Mr. Leibowitz, tear down this firewall!

PepsiCo announced today it will set up a "firewall" to ensure that its ownership of two bottling companies does not give it access to sensitive information about its rival Dr Pepper Snapple.

By , Guest blogger

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    Pepsi products are seen on the shelf at a grocery store. PepsiCo. on March 1 reiterated its 2010 earnings prediction after it completed the purchase of its two biggest bottlers.
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Really, I'm not making this up:

The Federal Trade Commission today announced that it will require carbonated soft drink company PepsiCo, Inc. to restrict its access to confidential business competitive information of rival Dr Pepper Snapple Group as a condition for proceeding with PepsiCo's proposed $7.8 billion acquisition of its two largest bottlers and distributors, which also distribute Dr Pepper Snapple Group carbonated soft drinks.

Under a settlement with the FTC, PepsiCo will set up a "firewall" to ensure that its ownership of the bottling companies does not give certain PepsiCo employees access to commercially sensitive confidential Dr Pepper Snapple marketing and brand plans. In a complaint filed with the settlement, the FTC charged that access to this information would have harmed competition in the U.S. market for carbonated soft drinks.

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[ . . . ]

The FTC is concerned that PepsiCo's access to this information could hurt Dr Pepper Snapple's ability to compete, and ultimately could harm consumers by eliminating competition between PepsiCo and Dr Pepper Snapple and/or facilitating coordinated interaction in the industry.

The FTC's proposed consent order is designed to remedy these potential problems by requiring PepsiCo to set up a "firewall" so that the sensitive information cannot be accessed by anyone at PepsiCo who may be in an position to use the information against Dr Pepper Snapple. The order, like the Dr Pepper Snapple-Pepsi license agreement, will expire in 20 years.

So you can own a company...but not the information it possesses. Because an unelected government agency is "concerned" that access -- to your own information -- might harm third parties in the future. Might. We can't be certain, but the it's better to act first and ask questions...well, never.

And these restrictions will last for two decades. Presidents we only trust four years at a time. Heck, even FTC commissioners are limited to seven-year terms. But Dr. Pepper's marketing plans must be kept out of Pepsi's hands for at least twenty years.

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