PepsiCo Inc. announced Thursday that the Federal Trade Commission had cleared its deal to purchase two companies that bottle its drinks, on the condition that it seal off confidential information about its competitors to which the bottlers have access.
Pepsi will acquire Pepsi Bottling Group Inc. and PepsiAmericas Inc., but the bottlers also will handle work for Pepsi rival Dr. Pepper Snapple Group, Inc.
In order to clear regulatory hurdles, Pepsi said, it will set up a firewall so that Pepsi officials don’t have access to confidential information from Dr. Pepper.
Pepsi announced the $7.8 billion deal last August, but worked out details of the arrangement with the FTC before filing its formal paperwork earlier this year.
Pepsi previously had minority stakes in both bottlers, which together accounted for about three-quarters of Pepsi’s U.S. sales.
In December, Dr. Pepper agreed to give Pepsi a 20-year license to distribute and sell Dr. Pepper, Schweppes, and Crush for $900 million.
The FTC found that the license agreement would limit competition in certain soft-drink markets in the United States because it would eliminate direct competition between the two companies, and would increase the chance that Pepsi would unilaterally set Dr. Pepper’s prices.
The consent order that Pepsi agreed to would limit commercially sensitive information to employees at the company who are involved in “bottler functions,” and not to anyone involved in making Pepsi’s soft drink concentrates.
The proposed agreement also provides for someone to monitor the firewall and report to the FTC.
The FTC documents on the deal are available here.
The commission voted unanimously to approve the consent order, which is subject to a 30-day waiting period.
Just as FTC officials sign off on Pepsi’s deal, they are set to review a similar proposed deal from Coca-Cola. The company announced Thursday it would acquire its own bottling business in a deal valued at $13 billion.
updated to include the FTC documents at 11:40 a.m.
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