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Antitrust Enforcers Confront Coronavirus by Easing Up on Competitors While Cracking Down on Price Gougers

Posted  April 3, 2020
By Matthew Moore

The coronavirus pandemic is forcing antitrust enforcers around the globe to adjust their competition policies to protect their constituents from both the virus and the unscrupulous.

In an antitrust variant of the Hippocratic Oath, antitrust enforcers are first easing up on competition law to ensure that enforcement does not hinder life-saving efforts at cooperation by competitors.  For example, last week in the United States the Federal trade Commission and the U.S. Department of Justice issued a joint statement providing guidance for collaborations of businesses working to protect the health and safety of Americans during the coronavirus pandemic.  Acknowledging that the virus requires a coordinated response, the agencies announced that they would expedite reviews of proposed collaborations that relate to the coronavirus and are designed to improve public health and safety.

The federal agencies also gave guidance on types of public-health collaborative activities which would generally be consistent with the antitrust laws.  Examples include joint purchasing agreements among healthcare providers, the sharing of technical know-how, collaborative research and development and healthcare providers’ development of patient management standards.

Across the Atlantic, the European Competition Network has issued its own guidance. The ECN announced that it would give latitude to temporary cooperative measures taken to ensure the steady supply of scarce goods.  In a similar vein, the United Kingdom is relaxing its enforcement of competition laws to permit grocery stores to share data on stock levels and methods of supply.

On the flip side, antitrust enforcers are becoming increasingly concerned about possible price gouging of essential supplies.  A coalition of 33 attorneys general have urged online retailers to rigorously monitor potential price gouging.   The Attorney General of Texas is seeking an injunction against a seller of face masks and hand sanitizers for allegedly price gouging during a disaster.

Most states have laws prohibiting price gouging in times of crisis, which are generally triggered upon the declaration of an emergency or a disaster area.

The scope of these laws against price gouging varies considerably.  New York prohibits price gouging with respect to goods and services that are “used, bought or rendered primarily for personal, family or household purposes.”  California law covers a wide swath of goods and services, including consumer goods, emergency supplies, building materials and repair services.  Massachusetts law is limited to banning price gouging of petroleum-based products.

Even in states where there is no law explicitly prohibiting price gouging, consumers are not without protection from unscrupulous sellers.  In Delaware, Governor John Carney has issued a Declaration of Emergency which includes a ban on “price gouging as a result of this public health emergency ….”  Not only does Alaska interpret its Unfair Trade Practices Act as covering price gouging, but its Attorney General is seeking to fine a man is accused of selling thousands of face masks “at unconscionable prices.”

In this time of an unprecedented health crisis, all participants in the marketplace are faced with novel risks and uncertainties.  Antitrust enforcers are seeking to strike the right balance in giving companies the leeway to deal with this crisis while reining in those that seek to take an unconscionable advantage of consumers.

Both consumers and companies need to be aware of the competition laws in this new environment that are simultaneously becoming more relaxed and more stringent.  Individuals and businesses should be mindful of how the coronavirus pandemic might be affecting their rights and obligations, and seek legal counsel as needed.

Edited by Gary J. Malone