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.
"bribes" have a specific meaning. It requires quid pro quo. Otherwise donating to get your preferred politician elected wasn't illegal, nor was altering your stance on a given position to maximize donations you'd collect.
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.
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?”
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
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.
> 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.
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.
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.
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.
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.
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.
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.
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.
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.
> 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.
> 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.
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.
>“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.
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.
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.
American monopolists don't want to get on Trump's bad side, so they give him fake peace prizes and gold trophies.
Trump's people don't want to get on the bad side of monopolists because people like Elon Musk and Munger's son won't dump hundreds of millions of dollars into keeping them in office (and out of jail).
Notice how I didn't mention you or me in either of those two agreements. That's because we aren't even noticed.
It makes perfect sense if you understand for whom Trump's people are working. It isn't much different than the democrats, but we should note that Lina Khan was appointed by Biden. And, Matt Stoller has another great article about attempts by Biden to correct the financial system with nominations like Omarova. Republicans couldn't get past calling her communist which is patently ridiculous. Drain the swamp indeed, MAGA.
> "The specifics in the complaint are that Pepsi keeps wholesale prices on its products high for every outlet but Walmart, and Walmart in return offers prominent placement in stores for Pepsi products. "
Lol so it's a price-cut. They offer Pepsi at lower margins, in a store known for lower prices, in exchange for being boosted. And somehow this translates to a conspiracy to raise prices everywhere else.
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.
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.
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 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.
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.
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.
>It used to be illegal to bribe. Used to...
"bribes" have a specific meaning. It requires quid pro quo. Otherwise donating to get your preferred politician elected wasn't illegal, nor was altering your stance on a given position to maximize donations you'd collect.
> 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.
>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?”
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
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.
> 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.
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.
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.
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.
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.
> 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.
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.
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.
>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?
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.
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.
> 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.
Coca-Cola supplies Disney{land,world}s with free drinks, in exchange for their branding in the parks.
> 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.
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.
And Pizza Hut ran itself into the ground despite being incredibly popular when I was a child
>“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.
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.
"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.
Game recognize game
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.
Ah yes, only capitalism suffers from corruption.
"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?
American monopolists don't want to get on Trump's bad side, so they give him fake peace prizes and gold trophies.
Trump's people don't want to get on the bad side of monopolists because people like Elon Musk and Munger's son won't dump hundreds of millions of dollars into keeping them in office (and out of jail).
Notice how I didn't mention you or me in either of those two agreements. That's because we aren't even noticed.
It makes perfect sense if you understand for whom Trump's people are working. It isn't much different than the democrats, but we should note that Lina Khan was appointed by Biden. And, Matt Stoller has another great article about attempts by Biden to correct the financial system with nominations like Omarova. Republicans couldn't get past calling her communist which is patently ridiculous. Drain the swamp indeed, MAGA.
> 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 specifics in the complaint are that Pepsi keeps wholesale prices on its products high for every outlet but Walmart, and Walmart in return offers prominent placement in stores for Pepsi products. "
Lol so it's a price-cut. They offer Pepsi at lower margins, in a store known for lower prices, in exchange for being boosted. And somehow this translates to a conspiracy to raise prices everywhere else.
This is pathetic.
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 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
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.
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.
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 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.
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.
We're now to a point where we are cheering on a battle between duopolies.
RC Cola, this is your moment to shine.
Coca cola doesn't sell food, Pepsi owns a ton of brands, anything they can mix corn syrup with it seems.
Monopolist economic surplus?