively rare acts untenable as a cost of doing business.
There's too many people here voting against regulation and enforcement, to their own detriment. They have no idea what they're actually doing, they're just run on propaganda from the greedy.
But Robert Bork and the Chicago School of Economics and Ronald Reagan and the Republican Party assured me that mergers and trusts were good for me! Look, the companies even have self-serving rationalizations scribbled with crayons on butcher paper saying the same thing!
Seriously, though: I cannot believe how high and how far these utterly dogshit arguments flew without pushback and the amount of damage that consolidation has done to the American Experiment. The best time to get a Lina Khan in the FTC was 40 years ago but the second best time was 4 years ago. I just hope the next president picks up the project... though I'm sure the (by then) trillionaires will do everything in their power to stop that from happening.
It's crazy the fan fiction we have allowed to be recon'd into being 'Capitalism' when Capitalist thinkers thought that rent seekers/monopolies were destructive to Capitalist, and that strong government oversight was key part of a strong Capitalist system.
Something like this has been going on in the restaurant world since seemingly forever. When I worked at a pizza joint (40-some years ago) we only served Pepsi drinks.
I was young and dumb enough then not to know that, for example, 7-Up and Sprite were not independent soft-drinks. I assumed every flavor of soda was its own company. I soon started to notice the drink pattern based on whether they had Coke or Pepsi. Those two owned all the other flavors—and they each had their own variant of the other's.
I was told too by management that we only bought Pepsi drinks. Again, native me thought, "Why not have both Coke and Pepsi and let the customer decide?" I am not sure whether there was a pricing issue that prevented management from buying both—like the loss of a discount for going Coke-only or whatever.
Of course you always saw signage, etc. around the restaurant with Pepsi logos (or Coca-Cola logos at other restaurants) so you knew there were gifts in other forms that one of the two would entice the owner with.
What a slow growing up I have gone through since then. It seems like the kind of thing they ought to teach in primary education.
The deals for this type of product positioning occur quite high up in the chain.
To give an example Yum! brands (KFC, Pizza Hut, Taco Bell, etc) was formed as a subsidiary of PepsiCo. Although PepsiCo has divested from Yum, their pre-existing relationship is why these restaurants only serve Pepsi's soft drinks.
Deal-making is also why you see patterns like this emerge in other places such as convenience stores that only sell beverages from the Coca-cola company (i.e. higher volume sales from just one supplier yields a better discount than splitting sales across multiple suppliers).
It's relatively rarer to see more than one beverage supplier at a restaurant, club or convenience outlet.
For convenience stores, particularly ones with few or no built-in wall coolers, the typical deal is the Coca-Cola or Pepsi distributor will provide and maintain a free-standing cooler, but it can only hold products from that distributor (often the distributor stocks it for you). Thus you'll typically see Coca-Cola and Pepsi products segregated in different coolers, if the store sells both.
I presume, but don't know first-hand, that for built-in coolers you want stocked by the distributor, they'll also require segregation. Frito-Lay distributors operate similarly--they'll come in and stock your shelf if you want (I dunno if there's a sales premium), but typically they'll require the Frito-Lay products be segregated, and they'll provide branded shelving if you want.
In my experience living here my entire life it’s _far_ more common for a restaurant/ fast food joint to have exclusive deals with one or the other.
That being said there is one popular gas station chain around here that historically sold Coke and Pepsi products in their fountains but in the past decade or so they’ve switched to exclusively Coke products in the fountains (but they still sell bottled Pepsi products)
Ha, the University where I work signed an exclusive agreement to only sell Pepsi products on campus. I'm sure there was some kickback money given to people here to push it through.
My wife's employer has a very similar thing going on. They have a cafeteria staffed by a catering company, and the contract requires that they (the employer) use the catering company for all things that take place in the building. A manager can't go out and buy donuts for a meeting, instead they would have to use the caterer who is both worse quality and more expensive. This caterer even tried to get the company to chase off food trucks that were coming to the area, though thankfully that went nowhere because the food trucks were on public streets and not private property.
It is truly an awful contract, with no benefit at all to the employer that I can see. Like you, I conclude that some executive must have gotten kickbacks for signing this.
> It is truly an awful contract, with no benefit at all to the employer that I can see.
The benefit is having an operating cafeteria (i.e. an amenity) for a guaranteed period with little or zero out-of-pocket expense other than providing the space. Unless there's obviously high-demand (coffee?), no catering company is going to commit to a long-term contract without ensuring some minimum volume to maintain staffing. Anything food related typically has ridiculously slim margins on average, especially when you count all the failed projects.
Catering is often an exception, but not this kind of daily staffed in-place catering. The most profitable kind of catering is where you can prepare food offset for discrete (though hopefully recurring) events across many (hopefully repeat) clients, and where you can quickly ramp up or ramp down staffing and facilities to minimize recurring costs.
At my institution there was a student revolt, chartwell was kicked out and it is a work co-op. The quality has increased, the employees are better treated and the cost stayed the same, and stupid rules like that are no more !
Yeah, exact same thing when I was reluctantly involved in a club’s leadership and organizing an on-campus event with food 20+ years ago. I think it was Sodexo in our case. Must be common.
It’s probably more there are only two or three companies, if that, that can service a customer that large and meet their requirements/SLAs by contract. And the three all happen to have the same sort of agreements required.
Large student unions are also renowned for reselling their cheap volume deal beer on the grey market to keep their volumes high. I wonder if that is all through the books?
Coke used to sell their high volume customers a different syrup, and give them different equipment to pour it, that was incompatible with the low volume customers equipment, to try and stop this
I worked as a buyer in edu, oh the grease is built in to the system from the vendors who will frequently shower you with coffee and donuts to much friendlier offers to get sales.
Why is it so hard to imagine people who work in education would have flexible ethics for personal gain?
>shower you with coffee and donuts to much friendlier offers to get sales.
If I was working a cushy admin job, I'd need way more bribery than $5 worth of coffee and doughnuts to intentionally select a worse vendor, especially if the decision would negatively impact my colleagues and get me flak.
>Why is it so hard to imagine people who work in education would have flexible ethics for personal gain?
Because if you read the other comments, there are perfectly reasonable explanations that don't involve graft. Jumping to "bribe" every time there's bad behavior is just lazy thinking and means you don't actually figure out what the root of the problem is.
>Because if you read the other comments, there are perfectly reasonable explanations that don't involve graft. Jumping to "bribe" every time there's bad behavior is just lazy thinking and means you don't actually figure out what the root of the problem is.
Right. I'm sure, in spite of this and the decades of overwhelming evidence, this was all just a silly coincidence, and they can lower food prices now.
Edit: I'm shitlimited to five posts per X number of hours, so I'm going to respond here: the evidence is in TFA, thanks.
>in spite of this and the decades of overwhelming evidence
Where's all this "overwhelming evidence"? So far the only that's presented is "my university is pepsi only so there must be something shady going on" and "vendors buy me coffee so there must be administrators corrupting themselves and risking their 6 figure jobs for $5 worth of inducements"
edit:
>Edit: I'm shitlimited to five posts per X number of hours, so I'm going to respond here: the evidence is in TFA, thanks.
Searches for "bribe" and "kickbacks" don't turn anything up. If you're talking about the unsealed FTC complaint, that's anti-competitive behavior, but not the "kickbacks" that OP was talking about (ie. some administrator abusing their position of trust to personally enrich themselves). Both are bad, but they're not remotely comparable. For one, in the case of kickbacks, the organization and its members are harmed (through worse contracts), whereas for whatever walmart and pepsi agreed to, both benefited.
But a lot of people are poorly paid and free coffee is nice.
It might not be enough to select a worse vendor but if two are equal it’s easy to pick the one with the cute sales representative who knows how you like your coffee.
Then there is the leadership who plays golf together and use the company card to buy gifts (booze) for the deciders.
It’s not bribery it’s just subtle influence;)
And it’s everywhere, it’s the same at the various higher education colleges I worked at.
> shower you with coffee and donuts to much friendlier offers to get sales.
By bringing this up in a thread talking about kickbacks, it sounds as if you're trying to equate the two. Please don't equate this to a "kickback." It's not what that is. There's real standards to what denotes bribes and kickbacks and that's not what those are.
> flexible ethics for personal gain?
If you let the donuts influence your judgment, that is an ethical problem -- I agree. But if you operate in your organization's best interest you can enjoy the coffee and donuts without remorse.
I don’t drink coffee or eat donuts (allergies) so I wasn’t influenced by the sales people but I understood what was happening and saw it happen to more senior people in the organization who were influenced and cost the organization a lot of money because of “friendship” with a leader at a client who was very generous to the executive.
I'd equate it more to ass-kissing than bribing. Kissing ass isn't a crime. Questionable if it's ethical, since you're basically pretending you like someone more than you do, which is dishonest.
The buyer at the university could just be doing their job, signing contracts to ensure (ideally) stable vendors and a good price by signing such a long contract term.
Coca-Cola is sort of like the Apple of cola in that they're the upmarket brand almost everywhere around the globe. Unless Coke has a sales, marketing, or branding angle (see, e.g., Disney deal mentioned elsethread), they won't discount nearly as deeply as Pepsi, which is perennially in second-place at best (Mt. Dew notwithstanding). Pepsi is the obvious choice for any outlet where your customers are captive (e.g. sit-down restaurants) and you don't otherwise care about looking cheap for not offering Coca-Cola.
Yea, when I worked at Dominos we were charging like $2.50 for a 20 oz coke and $3.50 for a 2 liter.
Since the same 2 liter was like $1 at the grocery store, I thought we were gouging costumers and making bank on them, and figured the manager was being dramatic whenever inventory counts were off by a few.
Turned out we had a really raw deal with Coke, and were only charging like 25-50¢ more than we bought from for. And we were also required to order them from the distributor, to prevent us from stocking the cooler with cheaper ones from the grocery store.
> Again, native me thought, "Why not have both Coke and Pepsi and let the customer decide?" I am not sure whether there was a pricing issue that prevented management from buying both—like the loss of a discount for going Coke-only or whatever.
There's a bunch of pricing stuff (typically the bottler sells syrup and rents dispensers and may supply drinkware, and you get discounts on everything when you buy more syrup, and you get advertising subsidies when you put the brand logo in your ad, etc), but there's also logistics. More options means a bigger soda fountain and probably more space storing syrup.
I'm not sure I've ever seen mixed brands in a single dispenser (other than 7up+DrPepper which is bottled regionally by Coke bottlers in some regions and Pepsi bottlers in others; so you might see Coke with 7up and DrPepper or with Sprite and MrPibb). But, rarely, I've seen dispensers from both. Mostly at convenience stores and also the Yahoo employee cafeteria at the Sunnyvale HQ on First Ave (which they left some time ago). Some restaurants that don't have a fountain will stock cans from multiple brands, too.
All that said, from my life experience, very few people express a strong preference, giving customers a choice probably isn't worth the effort.
This is world wide. Coke and Pepsi not only provide restaurants with soft drinks, but also all other drinks, most importantly beer. Local beverage distributors will be with either one or the other.
Restaurant owners will sign a contract with a distributor to buy only from them, and in exchange get discounts, free equipment rentals such as drink fridges and beer taps, and things like sunshades, tables and chairs, signage, etc.
Are you referring to the fact that 7up/Dr pepper are distributed by pepsico? They still have historically been independent from the big 2 as far as product branding since inception, most recently being owned by Schweppes.
Dr. Pepper is distributed by Coke in some states/countries, Pepsi in others, and by its own distribution network in like 30 US states. A friend likened it, not without a certain verisimilitude, to the result of the Treaty of Tordesillas in 1494.
I think they were just giving an example, and had assumed each separate flavor was a separate company, but happened to choose a bad one with 7up as it is a different beast then the rest.
There's a complicated UK beer version of this with more parties. Basically pubs might be any of:
- directly owned and managed by the brewery
- owned by the brewery and leased to a manager, like a franchise
- independent, but contracted exclusively
- genuinely independent
Contracted pubs may also have limited supplies of "guest ales". Usually there's sufficient local competition to keep the pubs good, but local monocultures can also be a problem.
Most of the pubs are owned by the PubCos
Back in the past it was mostly brewery owned with 6 big brewers owning most of them.
So a law got passed in the 90s which limited the breweries to a max of 2k pubs.
Unfortunately what happened was we ended up with a bunch of very large Pubcos who were often linked to a particular brewery anyway (some were formed by former brewery execs and the pubs were "donated" in return for an agreement to keep buying from the brewery").
The Pubcos started with low rents but high stock prices but now go for both high rents and high stocks. Its why often see pubs changing hands frequently when someone tries the dream of pub landlordship but runs out of money.
Its why Wetherspoons is "cheap" since generally they convert buildings and so have a freehouse model.
Oh! I've witnessed this quietly every time I buy soda!
I'm a habitual enough soda drinker that I'm a six-pack-a-day diet soda drinker (don't judge me, at least it's not Red Bull). I notice that there's vendor collusion at Walmart for months at a time where the Pepsi six-packs will typically go on sale for a few months at a sub-$4 to $5 price (currently it's $4.98) while Coke packs will be $5-6 off sale.
Cycle three to four months and Coke will enter the $4 position and Pepsi goes back up to a full retail price for the next quarter.
I've always seen the 'cycle' of the two competitors constantly hitting a 'sale' price across various retailers.
I used to drink a lot of seltzer purchased in those 1 liter bottles. Then I bought a countertop soda maker. I can make the same amount of soda that I was paying $1.50 for at the store for $0.20 now. (I refill my own CO2 off a 10 lb tank) I can't imagine paying more than $0.50 for a liter of soda anymore. They have got to be making an obscene profit on those drinks.
Even weirder, the drinks that I flavor myself taste way better than the ones in the store. I suspect they have been titrating their flavoring down over time. Root Beer I make myself using drink powder tastes way better than the ones from the store. Same for grape and orange sodas.
Seems to be a pattern among all products I’ve ever encountered. I’m a heavy sales shopper. My local grocer (Ingles) will do a promo for Sargento cheese or Chobani yoghurt for instance, normal price of 5$ let’s say, then drop it to $2 for a week, then to $4 the next week, then back to full price. This rinses and repeats every 2 or 3 months for most sales products.
Sadly for this RedBull drinker, they never go on sale, at all, ever, anywhere.
Where are the mainstream media stories about this? The article mentioned the story blowing up but a Google search showed only one media outlet covering the story.
As if we needed another reason not to buy junk food.
By the way, in France we have a 5.5% VAT on food, instead of 20% for other products. Junk food is also 5.5% but cat food is 20%.
I wonder if this is going to change some day for junk food or sodas.
Just stop buying Pepsi products. Stop going to Walmart. You don't need either. You don't need potato chips or soda or Gatorade or any of the other poison they produce.
Okay I'll go to Kroger who also has horrible anti competitive practices and buy their store brand which is literally just Nestle but in different packaging
Time for a class action lawsuit. You can submit your personal information to a wordpress powered law firm's upload forms in exchange for your twenty bucks without inflation compensation in about 5 years and they collect a cool 50% fee distributed amongst millionaire lawyers.
I wish I could do the reverse. Could I and a million other people pay $20 now to a few law firms that could fight this without need for compensation and do everything to expose this to everyone in America?
Isn't that what organizations like the ACLU are for? Except ACLU fights for civil rights whereas your hypothetical organization fights for consumer rights. The reason why it doesn't exist is that it suffers heavily from the free rider problem. Any individual's donation of $20 or whatever is unlikely to get them $20 worth of returns, because the lawsuit is either funded or not. Moreover you'd benefit regardless of whether you donated or not, so there's no incentive to donate.
>“I actually think we’re capable of taking whatever pricing we need,” said CFO Hugh Johnston in 2022. And the company did just that, raising prices by double digit percentages for seven straight quarters in 2022-2023.
I hate to say it, but was he proven wrong? People are still buying junk food and soda (their primary products) despite prices going up. Looking at Pepsis profit margin, it seems to have hovered between 9.5% and 10.5% since 2021.
The point of the complaint is that they were able to do this due to illegal collusion.
And even if people buy a lot of junk food, they might have bought competitors’ junk food. Laws are still laws even if you don’t like the people the laws protect.
Exactly pricing discrimination (i.e. selling at different prices to different customers) is absolutely legal and is market efficient in a market with multiple sellers and multiple buyers.
Pricing discrimination combined with monopsony(single large buyer) or monopoly ( single large seller) powers is not market efficient. It leads to higher prices by end consumers. Price discrimination via collusion + Walmarts monopsony in grocery industry violates that 1930s act and is illegal
Is that the point? The illegal collusion was with walmart to keep their prices artificially low compared to everyone else. They weren't colluding with coke to raise all soda prices.
The storm is likely within the administration and across governmental departments. Trump will try to drive out whoever doesn't toe his line, even if he legally doesn't have the authority to do so.
There often is a payment in the form of campaign contributions, and mysteriously cushy jobs after retirement from politics.
But, beyond that, while logically voters should vote against politicians that favor businesses over them, they often appear to do the opposite. They simply gain the label of "business friendly".
Capitalism as it is taught: lots of companies competing with each other, resulting in better goods at affordable prices! The customer wins!
Capitalism in practice: a relative handful of rich people cooperating with each other to extract as much money as possible from the middle and lower classes.
You can see which version of capitalism this document supports.
The "fiscally conservative" aspect of the Republican party (and the Democratic party to a lesser degree) don't want people to think of capitalism-in-practice; they want happy consumers who think that competition is still a thing. Since this document clearly goes against that narrative, it must be suppressed.
Corporations are a funny kind of alien intelligence. Producing a better product or a lower price is just one way to ensure their survival. Another is to manipulate the rules of the market itself, including the rule enforcers.
It's the product of an evolutionary process. You could scrap capitalism entirely and still get cartel formation, since you have agents with varied traits competing to gain the resources to be selected to reproduce [their continued existence, into the future].
A couple other ways of looking at it come from Bataille, Odum, Prigogine or Schmitt.
You can also just pay your workers in scrip and then hire Pinkertons to kill them if they get uppity about it. It's hard not to become cynical when people seem almost willfully ignorant of the despicable history of capital in this country...
no, not clear at all.. it is a system that filters. "rich people" go broke all the time, Britain too.. There are serious structural problems certainly but that does not describe them
I guess I'm not sure where you read a claim that rich people can never go broke into the original comment. They absolutely can. That's why they often - as they seem to have done here - cut side deals to protect their revenue streams at the expense of competition. There's a VP at Walmart who stands to lose a lot of money if people start buying their Pepsi elsewhere, and a VP at Pepsi who stands to lose a lot of money if their products are less visible in the nation's Walmarts, so they've agreed to cooperate and mutually reduce the risk that their orgs perform poorly.
Dynastic wealth also tends to dissipate significantly in a generation or two, as heirs fail to generate the same level of wealth and just spend it (plus it's divided).
"Capitalism is when Walmart offers a discount on Pepsi, at razor-thin margins, and somehow this is maximally extracting from the middle and lower classes"
Pepsi is exchanging profit for market-share. Be serious. Everyone else is just charging the standard price.
Market failures ought to be accounted for with regulation (they often are, that's what Liberalism is for), but this is not one.
The unessential garbage fuelling our obesity crisis has no place in the conversation about the affordability crisis whilst policy-makers and armchair experts are mulling a sugar tax, which would just raise the price. Notwithstanding, profit margins at grocery stores are not large in the first place. The reason profits are breaking records is that population is also breaking records, and customers are spending more on boutique animal alternative or organic boxed products. Margins on produce are as thin as ever. Canned black beans and soup are not making their billions.
It's not the discounting that's a problem -- it's the intentionally watching other stores and preventing them from closing the "price gap" with Walmart
> As a result of Food Lion threatening Walmart’s price gap, Pepsi created a plan to nudge Food Lion’s retail prices on Pepsi products upward by reducing promotional payments and allowances to Food Lion and raising other costs for Food Lion
> It's not the discounting that's a problem -- it's the intentionally watching other stores and preventing them from closing the "price gap" with Walmart
This is circular. You are just describing a selective/privileged discount, again.
Food Lion could of course sell some items at a loss (Walmart did this, to gain market share and beat out smaller businesses). Costco continues to sell hot dogs at a loss. But that probably wouldn't work for Pepsi products in this context; fortunately, there are other products beyond Pepsi.
The bright line distinction is Pepsi watching Food Lion's end-consumer pricing and trying to force it up in order to mollify Walmart.
I actually doubt this is remarkable in the world of major producers and retailers (e.g. I've heard anecdotes of brands sending around reps to ensure that their shelves at retail stores are appropriately well lit and placed, so having an agreement on price seems pretty normal). However, it's probably a good case to get the public thinking about the desireability of such an oligopoly -- evidence that it's not merely better economies of scale and logistics that are keeping Walmart's prices low, but also explicit, private deals that feel shadier. I don't know that anyone did anything objectionable here given the norms and incentives in front of them, but it's a bad look for those norms and incentives.
You asked how a price cut translates to raising prices everywhere, and the parent comment answered. Though even without the further raising of prices for the competitors, the effect of many such agreements is that the competitors have a harder time competing, some shut down, and now the Walmart can also charge more because there's less competition.
The Robinson-Patman Act is terrible law. It’s been routinely violated (unknowingly in most cases) for decades across effectively every sector of the economy & enforced vanishingly rarely.
If it were to be enforced uniformly and aggressively it would be devastating: Every negotiation between a supplier and a purchaser at every level is potentially a federal crime!
If it were to be enforced capriciously, it would put unchecked power over everyday commerce—again at every level—into the hands of the FTC and its political masters.
No thanks. Repeal it so we can stop hearing about this “one neat trick to roll back neoliberalism!”
Shout out to Friedman, Hayek, Rand, Reagan, and their neoliberal enablers in the democrat party like Clinton. All US Citizens and the unlucky citizens of our colonies are property of US corporations. Bought and paid for. It’s about to become really obvious to anyone paying even the smallest amount of attention just how screwed anyone not in the top 1-5% really is.
The legal theory is Robinson-Patman promotional discrimination, not a price-fixing judgment. The complaint’s factual story can imply broader price effects, but that is not the same as “proven collusion” across the whole economy.
The case was not dropped in February; it was extended.
Seems awfully dumb to attempt the whole "collusion on prices" thing when both you and your partner in crime are locked in your own cutthroat duopoly battles. What's to stop Coca-cola+Target from turning around and crushing Walmart+Pepsi on pricing the instant they try to "price-gouge"?
The whole point of Duopoly is to have a “competitor” so that you can continue to act as a monopoly behind the scenes while avoiding the appearance of a monopoly. You get to point finger at the other guy when there’s scrutiny and argue there’s no monopoly, but also increase your own prices when your competitor does it.
It’s not cutthroat, it’s comfortable partnership with a cutthroat veneer. If either of them wins, they have a monopoly and are at higher risk of regulation or breakup. So they fight openly over small fries, and keep writing dividend checks.
It's kind of like what's to stop you from stealing your neighbor's lawn gnome? You get a free gnome once and now neither of you can ever have anything on your property not bolted down ever again. Better to not hurt both of you by rocking the boat and instead slowly raise prices together. Cooperation is only hard when there's a lot of people involved.
Bigger the company the more power they have to dictate the purchasing price from producers and the cost for consumers. This is not just in the food industry it is also in retail such as Amazon.
Companies like Kroger are so big they dictate the purchase prices from farms. The farmers were better off in the past with multiple competitors creating a bidding war. Same with consumers, products had to be priced right to win their business.
A company I work for had to give free engineering labor in millions of dollars to get access to one of the largest retailers in the USA. Too big not-to-do-business-with harms everyone except the retailer.
> Bigger the company the more power they have to dictate the purchasing price from producers and the cost for consumers.
That wasn't always true. The Robinson-Patman Act made it illegal to give preferential treatment to large retailers specifically in order to prevent what we're seeing with walmart and amazon today. The US just stopped enforcing the law (and also anti-trust laws that would have protected local/small businesses) so here we are. At any point the US could decide that enough is enough and fix the situation but we'd probably have to make it actually illegal for corporations to bribe government officials before it stands a chance of happening.
It used to be illegal to bribe. Used to... Make a law impossible to enforce, and you suddenly transform the act to a totally legal one, at the expense of people losing trust in the system (specifically the U.S. Supreme Court and Congress). And at some point, the system breaks.
[flagged]
> altering your stance on a given position to maximize donations you'd collect
Money exchanged to alter the conduct of a person in position of power... That sounds familiar. I wonder if there's a name for that?
"Bribe: money or favor given or promised in order to influence the judgment or conduct of a person in a position of trust"
https://www.merriam-webster.com/dictionary/bribe
Don't you see, someone just has to say "this is not a bribe", and, like magic, they can finagle their way out of their corruption. "Bribery" has a very narrow definition, which conveniently doesn't apply to the corruption in question.
It's clearly not a bribe. The politicians change their judgement/conduct BEFORE the money is given or promised (in anticipation of) so it's fine.
..../s (you know, because what's serious these days is hard to tell)
Y'all in the US are so, so cactus haha.
Well, perhaps that's more extortion than a bribe?
"Nice business you have there, would be a shame if I changed my conduct back again, wouldn't it?"
Does that work? Congress is so broken now that nothing happens. Sayings like “act of Congress” describing slow progress it would be simple for the lobbyist to just back another candidate to eliminate this “would be a shame” threat
>Y'all in the US are so, so cactus haha.
Are there any countries that don't use the quid pro quo definition of bribery? At best, they try to keep a lid on it by capping campaign contributions, but that's not really "bribery is illegal" (if we accept the more liberal definition), more like "there's a limit on how much you can bribe".
The Ottoman Empire kind of acknowledged the futility of trying to suppress corruption, opting instead to codify it and set thresholds for excessive abuse. Progressive for its day, it only partially succeeded since enforcement was no less prone to corrupt influence. As the romans famously said, “Quis custodiet ipsos custodes?” Literally: “Who will guard the guards themselves?”
It's why the 3 branches of government worked so well for the US for so long. They each want to protect themselves, and are effectively at odds with each other unless there is almost universal agreement on something.
However that has completely fallen apart with a toothless Congress, and a executive branch that can stack the 3rd branch with similar minded idealogues.
Isn't that pretty close to the actual position of your supreme court though?
Whew!
Glad I haven’t been bribing mechanics that work on my car.
I only pay them after the work is done!
To put it on your level, the mechanic works for you not us. Working for us involves a higher bar (or should).
Edit: typos
There are "bribes" and then there are "bribes as recognized by the law".
We all know bribes happen, but for the law to recognize a bribe as a bribe basically requires the two parties to have a signed and notorized legal document statating that they are knowingly entering into a quid pro quo, and that both parties are aware it's illegal to do so. Anything less than this, and it will never be prosecuted.
Lobbying involves quid-pro-quo: You pass the bill we wrote for ourselves and we give you a cushy consulting job when you leave Congress.
As Matt Levine points out, the revolving door often works in more interesting ways.
If you are a bureaucrat, the way to maximise your next paycheck is often to be especially tough on companies (and on the margin push for more complicated rules that you can be an expert in). Simplified, the logic is "See how tough I am, you better give me a good paycheck to make sure I'm playing on your team."
The beauty is: the bureaucrats at the regulator don't even need to consciously think this way. They can be tough out of the ideological and conscientious conviction at the bottom of their heart, and the mechanism that gives them comparatively higher pay afterwards still works. Being tough also raises your profile, when you are but a junior or middling drone.
The logic you are describing might work, but only for the most senior appointees who already have a high profile.
the logic they describe does work. A lot. The Rollback of Dodd-Frank [0]. Recent malpractice reform (in the wrong direction) [1]. Drilling leases [2]. Asbestos. And so on and so on [3].
Tiger's in the house, y'all. And the roof is on fire. And the water is unavailable because it all got sold to nestle [4].
0 - https://www.npr.org/sections/itsallpolitics/2013/11/11/24397...
1 - https://www.washingtonpost.com/powerpost/in-trump-era-lobbyi...
2 - https://www.cpr.org/show-segment/its-common-for-lobbyists-to...
3 - https://publicintegrity.org/politics/state-politics/copy-pas...
4 - https://kitoconnell.com/2016/09/27/nestle-spent-11m-lobbying...
But anything more than 1 vote assigned for your usage is quid pro quo (since you will get to enjoy policies that you "paid" for) when others only get a single vote.
> That wasn't always true. The Robinson-Patman Act made it illegal
"Legality" has never stopped big companies from doing these things. Google, Apple, Meta, etc has been receiving fines all day long and they still continue what they do.
Fines don't scale. The Australian mining company, fined a thousand bucks for every native rock drawing they destroy? They counted them up, paid the fine, and blasted a road through. All gone.
Fines becomes a business calculation. Not a deterrent, not if it matters to the big corporation. Which at some scale, it will become cost-effective.
Fines should be percentage of stock price. Applied to the owners of stock. Next time there is dividend or stock is transacted fine is collected. Still limits the liability to price of stock, but fully incentives stock owners to make sure the leadership will do their best to avoid fines.
I once saw a meme of a quote somewhere that said "if the only penalty for a crime is a fine, then it's only a deterrent for poor people" or something to that effect.
I suppose it scales upward infinitely.
A "fine" or "tax" is not necessarly regulation, in that it can be avoided, as in paid for by other actions, or gamed. Regulation should be though of as an input to cause a result in a scenario. Work backwards from the desired result, accounting for gaming the system, to attempt a regulation action. Of course, politicians are motivated only to provide something, not to make it effective.
> Fines don't scale. The Australian mining company
There's the problem. Australia doesn't scale... not the fines.
In Australia, there are a lot of rules, a lot of fines but not much to gain.
I imagine a world sometimes where punitive measures reflect the scope of crimes. If steal from a person is 1 year, then stealing from 1000 is 10 years and from a million is a lifetime. That’d put the end to political shenanigans, in my imagination.
Our legal system would rather do just about anything than bring companies to court. Unless they're, like, giving people HIV. And even then it's reluctant.
As someone proposed on here, instead of fines, punishment should be a percentage government ownership stake. This serves to 1. dilute the shares, punishing the people who can affect change (the shareholders) and 2. Put the government on the inside, a major pain in the ass and a stronger position for the government to know when, prevent, and/or punish these things in the future.
An irredeemable company/ownership will ultimately lose control over time.
>The Robinson-Patman Act made it illegal to give preferential treatment to large retailers specifically in order to prevent what we're seeing with walmart and amazon today.
Price collusion is illegal too, but happens all the time. There being a law for it just makes the rare fine a cost of doing business.
Not if the penalty is severe enough. Mass murder is also illegal and we make sure we don't have repeat offenders.
I wish that were true, but mass murderers like Johnson & Johnson, DuPont, Philip Morris, the Sackler family, etc. are allowed to keep on killing people and face no meaningful consequences for the deaths they cause. With enough money you can be a serial killer for decades and get away with it.
Corporate punishments can be applied on a fine grain. Every store, every instance, every choice becoming a 10k fine can rapidly make even relatively rare acts untenable as a cost of doing business.
There's too many people here voting against regulation and enforcement, to their own detriment. They have no idea what they're actually doing, they're just run on propaganda from the greedy.
But Robert Bork and the Chicago School of Economics and Ronald Reagan and the Republican Party assured me that mergers and trusts were good for me! Look, the companies even have self-serving rationalizations scribbled with crayons on butcher paper saying the same thing!
Seriously, though: I cannot believe how high and how far these utterly dogshit arguments flew without pushback and the amount of damage that consolidation has done to the American Experiment. The best time to get a Lina Khan in the FTC was 40 years ago but the second best time was 4 years ago. I just hope the next president picks up the project... though I'm sure the (by then) trillionaires will do everything in their power to stop that from happening.
Not to mention the number of ordinary people who still parrot the utter dogshit arguments to this day despite being actively harmed by them
It's crazy the fan fiction we have allowed to be recon'd into being 'Capitalism' when Capitalist thinkers thought that rent seekers/monopolies were destructive to Capitalist, and that strong government oversight was key part of a strong Capitalist system.
My choice now is to give every excess penny I have to food or starve to death.
Complaint: https://storage.courtlistener.com/recap/gov.uscourts.nysd.63...
Something like this has been going on in the restaurant world since seemingly forever. When I worked at a pizza joint (40-some years ago) we only served Pepsi drinks.
I was young and dumb enough then not to know that, for example, 7-Up and Sprite were not independent soft-drinks. I assumed every flavor of soda was its own company. I soon started to notice the drink pattern based on whether they had Coke or Pepsi. Those two owned all the other flavors—and they each had their own variant of the other's.
I was told too by management that we only bought Pepsi drinks. Again, native me thought, "Why not have both Coke and Pepsi and let the customer decide?" I am not sure whether there was a pricing issue that prevented management from buying both—like the loss of a discount for going Coke-only or whatever.
Of course you always saw signage, etc. around the restaurant with Pepsi logos (or Coca-Cola logos at other restaurants) so you knew there were gifts in other forms that one of the two would entice the owner with.
What a slow growing up I have gone through since then. It seems like the kind of thing they ought to teach in primary education.
The deals for this type of product positioning occur quite high up in the chain.
To give an example Yum! brands (KFC, Pizza Hut, Taco Bell, etc) was formed as a subsidiary of PepsiCo. Although PepsiCo has divested from Yum, their pre-existing relationship is why these restaurants only serve Pepsi's soft drinks.
Deal-making is also why you see patterns like this emerge in other places such as convenience stores that only sell beverages from the Coca-cola company (i.e. higher volume sales from just one supplier yields a better discount than splitting sales across multiple suppliers). It's relatively rarer to see more than one beverage supplier at a restaurant, club or convenience outlet.
For convenience stores, particularly ones with few or no built-in wall coolers, the typical deal is the Coca-Cola or Pepsi distributor will provide and maintain a free-standing cooler, but it can only hold products from that distributor (often the distributor stocks it for you). Thus you'll typically see Coca-Cola and Pepsi products segregated in different coolers, if the store sells both.
I presume, but don't know first-hand, that for built-in coolers you want stocked by the distributor, they'll also require segregation. Frito-Lay distributors operate similarly--they'll come in and stock your shelf if you want (I dunno if there's a sales premium), but typically they'll require the Frito-Lay products be segregated, and they'll provide branded shelving if you want.
Red Bull gives you a discount if their mini fridge is close to the register
Coca-cola has a President (probably called a VP in other companies) designated only for their relationship with McD
https://www.coca-colacompany.com/about-us/leadership/roberto...
Don’t they have explicit agreements to not sell the competing vendors’ products?
Or is that just urban legend?
The only restaurants I’ve ever seen selling Coke and Pepsi were in less developed countries…
There are some but it's rare. Most restaurants sell only one or the other.
Is convenience stores only selling Coke or Pepsi an American thing?
Because over here in the UK, every shop I've seen that sells soft drinks sells both brands at the same time. Probably alongside a bunch of others.
Then again, the branded coolers seem to be more of a thing in restaurants and takeaways rather than shops.
In my experience living here my entire life it’s _far_ more common for a restaurant/ fast food joint to have exclusive deals with one or the other.
That being said there is one popular gas station chain around here that historically sold Coke and Pepsi products in their fountains but in the past decade or so they’ve switched to exclusively Coke products in the fountains (but they still sell bottled Pepsi products)
> It's relatively rarer to see more than one beverage supplier at a restaurant, club or convenience outlet.
Wait what? What do you mean by convenience outlet? We must have different definitions.
Ha, the University where I work signed an exclusive agreement to only sell Pepsi products on campus. I'm sure there was some kickback money given to people here to push it through.
My wife's university has a totally egregious contract which is exclusive to a food provider for cafeteria food and event catering.
If you want to, say, have a student group sell cookies or whatever, the provider has to approve and you have to pay to host it.
The contract is for 10 years. No freaking way somebody signed off on that without money under the table.
My wife's employer has a very similar thing going on. They have a cafeteria staffed by a catering company, and the contract requires that they (the employer) use the catering company for all things that take place in the building. A manager can't go out and buy donuts for a meeting, instead they would have to use the caterer who is both worse quality and more expensive. This caterer even tried to get the company to chase off food trucks that were coming to the area, though thankfully that went nowhere because the food trucks were on public streets and not private property.
It is truly an awful contract, with no benefit at all to the employer that I can see. Like you, I conclude that some executive must have gotten kickbacks for signing this.
> It is truly an awful contract, with no benefit at all to the employer that I can see.
The benefit is having an operating cafeteria (i.e. an amenity) for a guaranteed period with little or zero out-of-pocket expense other than providing the space. Unless there's obviously high-demand (coffee?), no catering company is going to commit to a long-term contract without ensuring some minimum volume to maintain staffing. Anything food related typically has ridiculously slim margins on average, especially when you count all the failed projects.
Catering is often an exception, but not this kind of daily staffed in-place catering. The most profitable kind of catering is where you can prepare food offset for discrete (though hopefully recurring) events across many (hopefully repeat) clients, and where you can quickly ramp up or ramp down staffing and facilities to minimize recurring costs.
Sodexo or Aramark I assume? Unfortunately standard practice on University campuses across Canada and the USA.
At my institution there was a student revolt, chartwell was kicked out and it is a work co-op. The quality has increased, the employees are better treated and the cost stayed the same, and stupid rules like that are no more !
Yeah, exact same thing when I was reluctantly involved in a club’s leadership and organizing an on-campus event with food 20+ years ago. I think it was Sodexo in our case. Must be common.
Sodexo
It’s probably more there are only two or three companies, if that, that can service a customer that large and meet their requirements/SLAs by contract. And the three all happen to have the same sort of agreements required.
Large student unions are also renowned for reselling their cheap volume deal beer on the grey market to keep their volumes high. I wonder if that is all through the books?
Coke used to sell their high volume customers a different syrup, and give them different equipment to pour it, that was incompatible with the low volume customers equipment, to try and stop this
>I'm sure there was some kickback money given to people here to push it through.
Why? Is it that hard to imagine pepsi doing it in an above-board way, eg. giving a discount to the university directly?
I worked as a buyer in edu, oh the grease is built in to the system from the vendors who will frequently shower you with coffee and donuts to much friendlier offers to get sales.
Why is it so hard to imagine people who work in education would have flexible ethics for personal gain?
>shower you with coffee and donuts to much friendlier offers to get sales.
If I was working a cushy admin job, I'd need way more bribery than $5 worth of coffee and doughnuts to intentionally select a worse vendor, especially if the decision would negatively impact my colleagues and get me flak.
>Why is it so hard to imagine people who work in education would have flexible ethics for personal gain?
Because if you read the other comments, there are perfectly reasonable explanations that don't involve graft. Jumping to "bribe" every time there's bad behavior is just lazy thinking and means you don't actually figure out what the root of the problem is.
>Because if you read the other comments, there are perfectly reasonable explanations that don't involve graft. Jumping to "bribe" every time there's bad behavior is just lazy thinking and means you don't actually figure out what the root of the problem is.
Right. I'm sure, in spite of this and the decades of overwhelming evidence, this was all just a silly coincidence, and they can lower food prices now.
Edit: I'm shitlimited to five posts per X number of hours, so I'm going to respond here: the evidence is in TFA, thanks.
>in spite of this and the decades of overwhelming evidence
Where's all this "overwhelming evidence"? So far the only that's presented is "my university is pepsi only so there must be something shady going on" and "vendors buy me coffee so there must be administrators corrupting themselves and risking their 6 figure jobs for $5 worth of inducements"
edit:
>Edit: I'm shitlimited to five posts per X number of hours, so I'm going to respond here: the evidence is in TFA, thanks.
Searches for "bribe" and "kickbacks" don't turn anything up. If you're talking about the unsealed FTC complaint, that's anti-competitive behavior, but not the "kickbacks" that OP was talking about (ie. some administrator abusing their position of trust to personally enrich themselves). Both are bad, but they're not remotely comparable. For one, in the case of kickbacks, the organization and its members are harmed (through worse contracts), whereas for whatever walmart and pepsi agreed to, both benefited.
That’s you.
But a lot of people are poorly paid and free coffee is nice.
It might not be enough to select a worse vendor but if two are equal it’s easy to pick the one with the cute sales representative who knows how you like your coffee.
Then there is the leadership who plays golf together and use the company card to buy gifts (booze) for the deciders.
It’s not bribery it’s just subtle influence;)
And it’s everywhere, it’s the same at the various higher education colleges I worked at.
> shower you with coffee and donuts to much friendlier offers to get sales.
By bringing this up in a thread talking about kickbacks, it sounds as if you're trying to equate the two. Please don't equate this to a "kickback." It's not what that is. There's real standards to what denotes bribes and kickbacks and that's not what those are.
> flexible ethics for personal gain?
If you let the donuts influence your judgment, that is an ethical problem -- I agree. But if you operate in your organization's best interest you can enjoy the coffee and donuts without remorse.
I don’t drink coffee or eat donuts (allergies) so I wasn’t influenced by the sales people but I understood what was happening and saw it happen to more senior people in the organization who were influenced and cost the organization a lot of money because of “friendship” with a leader at a client who was very generous to the executive.
I'd equate it more to ass-kissing than bribing. Kissing ass isn't a crime. Questionable if it's ethical, since you're basically pretending you like someone more than you do, which is dishonest.
This was my first reaction, too.
The buyer at the university could just be doing their job, signing contracts to ensure (ideally) stable vendors and a good price by signing such a long contract term.
Coca-Cola is sort of like the Apple of cola in that they're the upmarket brand almost everywhere around the globe. Unless Coke has a sales, marketing, or branding angle (see, e.g., Disney deal mentioned elsethread), they won't discount nearly as deeply as Pepsi, which is perennially in second-place at best (Mt. Dew notwithstanding). Pepsi is the obvious choice for any outlet where your customers are captive (e.g. sit-down restaurants) and you don't otherwise care about looking cheap for not offering Coca-Cola.
Coca-Cola supplies Disney{land,world}s with free drinks, in exchange for their branding in the parks.
Yea, when I worked at Dominos we were charging like $2.50 for a 20 oz coke and $3.50 for a 2 liter.
Since the same 2 liter was like $1 at the grocery store, I thought we were gouging costumers and making bank on them, and figured the manager was being dramatic whenever inventory counts were off by a few.
Turned out we had a really raw deal with Coke, and were only charging like 25-50¢ more than we bought from for. And we were also required to order them from the distributor, to prevent us from stocking the cooler with cheaper ones from the grocery store.
> Again, native me thought, "Why not have both Coke and Pepsi and let the customer decide?" I am not sure whether there was a pricing issue that prevented management from buying both—like the loss of a discount for going Coke-only or whatever.
There's a bunch of pricing stuff (typically the bottler sells syrup and rents dispensers and may supply drinkware, and you get discounts on everything when you buy more syrup, and you get advertising subsidies when you put the brand logo in your ad, etc), but there's also logistics. More options means a bigger soda fountain and probably more space storing syrup.
I'm not sure I've ever seen mixed brands in a single dispenser (other than 7up+DrPepper which is bottled regionally by Coke bottlers in some regions and Pepsi bottlers in others; so you might see Coke with 7up and DrPepper or with Sprite and MrPibb). But, rarely, I've seen dispensers from both. Mostly at convenience stores and also the Yahoo employee cafeteria at the Sunnyvale HQ on First Ave (which they left some time ago). Some restaurants that don't have a fountain will stock cans from multiple brands, too.
All that said, from my life experience, very few people express a strong preference, giving customers a choice probably isn't worth the effort.
This is world wide. Coke and Pepsi not only provide restaurants with soft drinks, but also all other drinks, most importantly beer. Local beverage distributors will be with either one or the other.
Restaurant owners will sign a contract with a distributor to buy only from them, and in exchange get discounts, free equipment rentals such as drink fridges and beer taps, and things like sunshades, tables and chairs, signage, etc.
Are you referring to the fact that 7up/Dr pepper are distributed by pepsico? They still have historically been independent from the big 2 as far as product branding since inception, most recently being owned by Schweppes.
Dr. Pepper is distributed by Coke in some states/countries, Pepsi in others, and by its own distribution network in like 30 US states. A friend likened it, not without a certain verisimilitude, to the result of the Treaty of Tordesillas in 1494.
The Dr Pepper/Coke agreement was terminated this year.
https://finance.yahoo.com/news/dr-pepper-end-partnership-cok...
I think they were just giving an example, and had assumed each separate flavor was a separate company, but happened to choose a bad one with 7up as it is a different beast then the rest.
There's a complicated UK beer version of this with more parties. Basically pubs might be any of:
- directly owned and managed by the brewery
- owned by the brewery and leased to a manager, like a franchise
- independent, but contracted exclusively
- genuinely independent
Contracted pubs may also have limited supplies of "guest ales". Usually there's sufficient local competition to keep the pubs good, but local monocultures can also be a problem.
Most of the pubs are owned by the PubCos Back in the past it was mostly brewery owned with 6 big brewers owning most of them. So a law got passed in the 90s which limited the breweries to a max of 2k pubs. Unfortunately what happened was we ended up with a bunch of very large Pubcos who were often linked to a particular brewery anyway (some were formed by former brewery execs and the pubs were "donated" in return for an agreement to keep buying from the brewery"). The Pubcos started with low rents but high stock prices but now go for both high rents and high stocks. Its why often see pubs changing hands frequently when someone tries the dream of pub landlordship but runs out of money. Its why Wetherspoons is "cheap" since generally they convert buildings and so have a freehouse model.
And Pizza Hut ran itself into the ground despite being incredibly popular when I was a child
Oh! I've witnessed this quietly every time I buy soda!
I'm a habitual enough soda drinker that I'm a six-pack-a-day diet soda drinker (don't judge me, at least it's not Red Bull). I notice that there's vendor collusion at Walmart for months at a time where the Pepsi six-packs will typically go on sale for a few months at a sub-$4 to $5 price (currently it's $4.98) while Coke packs will be $5-6 off sale.
Cycle three to four months and Coke will enter the $4 position and Pepsi goes back up to a full retail price for the next quarter.
I've always seen the 'cycle' of the two competitors constantly hitting a 'sale' price across various retailers.
I used to drink a lot of seltzer purchased in those 1 liter bottles. Then I bought a countertop soda maker. I can make the same amount of soda that I was paying $1.50 for at the store for $0.20 now. (I refill my own CO2 off a 10 lb tank) I can't imagine paying more than $0.50 for a liter of soda anymore. They have got to be making an obscene profit on those drinks.
Even weirder, the drinks that I flavor myself taste way better than the ones in the store. I suspect they have been titrating their flavoring down over time. Root Beer I make myself using drink powder tastes way better than the ones from the store. Same for grape and orange sodas.
Seems to be a pattern among all products I’ve ever encountered. I’m a heavy sales shopper. My local grocer (Ingles) will do a promo for Sargento cheese or Chobani yoghurt for instance, normal price of 5$ let’s say, then drop it to $2 for a week, then to $4 the next week, then back to full price. This rinses and repeats every 2 or 3 months for most sales products.
Sadly for this RedBull drinker, they never go on sale, at all, ever, anywhere.
This is just the tip of the iceberg, and it's only in the grocery shopping industry.
Our country and civilization is slowly turning into organized crime.
Where are the mainstream media stories about this? The article mentioned the story blowing up but a Google search showed only one media outlet covering the story.
Or like any mea culpas. I remember Larry Summers scoffing about this, as well as our very own Walter Bright.
As if we needed another reason not to buy junk food. By the way, in France we have a 5.5% VAT on food, instead of 20% for other products. Junk food is also 5.5% but cat food is 20%. I wonder if this is going to change some day for junk food or sodas.
Just stop buying Pepsi products. Stop going to Walmart. You don't need either. You don't need potato chips or soda or Gatorade or any of the other poison they produce.
I just look at $7 for a bag of chips (which seems to get smaller every year) and it makes the decision easy.
Why do you think that all the other brands don't have similar deals?
Okay I'll go to Kroger who also has horrible anti competitive practices and buy their store brand which is literally just Nestle but in different packaging
Time for a class action lawsuit. You can submit your personal information to a wordpress powered law firm's upload forms in exchange for your twenty bucks without inflation compensation in about 5 years and they collect a cool 50% fee distributed amongst millionaire lawyers.
Something is seriously wrong with the US justice system. Some links to bolster your point.
https://waldenconsultants.com/2020/04/13/yet-another-study-s...
https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_L...
I wish I could do the reverse. Could I and a million other people pay $20 now to a few law firms that could fight this without need for compensation and do everything to expose this to everyone in America?
Isn't that what organizations like the ACLU are for? Except ACLU fights for civil rights whereas your hypothetical organization fights for consumer rights. The reason why it doesn't exist is that it suffers heavily from the free rider problem. Any individual's donation of $20 or whatever is unlikely to get them $20 worth of returns, because the lawsuit is either funded or not. Moreover you'd benefit regardless of whether you donated or not, so there's no incentive to donate.
But isn’t that true of the ACLU as well?
A similar idea that's immediately actionable is subscribing to independent media doing investigative journalism
hmmm that is very interesting wonder if its possible even
The greatest enemy of a free market is a successful capitalist.
>“I actually think we’re capable of taking whatever pricing we need,” said CFO Hugh Johnston in 2022. And the company did just that, raising prices by double digit percentages for seven straight quarters in 2022-2023.
I hate to say it, but was he proven wrong? People are still buying junk food and soda (their primary products) despite prices going up. Looking at Pepsis profit margin, it seems to have hovered between 9.5% and 10.5% since 2021.
The point of the complaint is that they were able to do this due to illegal collusion.
And even if people buy a lot of junk food, they might have bought competitors’ junk food. Laws are still laws even if you don’t like the people the laws protect.
Exactly pricing discrimination (i.e. selling at different prices to different customers) is absolutely legal and is market efficient in a market with multiple sellers and multiple buyers.
Pricing discrimination combined with monopsony(single large buyer) or monopoly ( single large seller) powers is not market efficient. It leads to higher prices by end consumers. Price discrimination via collusion + Walmarts monopsony in grocery industry violates that 1930s act and is illegal
Is that the point? The illegal collusion was with walmart to keep their prices artificially low compared to everyone else. They weren't colluding with coke to raise all soda prices.
Companies are enshittifying everything so quickly now that it must be via collusion.
> A Trump official tasked with dealing with affordability tried to hide this complaint...
First, that made me raise an eyebrow.
> ...and failed.
Then, that made me laugh.
> And now there’s a political and legal storm as a result.
Finally, that made me sigh, because nothing's gonna happen. The "storm" will pass, as it always does.
The storm is likely within the administration and across governmental departments. Trump will try to drive out whoever doesn't toe his line, even if he legally doesn't have the authority to do so.
"A Trump official tasked with dealing with affordability tried to hide this complaint…"
Why? Unless there was some kind of payola, this is doesn't make sense.
According to TFA, Pepsi hired lobbyists immediately prior to the complaint being hidden.
There often is a payment in the form of campaign contributions, and mysteriously cushy jobs after retirement from politics.
But, beyond that, while logically voters should vote against politicians that favor businesses over them, they often appear to do the opposite. They simply gain the label of "business friendly".
Capitalism as it is taught: lots of companies competing with each other, resulting in better goods at affordable prices! The customer wins!
Capitalism in practice: a relative handful of rich people cooperating with each other to extract as much money as possible from the middle and lower classes.
You can see which version of capitalism this document supports.
The "fiscally conservative" aspect of the Republican party (and the Democratic party to a lesser degree) don't want people to think of capitalism-in-practice; they want happy consumers who think that competition is still a thing. Since this document clearly goes against that narrative, it must be suppressed.
Corporations are a funny kind of alien intelligence. Producing a better product or a lower price is just one way to ensure their survival. Another is to manipulate the rules of the market itself, including the rule enforcers.
It's the product of an evolutionary process. You could scrap capitalism entirely and still get cartel formation, since you have agents with varied traits competing to gain the resources to be selected to reproduce [their continued existence, into the future].
A couple other ways of looking at it come from Bataille, Odum, Prigogine or Schmitt.
You can also just pay your workers in scrip and then hire Pinkertons to kill them if they get uppity about it. It's hard not to become cynical when people seem almost willfully ignorant of the despicable history of capital in this country...
> a relative handful of rich people
no, not clear at all.. it is a system that filters. "rich people" go broke all the time, Britain too.. There are serious structural problems certainly but that does not describe them
I guess I'm not sure where you read a claim that rich people can never go broke into the original comment. They absolutely can. That's why they often - as they seem to have done here - cut side deals to protect their revenue streams at the expense of competition. There's a VP at Walmart who stands to lose a lot of money if people start buying their Pepsi elsewhere, and a VP at Pepsi who stands to lose a lot of money if their products are less visible in the nation's Walmarts, so they've agreed to cooperate and mutually reduce the risk that their orgs perform poorly.
billionaires only tend to "go broke" when they commit massive amounts of crime, mostly against other rich people.
Dynastic wealth also tends to dissipate significantly in a generation or two, as heirs fail to generate the same level of wealth and just spend it (plus it's divided).
Thanks, I'll pay my rent with this information when I get laid off.
Not sure what you're trying to say with that non-sequitur.
Ah yes, only capitalism suffers from corruption.
Good job calling me out for saying that "only capitalism suffers from corruption". If only I had actually said that.
It's an obvious implication by specifically calling out capitalism when discussing the difference between theory and practice.
"Capitalism is when Walmart offers a discount on Pepsi, at razor-thin margins, and somehow this is maximally extracting from the middle and lower classes"
Pepsi is exchanging profit for market-share. Be serious. Everyone else is just charging the standard price.
Market failures ought to be accounted for with regulation (they often are, that's what Liberalism is for), but this is not one.
The unessential garbage fuelling our obesity crisis has no place in the conversation about the affordability crisis whilst policy-makers and armchair experts are mulling a sugar tax, which would just raise the price. Notwithstanding, profit margins at grocery stores are not large in the first place. The reason profits are breaking records is that population is also breaking records, and customers are spending more on boutique animal alternative or organic boxed products. Margins on produce are as thin as ever. Canned black beans and soup are not making their billions.
Did you forget about the "creative" methods that Pepsi used to (illegally) ensure other retailers could not offer low margins on Pepsi?
I didn't. I didn't contend whether the actions were kosher, I contended the ridiculous idea that they "raised prices everywhere".
That's exactly what happened?
Game recognize game
This reality doesn't fit the narrative Trump pushes that all price increases are Biden's fault.
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It's not the discounting that's a problem -- it's the intentionally watching other stores and preventing them from closing the "price gap" with Walmart
> As a result of Food Lion threatening Walmart’s price gap, Pepsi created a plan to nudge Food Lion’s retail prices on Pepsi products upward by reducing promotional payments and allowances to Food Lion and raising other costs for Food Lion
> It's not the discounting that's a problem -- it's the intentionally watching other stores and preventing them from closing the "price gap" with Walmart
This is circular. You are just describing a selective/privileged discount, again.
Food Lion could of course sell some items at a loss (Walmart did this, to gain market share and beat out smaller businesses). Costco continues to sell hot dogs at a loss. But that probably wouldn't work for Pepsi products in this context; fortunately, there are other products beyond Pepsi.
The bright line distinction is Pepsi watching Food Lion's end-consumer pricing and trying to force it up in order to mollify Walmart.
I actually doubt this is remarkable in the world of major producers and retailers (e.g. I've heard anecdotes of brands sending around reps to ensure that their shelves at retail stores are appropriately well lit and placed, so having an agreement on price seems pretty normal). However, it's probably a good case to get the public thinking about the desireability of such an oligopoly -- evidence that it's not merely better economies of scale and logistics that are keeping Walmart's prices low, but also explicit, private deals that feel shadier. I don't know that anyone did anything objectionable here given the norms and incentives in front of them, but it's a bad look for those norms and incentives.
You asked how a price cut translates to raising prices everywhere, and the parent comment answered. Though even without the further raising of prices for the competitors, the effect of many such agreements is that the competitors have a harder time competing, some shut down, and now the Walmart can also charge more because there's less competition.
> the parent comment answered
There's no evidence that it translates to raised prices everywhere.
> competitors have a harder time competing
Yes
> some shut down
No one is shutting down because of Pepsi. Offer some evidence.
The article explains that for a supermarket Pepsi is a must have product, they loose to many customers if they don’t have it.
Only one company sells it (obviously). Pepsi is enforcing a retail price differential between Walmart and other retailers.
This is a violation of US law
> they loose to many customers if they don’t have it.
Good thing they do have it, at a marginally higher price.
> This is a violation of US law
It may very well be, but that is not what I contended.
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Weird stance to take since PepsiCo owns a number of food subsidiaries like QuakerOats.
Pretty sure oatmeal is a nutritional foodstuff.
Excuse me if I don't count <5% of their revenue source as making a difference.
The Robinson-Patman Act is terrible law. It’s been routinely violated (unknowingly in most cases) for decades across effectively every sector of the economy & enforced vanishingly rarely.
If it were to be enforced uniformly and aggressively it would be devastating: Every negotiation between a supplier and a purchaser at every level is potentially a federal crime!
If it were to be enforced capriciously, it would put unchecked power over everyday commerce—again at every level—into the hands of the FTC and its political masters.
No thanks. Repeal it so we can stop hearing about this “one neat trick to roll back neoliberalism!”
Shout out to Friedman, Hayek, Rand, Reagan, and their neoliberal enablers in the democrat party like Clinton. All US Citizens and the unlucky citizens of our colonies are property of US corporations. Bought and paid for. It’s about to become really obvious to anyone paying even the smallest amount of attention just how screwed anyone not in the top 1-5% really is.
please, please read Dark Money by Jane Mayer if you haven't already.
Will add it to my list!
soda isn't actually food, nor is it healthy. Pepsi should be $40 a carton
You should look up what PepsiCo owns.
Garbage, mostly. Aside from bottled water which is itself often redundant, there's very little they sell that could be considered "good" for people.
That makes collusion okay. QED.
No.
The legal theory is Robinson-Patman promotional discrimination, not a price-fixing judgment. The complaint’s factual story can imply broader price effects, but that is not the same as “proven collusion” across the whole economy. The case was not dropped in February; it was extended.
Seems awfully dumb to attempt the whole "collusion on prices" thing when both you and your partner in crime are locked in your own cutthroat duopoly battles. What's to stop Coca-cola+Target from turning around and crushing Walmart+Pepsi on pricing the instant they try to "price-gouge"?
The whole point of Duopoly is to have a “competitor” so that you can continue to act as a monopoly behind the scenes while avoiding the appearance of a monopoly. You get to point finger at the other guy when there’s scrutiny and argue there’s no monopoly, but also increase your own prices when your competitor does it.
It’s not cutthroat, it’s comfortable partnership with a cutthroat veneer. If either of them wins, they have a monopoly and are at higher risk of regulation or breakup. So they fight openly over small fries, and keep writing dividend checks.
They write the rules.
It's kind of like what's to stop you from stealing your neighbor's lawn gnome? You get a free gnome once and now neither of you can ever have anything on your property not bolted down ever again. Better to not hurt both of you by rocking the boat and instead slowly raise prices together. Cooperation is only hard when there's a lot of people involved.
We're now to a point where we are cheering on a battle between duopolies.
RC Cola, this is your moment to shine.
How is that different from any regular election year?
Coca cola doesn't sell food, Pepsi owns a ton of brands, anything they can mix corn syrup with it seems.
Monopolist economic surplus?