COVID-19 has had a profound effect on supply chains, creating shortages and, in some cases, raising prices of vital medical and consumer products. It is no surprise that consumers, businesses, and government authorities are sounding the alarm about potential price gouging and pursuing those who appear to be exploiting the current crisis. On March 23, President Trump signed Executive Order 13910 under the Defense Production Act, which, among other things, prohibits hoarding of designated materials for the purpose of price gouging. Various federal agencies have warned that they will vigorously prosecute related conduct. Many state authorities have triggered the operation of price gouging statutes or stated their intention to use other available enforcement tools.
The uncertainty surrounding these competing legal frameworks can present challenges for suppliers of in-demand products at all levels of the distribution chain. There is no uniform definition of the offense of price gouging, which generally refers to opportunistic pricing at above-market rates or dramatic increases of prices for products in critical need. The diverse set of applicable state and federal laws vary in their operation and scope. This alert identifies the key federal and state enforcement risks and provides practical guidance for suppliers and purchasers seeking to navigate these issues.
Continue Reading Federal and State Price-Gouging Enforcement in the Era of COVID-19