[digital-cygnet]

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

[lanfeust6]

> 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.

[digital-cygnet]

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.

[foolswisdom]

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.

[lokar]

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