The gravity of the pandemic is palpable, and seemingly constant news about it is hard to escape, with recent reports including updates on the availability of vaccines, the changing scope of various stay-at-home orders, and the perceived risks of new COVID-19 variants.  But there will come a time—perhaps sooner than the pessimists predict—when this will no longer be the all-consuming story it has been for the past ten months.  In this post, we address a few of the strongest reasons that most pricing restrictions may be lifted before the start of the next school year.

A Patchwork of Laws May Be Supplanted by a Robust Federal Response. In the United States, we seem to be getting some measure of control over the spread of the virus.  The truer that becomes, the less emergency orders and price gouging restrictions are necessary or justifiable.  As vaccinations increase, a return to normalcy may be in sight.  Dr. Fauci, the president’s chief medical adviser on COVID-19 and the country’s leading expert on infectious disease, has estimated that a critical amount of the population could be vaccinated by the end of the summer.

In addition to this aggressive plan for vaccinations, in its National Strategy for the COVID-19 Response and Pandemic Preparedness, released January 21, the Biden Administration committed itself to “[i]dentify and take steps to limit price gouging and promote reasonable pricing.”  The strategy goes on to assure the public that “the federal government will use its full powers to prevent hoarding and price gouging, including by reviewing and expanding the designated scarce materials under the DPA.”  It is possible that robust price gouging guidance from the federal government, coupled with meaningful increases in herd immunity, will obviate the need for the piecemeal assembly of state and local controls that have been the norm.

Unpopularity of Some State Emergency Declarations. The unpopularity of state emergency declarations could create enough pressure for local leaders to consider how long they are truly necessary.  This has been a live issue for months, notably with the Michigan Supreme Court weighing in on the validity of emergency orders (and the price gouging restrictions therein).  In a growing number of states, lawmakers are attempting to limit the authority of state leaders to impose emergency restrictions.  Recently, lawmakers in Washington state introduced a bill that would limit the scope of the governor’s emergency declaration, requiring separate emergency proclamations for each county and mandating that any such proclamations would need to be reauthorized by the state legislature or legislative leaders after 14 days.  As we approach a full year of living under various emergency declarations, and given the anticipated relief on the horizon due to the rollout of vaccines, states may be more willing to walk back their controls.

Price Gouging Laws May Not Help As Much As Some Think. Price gouging laws can have unintended consequences.  A recently published peer-reviewed article by Gavin Roberts, assistant professor of economics at Weber State, and Rik Chakraborti, assistant professor of economics at Christopher Newport University, sheds light on how price gouging laws have actually affected consumers during the early stages of the COVID-19 pandemic.  Their article, published in the Journal of Private Enterprise, analyzed publicly available internet search data from Google Shopping Trends “to track web searches as a proxy for in-store shortages,” and found notable differences between the data in states with and without price gouging laws.  The research suggests, at least preliminarily, that rather than protecting consumers, price gouging laws actually “caused in-store shortages” of in-demand items like hand sanitizer and toilet paper, driving consumers to need to search for available supplies.  The authors note that while “[i]t is not clear from [their] results whether total consumer welfare is increased or decreased as a result of anti-gouging laws, … the possibility of increased search costs is an issue that should be considered in future research[.]”

Choosing to roll back price gouging restrictions would have a very different impact today than it would have eight or ten months ago.  With a few notable exceptions—for N95 masks, for example—the supply chain concerns from the early weeks of the pandemic are no longer present to the same degree.  Many suppliers have been able to adapt to meet changing demands, such as providing more food to grocery stores and less to schools.  At this stage, most may be less concerned about shortages and feel safer letting market forces determine prices.

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Visit Proskauer on Price Gouging for antitrust insights on COVID-19.

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Proskauer’s cross-disciplinary, cross-jurisdictional Coronavirus Response Team is focused on supporting and addressing client concerns. Visit our Coronavirus Resource Center for guidance on risk management measures, practical steps businesses can take and resources to help manage ongoing operations.

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Photo of Christopher E. Ondeck Christopher E. Ondeck

Chris Ondeck is co-chair of the Firm’s Antitrust Group and co-head of the Washington DC office. He represents clients in complex antitrust and consumer protection litigation, defends mergers and acquisitions before the U.S. antitrust agencies, represents companies involved in government investigations, and counsels…

Chris Ondeck is co-chair of the Firm’s Antitrust Group and co-head of the Washington DC office. He represents clients in complex antitrust and consumer protection litigation, defends mergers and acquisitions before the U.S. antitrust agencies, represents companies involved in government investigations, and counsels on antitrust compliance. Chris is also the founder and leader of the firm’s Price Gouging Practice, and is one of the key thought leaders in this space.

Chris handles antitrust matters for clients in a number of industries, including food and agriculture, financial services, media, telecom, technology, e-commerce, consumer products, natural resources, oil and gas, chemicals, and pharmaceuticals.  He also serves as outside counsel to a large number of industry groups, including trade associations and cooperatives.

Chris has been recognized as a leading antitrust practitioner by Chambers, noting that clients describe him as “our primary thought partner – he’s very good at explaining the complex issues and making them easy to understand” and praising “his strong advocacy skills”; by The National Law Review as a “Go To Thought Leader 2020”; by Acritas as a “Star” in multiple years; by Benchmark Litigation as a National Litigation Star 2021; and by The Legal 500 United States for Antitrust: Civil Litigation/Class Actions.

Photo of John R. Ingrassia John R. Ingrassia

John is a partner at the Firm, advising on the full range of foreign investment and antitrust matters across industries, including chemicals, pharmaceutical, medical devices, telecommunications, financial services consumer goods and health care. He is the first call clients make in matters relating…

John is a partner at the Firm, advising on the full range of foreign investment and antitrust matters across industries, including chemicals, pharmaceutical, medical devices, telecommunications, financial services consumer goods and health care. He is the first call clients make in matters relating to competition and antitrust, CFIUS or foreign investment issues.

For more than 25 years, John has counselled businesses facing the most challenging antitrust issues and helped them stay out of the crosshairs — whether its distribution, pricing, channel management, mergers, acquisitions, joint ventures, or price gouging compliance.

John’s practice focuses on the analysis and resolution of CFIUS and antitrust issues related to mergers, acquisitions, and joint ventures, and the analysis and assessment of pre-merger CFIUS and HSR notification requirements. He advises clients on issues related to CFIUS national security reviews, and on CFIUS submissions when non-U.S. buyers seek to acquire U.S. businesses that have national security sensitivities.  He also regularly advises clients on international antitrust issues arising in proposed acquisitions and joint ventures, including reportability under the EC Merger Regulation and numerous other foreign merger control regimes.

His knowledge, reputation and extensive experience with the legal, practical, and technical requirements of merger clearance make him a recognized authority on Hart-Scott-Rodino antitrust merger review. John is regularly invited to participate in Federal Trade Commission and bar association meetings and takes on the issues of the day.

Photo of Kelly Landers Hawthorne Kelly Landers Hawthorne

Kelly Landers Hawthorne is an associate in the Litigation Department and a member of the Antitrust and Product Liability groups. She represents clients in litigations and due diligence across a range of industries, including consumer products, life sciences, healthcare, education, hospitality, sports and…

Kelly Landers Hawthorne is an associate in the Litigation Department and a member of the Antitrust and Product Liability groups. She represents clients in litigations and due diligence across a range of industries, including consumer products, life sciences, healthcare, education, hospitality, sports and entertainment.

Kelly also maintains a diverse pro bono practice. She received Proskauer’s Golden Gavel Award for excellence in pro bono work in 2019.

She is a frequent contributor to Proskauer’s Minding Your Business blog, where she authors articles related to price gouging issues.

Kelly is also a member of the Proskauer Women’s Alliance Steering Committee, where she serves on subcommittees focused on highlighting and providing professional development opportunities for women at the firm.

Prior to her legal career, Kelly was a Teach For America corps member and taught middle school in Washington, DC.

While at Columbia Law School, Kelly served as an articles editor of the Columbia Journal of Law & the Arts and interned for the Honorable Sandra Townes of the U.S. District Court for the Eastern District of New York.