In our first installment and podcast, we discussed antitrust enforcement in the COVID-19 era. Now, we’d like to discuss price gouging, which in many ways is the polar opposite of antitrust law. Antitrust laws are based, at least partly, on the principle that fair and open competition allows resources to be allocated most efficiently. It further assumes that fair and open competition allows goods and services to be priced efficiently, by the forces of supply and demand. Price gouging laws, on the other hand, seek to limit price increases even when those prices are being determined by fair and open competition and by the forces of supply and demand. While price gouging and other consumer protection laws certainly protect the public from the effects of hoarding and other predatory behavior during public emergencies, they also capture price increases that are a result of sharply increased demand or supply shortages that are not occasioned by any malfeasance.
In the COVID-19 era, governments at all levels have mobilized efforts to combat price gouging. State attorneys general are conducting investigations and filing suits; governors have issued executive orders declaring emergencies and expanding enforcement; the Federal government has invoked the Defense Production Act to handle problems traditionally addressed by price-gouging statutes. Companies must conduct a careful state-by-state analysis to fully appreciate the impact of these laws on their business. Continue Reading