As new restrictions addressing the economic impacts of COVID-19 continue to be proposed, some are targeting price increases for services. Businesses may want to re-familiarize themselves with the “services” covered by existing price gouging laws and pay close attention to developments, as they may cover unexpected areas.

Many existing state price gouging rules already covered a range of services, including not only “necessary” or “essential” services, or “emergency” services, but also:

  • transportation;
  • construction;
  • healthcare services;
  • storage services;
  • video streaming; and
  • child care.

Price increase restrictions are being enforced at the state level already. Perhaps unsurprisingly, given the current health crisis, one early example was an action brought against physician and healthcare provider groups. A class action complaint alleging price gouging and other claims was filed in April in Washington state court, alleging unreasonable and excessive fees for medical services. Private plaintiffs are increasingly taking a role, and this case is the latest in a series of class actions filed alleging price gouging and seeking damages.

At the federal level, a bill pending in the Senate would cover a broad range of services. In mid-May, the House passed “The Heroes Act,HR 6800, a proposed pandemic relief bill that would in part create a federal price gouging regime for the current state of emergency. The Act would make price gouging a violation the FTC Act’s prohibition on unfair or deceptive practices, while also authorizing actions by state attorneys general. It would apply to “any person” who sells or offers for sale a “good or service” at an “unconscionably excessive” price that “indicates the seller is using the circumstances related to such public health emergency to increase prices unreasonably.” “[G]ood or service” would be defined broadly as:

  • “a good or service offered in commerce, including—

(A) food, beverages, water, ice, a chemical, or a personal hygiene product;

(B) any personal protective equipment for protection from or prevention of contagious diseases, filtering facepiece respirators, medical equipment and supplies (including medical testing supplies), a drug as defined in section 201(g)(1) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321(g)(1)), cleaning supplies, disinfectants, sanitizers; or

(C) any healthcare service, cleaning service, or delivery service.”

Local governments have also recently taken a more targeted approach to managing the pricing on services during this emergency. In addition to the existing restrictions on price increases for various covered services, for example, several cities and counties have taken additional steps to cap how much food delivery services can charge for orders made during a state of emergency.

New York City recently capped certain fees that a third-party delivery service may charge — 15% for delivery services, and 5% for other services. Third-party services would be subject to a civil penalty of up to $1,000 per restaurant per day for violations. These caps will extend 90 days after the emergency has ended.

Comparable limits are now in place in San Francisco, Seattle, and, most recently, Los Angeles. The Los Angeles City Council approved a similar third-party food delivery app fee limit. The ordinance creates a civil cause of action, with a right to obtain attorney fees, against potential violators. The L.A. County Board of Supervisors is preparing its own ordinance to cap third-party delivery fees in the unincorporated areas of the County of Los Angeles, which notably may keep the measure in place permanently, irrespective of the pandemic.

The focus on third-party food delivery services is just one example of the kinds of regulation on the service offerings companies may need to account for as the state of emergency persists and the price gouging landscape continues to evolve. The broad approach in The Heroes Act and the industry-specific examples at the local level attest to regulators’ close attention to prices on services, and should prompt companies to continue aggressively managing their price gouging compliance efforts.

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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.

Photo of Christopher E. Ondeck Christopher E. Ondeck

Chris Ondeck is co-chair of the Firm’s nationwide Antitrust Group. He represents clients in civil and criminal antitrust litigation, defending mergers and acquisitions before the U.S. antitrust agencies, defending companies involved in government investigations, and providing antitrust counseling.

Chris has handled antitrust matters…

Chris Ondeck is co-chair of the Firm’s nationwide Antitrust Group. He represents clients in civil and criminal antitrust litigation, defending mergers and acquisitions before the U.S. antitrust agencies, defending companies involved in government investigations, and providing antitrust counseling.

Chris has handled antitrust matters for clients in a number of industries, including advertising, aerospace, alcoholic beverages, appliances, building materials, consumer products, defense, franchise, medical devices, metals, mining, natural resources, oil and gas, packaging, pharmaceuticals, software and telecommunications. He also has developed substantial experience advising clients regarding the application of the antitrust laws to the pharmaceutical industry, the agriculture industry, trade associations and the energy industry.

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.

While at Columbia, she served as an articles editor of the Columbia Journal of Law & the Arts and was involved with the Lawyering in the Digital Age Clinic.  She also worked as…

Kelly Landers Hawthorne is an associate in the Litigation Department.

While at Columbia, she served as an articles editor of the Columbia Journal of Law & the Arts and was involved with the Lawyering in the Digital Age Clinic.  She also worked as a judicial intern for the Honorable Sandra Townes of the United States District Court for the Eastern District of New York.

Kelly is a Teach For America alumnus and taught middle school special education and math in Washington, D.C. prior to law school.