Two federal price gouging bills were recently introduced in Congress. Senator Elizabeth Warren led the introduction of the Price Gouging Prevention Act of 2022. The bill prohibits “unconscionably excessive price[s]” at any point in a supply chain or distribution network during an “exceptional market shock” triggered by a range of events – including public health emergencies. The law would apply to any good or service offered in commerce, and would authorize the Federal Trade Commission and State Attorneys General to enforce the prohibition.  Additionally, during “exceptional market shocks,” the law would require public companies to disclose and explain changes in pricing and gross margins in quarterly SEC filings—raising the specter of SEC enforcement with respect to those disclosures.

Under Senator Warren’s bill, a defendant would presumptively violate the act if, during an “exceptional market shock,” it is shown that they (1) either have “unfair leverage” or are using circumstances related to the market shock to increase prices; and (2) sell or offer to sell a good or service at an excessive price compared to the average price during the 120-days prior to the market shock.  Unfair leverage is defined as: (1) earning $1 billion in revenue in the last year; (2) discriminating between otherwise equal trading partners; (3) being a critical trading partner; or (4) having a characteristic described in any rule issued by the FTC further defining unfair leverage. Businesses earning less than $100 million in gross U.S. revenue during the preceding year can raise an affirmative defense by showing by a preponderance of evidence the increase in price is directly attributable to additional costs outside of the business’s control. Larger business can rebut the presumption of a violation only if they demonstrate by clear and convincing evidence the price increase is directly attributable to additional costs outside of the business’s control.

Representative Katie Porter led the introduction of the Consumer Fuel Price Gouging Prevention Act, which would prohibit “unconscionably excessive” prices, at wholesale or retail, of consumer fuel, including gasoline and home energy fuel. Price controls would be triggered by the President issuing an energy emergency proclamation, as prescribed by the Act. The energy emergency proclamation would specify the covered geographic area, consumer fuel type, and time period, not to exceed 30 consecutive days at a time, though renewable for consecutive periods. An affirmative defense would be available for price increases that reasonably reflect additional costs paid, incurred, or reasonably anticipated, or that reasonably reflect additional risks taken by the seller. The FTC would have enforcement power at the wholesale or retail level, with “enforcement priority” for companies that exceed $500 million annually in U.S. consumer fuel sales. State Attorneys General would have authority to enforce the prohibition only at the retail level.

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Elected officials were quick to warn against price gouging stemming from the nationwide infant formula shortage. On May 12, 2022, the White House released a statement asking the FTC and State Attorneys General to investigate price gouging or unfair market practices in the industry. In response to the shortage, on May 18, 2022, the White House invoked provisions of the Defense Production Act (“DPA”), which gives the President broad authority to provide financial incentives and redirect resources to expand productive capacity and supply. The DPA also penalizes hoarding or price gouging of any materials deemed scarce under the Act. However, President Biden had not to date designated infant formula as “scarce.”

On May 11, 2022, New York Attorney General Leticia James issued a press release warning retailers against price gouging and pointing to existing NY law – “[t]he last thing any family needs is to be price gouged on critical nutrition for their little ones, which is why I am putting profiteers seeking to take advantage of this crisis on notice. If New Yorkers see exorbitant price increases for baby formula, I encourage them to report it to my office immediately.” On May 13, 2022, the House Committee on Oversight and Reform issued a press release publicizing an inquiry into four baby formula companies. In letters sent to each company, Chairwoman Rep. Carolyn Maloney and Subcommittee Chairman Rep. Raja Krishnamoorthi warned, “[i]t is critical that your company take all possible steps to increase the supply of formula and prevent price gouging.” The Chairs requested detailed information and a briefing by May 26, 2022.

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Online Merchants Guild v. Cameron, 3:20-cv-00029-GFVT (E.D.K.Y.)

A seminal case addressing price gouging claims and restrictions during the pandemic has resolved. After Kentucky Attorney General Daniel Cameron initiated civil price gouging investigations into various Kentucky-based merchants in 2020, the Online Merchants Guild (“Guild”) brought suit to enjoin application of the state price gouging laws against its member suppliers. The district court granted a preliminary injunction halting the investigations, predicated on the Dormant Commerce Clause. In April 2021, the Sixth Circuit vacated the preliminary injunction, allowing the investigations to resume. Relying on the Sixth Circuit opinion, the Attorney General moved for judgment on the pleadings arguing that Kentucky’s price gouging statute posed “no extraterritoriality problem.” On October 12, 2021, the Guild moved to voluntarily dismiss without prejudice, which the Attorney General opposed. On May 2, 2022, the district court issued an order to the Guild to show cause to explain why the case should not be dismissed with prejudice. The Guild responded to the show cause order by withdrawing its opposition to the dismissal with prejudice, noting that the Attorney General had reasonably addressed “certain concerns underlying this case.”

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

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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 Timothy E. Burroughs Timothy E. Burroughs

Tim Burroughs is an associate in the Litigation Department.

Tim earned his J.D. from Vanderbilt Law School, where he was the Executive Student Writing Editor for the Vanderbilt Journal of Transnational Law and Teaching Assistant for the legal writing program. While at Vanderbilt…

Tim Burroughs is an associate in the Litigation Department.

Tim earned his J.D. from Vanderbilt Law School, where he was the Executive Student Writing Editor for the Vanderbilt Journal of Transnational Law and Teaching Assistant for the legal writing program. While at Vanderbilt, Tim interned at the U.S. Attorney’s Office for the Southern District of New York and published his student note on international anti-money laundering regulation in the fine-art market.

Prior to law school, Tim taught elementary school in the Brownsville neighborhood of Brooklyn for three years as part of Teach for America.

Photo of Bryan A. Cruz Bryan A. Cruz

Bryan A. Cruz is an associate in the Litigation Department.

Bryan earned his J.D. from Harvard Law School, where he participated in the Crimmigration Clinic and as an extern at the Asian American Legal Defense and Education Fund through the Voting Rights Litigation…

Bryan A. Cruz is an associate in the Litigation Department.

Bryan earned his J.D. from Harvard Law School, where he participated in the Crimmigration Clinic and as an extern at the Asian American Legal Defense and Education Fund through the Voting Rights Litigation and Advocacy Clinic. Bryan interned his 1L summer at Disability Rights Texas.

Prior to law school, Bryan taught bilingual elementary school in San Antonio, Texas for two years as part of Teach For America. Bryan then taught middle school for two years.