Skip to main content

Frito-Lay Investigations : 05/22/1995: Memorandum

This document is available in two formats: this web page (for browsing content), and PDF (comparable to original document formatting).

Memorandum U.S. Department of Justice Seal

Subject: [REDACTED TEXT (b7D)] Date: May 22, 1995
To: Kate Balaban From: Wendy Saltzman

In a telephone interview, [REDACTED TEXT (b7D)] alleged that Frito Lay has initiated exclusive dealing arrangements with grocery and convenience stores aimed at displacing [REDACTED TEXT (b7D)] from the marketplace. [REDACTED TEXT (b7D)] According to [REDACTED TEXT (b7D)] Frito Lay's is currently targeting retail sales outlets through two types of agreements: FL has exclusive agreements with certain stores to sell only FL products, and in other stores FL is replacing competition by outbidding the other snack manufacturers for shelve space.

[REDACTED TEXT (b7D)] maintains that [REDACTED TEXT (b7D)] has mainly been shut out as a result of exclusive agreements in convenience stores where he has lost [REDACTED TEXT (b4)] in gross sales over the past year. In order to operate at a profitable margin, a distributor should generate [REDACTED TEXT (b4)] in gross sales per week, but currently [REDACTED TEXT] is operating at a loss, only generating [REDACTED TEXT (b4)] a week. Frito Lay makes [REDACTED TEXT (b4)] a week just from a single franchise, [REDACTED TEXT (b4)] almost the same amount [REDACTED TEXT (b7D)] makes from all of its convenience sales in the same area.

Frito Lay's influence in the vending machine industry is not significant at this point, but [REDACTED TEXT (b7D)] fears it may be growing. Over the past 2-3 years FL has ordered the production of 10,000 new vending machines, some which will display both Frito Lay and Pepsi products in the same machines. [REDACTED TEXT (b7D)]

[REDACTED TEXT (b7D)] said that "Frito Lay would love for me to just disappear. I can hardly get an appointment with store owners because they are so scared to upset Frito Lay." [REDACTED TEXT (b5)]

Updated June 25, 2015