Why Walmart Has the 'Lowest' Grocery Prices — and What Newly Unsealed Court Documents Say About the Real Reason
Walmart has the lowest grocery prices. This is probably the most durable belief in North American retail. It's repeated like a fact in economics textbooks and personal finance advice alike: big stores buy in bulk, pass savings along, and smaller competitors can't keep up.
RF Buche has been in the grocery business since 1905 — fourth generation, operating independent stores across South Dakota, including the only full-service grocery store on the Oglala Sioux Indian Reservation. He can tell you exactly what's wrong with that explanation.
For a 12-pack of Pepsi, his wholesale cost is $9. Walmart's shelf price is $7.97.
For an 18-ounce box of Cheerios, his cost is $6. Walmart's shelf price: $4.98. Lower on the day More Perfect Union visited.
RF isn't losing on these items because he can't buy as efficiently as Walmart. He's losing before the product even reaches a shelf.
That's the claim at the centre of a recently unsealed FTC lawsuit — and a new More Perfect Union investigation that dug into what the documents say.
Watch the full investigation on YouTube →
The Lawsuit That Was Almost Buried
In the final days of the Biden administration, the Federal Trade Commission — under chair Lina Khan — filed a complaint against PepsiCo and a major retailer. The retailer was initially redacted. So was most of what Pepsi allegedly did.
When the complaint became public, this is roughly what it looked like:
As a result of [redacted], Pepsi created a plan [redacted]. The plan advised that Pepsi [redacted]. The plan included [redacted], [redacted], [redacted].
Days before Pepsi had to defend those redactions in open court, the Trump administration's FTC dropped the case.
That might have been the end of it. But the Institute for Local Self-Reliance — alongside former FTC legal adviser Katherine Van Dyck — petitioned the court to unseal the documents. Pepsi had to prove the redactions should stand. They couldn't. The documents were unsealed.
The major retailer in the complaint: Walmart.
What the Documents Allege
According to the unsealed FTC complaint, as reported by More Perfect Union, PepsiCo ran a sophisticated surveillance system to monitor grocery prices across the United States.
The system reportedly tracked two things:
Leakage — customers buying Pepsi products at stores other than Walmart.
Price gaps — the difference between Walmart's prices and those of its competitors.
The alleged goal, according to the complaint: ensure that Walmart always had the lowest price, and that the gap between Walmart and its competitors never fell below a certain level.
This is the part that upends the conventional story. Walmart's low prices, the complaint alleges, weren't just the result of Walmart being more efficient — they were maintained partly by Pepsi taking active steps to prevent other stores from being more competitive.
The Food Lion Case
The investigation offers a specific example from the documents. Food Lion is a regional grocery chain with nearly 1,000 stores in the southeastern United States. According to the complaint, when Pepsi's monitoring system detected that Food Lion was selling Pepsi products for less than Walmart, it described Food Lion internally as the "worst offender."
Pepsi's alleged response was not to lower its own prices or improve its products. According to the complaint, it developed a multi-year plan to force Food Lion to raise its prices. The methods described: cutting Food Lion's promotional money — the funding that allows stores to run sales — and raising Food Lion's wholesale costs.
In other words: a competitor tried to offer consumers a lower price. And a major supplier, whose biggest customer is Walmart, allegedly intervened to stop them.
Stacy Mitchell, co-director of the Institute for Local Self-Reliance, put it plainly: "This is Pepsi taking deliberate steps to force Food Lion to raise its prices."
Why This May Be Illegal
There is a law designed specifically to prohibit this kind of arrangement. It's called the Robinson-Patman Act, and it makes it illegal for a large retailer to require a supplier to give it pricing advantages that disadvantage smaller competitors.
The law was passed in 1936, in part in response to the growing market power of large chain stores and their ability to demand preferential treatment from suppliers. The concern at the time was that this would hollow out independent retail — that smaller competitors would be driven out not because they were less efficient, but because they couldn't access the same pricing.
What happened to enforcement? According to the investigation, the federal government largely stopped enforcing the Robinson-Patman Act in the 1980s. The prevailing view at the time was that allowing large retailers to leverage their scale over suppliers would drive prices down for consumers.
Stacy Mitchell's assessment: "Today, we're surrounded by evidence that that was a complete mistake."
The FTC complaint filing was, in that context, unusual. It represented a renewed attempt to use a law that had been dormant for decades. The Trump administration's decision to drop it before it reached court has attracted criticism from across the political spectrum — including a letter from six Republican senators asking the new FTC chair to enforce the Robinson-Patman Act.
The Structural Consequence
Katherine Van Dyck's summary of the complaint's implications is worth sitting with: "Walmart does almost always have the lowest price, because it is involved in these sorts of schemes. But in reality, all that's doing is setting a price floor. It's not lowering prices for consumers."
The distinction matters. If Walmart's prices are low because Walmart is genuinely more efficient, competition should push prices down across the market. If Walmart's prices are low because other stores are prevented from being more competitive, you get a different outcome: a floor below which prices can't fall, regardless of what any individual competitor tries to do.
As the investigation frames it: a Walmart tax on the market.
Walmart captures roughly one in every four dollars Americans spend on groceries. In over 60 metropolitan areas, it holds more than half of all grocery spending. When a company of that size is alleged to be using supplier relationships to prevent competition on price, the effects aren't confined to the stores that close. They ripple through every consumer's grocery bill.
Neither Walmart nor the FTC responded to More Perfect Union's inquiry. PepsiCo characterized the complaint as having no merit, noting that the new FTC agreed and dropped it voluntarily.
What This Means for Canadian Shoppers
The Robinson-Patman Act is U.S. law. The FTC complaint was a U.S. case. But the dynamics it describes are not limited to the United States.
Walmart operates across Canada. PepsiCo and Frito-Lay supply Canadian grocery retailers. Independent grocers in Canada face similar wholesale cost pressures relative to major chains. Canada's Competition Act covers some of the same ground as Robinson-Patman — including provisions against price discrimination that damages competition — though enforcement history and mechanisms differ.
The broader point is structural: when a dominant retailer's pricing power extends to how suppliers treat every other store in the market, the effects are felt by anyone who buys groceries anywhere. The premise that the biggest player's low prices are simply a reflection of efficiency doesn't fully hold up when suppliers are allegedly being used to suppress the competition that would otherwise bring prices down further.
RF Buche, who recently closed stores after years of being unable to compete on price, put it simply: "I would like to think if the Robinson-Patman Act was being enforced, those store closures would have probably been different."
Frequently Asked Questions
Q: Is this relevant to Canada, or is this purely a U.S. legal story? A: The specific law and FTC case are American. But Walmart is a major Canadian retailer and PepsiCo operates throughout Canada. Canada's Competition Act includes provisions against anti-competitive pricing arrangements, though enforcement history differs. The underlying market dynamics — large retailers leveraging supplier relationships — apply broadly across North American grocery markets.
Q: Didn't the FTC drop this case? Doesn't that mean it had no merit? A: PepsiCo characterizes it that way. Critics, including former FTC legal adviser Katherine Van Dyck and six Republican senators who subsequently wrote to the FTC, argue the case was dropped for political reasons before its merits were ever tested in court. The documents were unsealed — meaning Pepsi could not justify keeping them secret — and the allegations they contain remain on the public record.
Q: What is the Robinson-Patman Act and why does it matter? A: The Robinson-Patman Act (1936) prohibits a powerful buyer from demanding price terms from a supplier that put the supplier's other customers at a competitive disadvantage. It was designed to prevent large chains from using their leverage to undermine smaller competitors — not by competing more effectively, but by forcing suppliers to treat competitors worse. The law hasn't been actively enforced since the 1980s.
Q: Does this mean Walmart's prices aren't actually low? A: Walmart's prices are genuinely lower in many categories. The investigation's argument isn't that Walmart's low prices are fake — it's that they may be maintained in part by preventing other retailers from offering prices that are equally low or lower. The result is a price floor, not a competitive market pushing prices down. Whether prices would be lower still in a more competitive market is, by definition, hard to measure.
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