While the majority of price gouging enforcement has occurred at the state level (see Proskauer on Price Gouging — A Coast-to-Coast Reference Guide), the federal government has also been active, and several federal price gouging bills have been introduced, though none have been signed into law. See, e.g., S. 3574 (empowers the FTC and Attorney General to enforce civil and criminal penalties for price gouging); H.R. 6472 (prohibits “unconscionably excessive” pricing “indicating the seller is using the circumstances related to” the emergency to increase prices); H.R. 6264 (creates a new criminal offense for price gouging during a state of emergency); H.R. 6450 (based on California law, limits raising price of consumer goods to no more than 10% after an emergency declaration).

Therefore, with no comprehensive federal legislation on price gouging, enforcement has largely taken the form of the Department of Justice and other executive agencies acting under the Defense Production Act (the “DPA”), a law passed in 1950 in response to the Korean War which gives the president broad authority to manage domestic industrial affairs in the interest of “national defense.” While originally enacted in wartime and more commonly employed to regulate certain foreign investment into U.S. businesses, authority extends to the Executive Branch to act in response to national emergencies like COVID-19.

The DPA has two sections relevant to the COVID-19 pandemic: an anti-hoarding provision and an anti-price-gouging provision. The anti-hoarding provision bars accumulation of materials “in excess of the reasonable demands of business, personal, or home consumption.” The anti-price gouging provision bars accumulation of materials for the “purpose of resale at prices in excess of prevailing market prices.” The act carries both civil and criminal penalties.

Pursuant to the DPA, President Trump has issued three executive orders to combat price gouging, which delegated authority to the secretaries of the U.S. Department of Health and Human Services and the U.S. Department of Homeland Security to prevent the hoarding of designated health and medical resources necessary for combatting the spread of COVID-19. On March 25, the Secretary of Health and Human Services designated 15 categories of health and medical resources as scare or threatened materials, with the designation expiring in 120 days, bringing them within the scope of DPA enforcement.

Also in March, Attorney General William Barr announced a nationwide task force to address hoarding and price-gouging in the wake of COVID-19. The task force includes over one hundred federal prosecutors around the country and has opened hundreds of hoarding and price-gouging investigations into companies and individuals selling PPE and other goods designated as “scarce” by HHS. While reporting has emerged that White House officials have resisted the reach of the Task Force, and that enforcement has not been as robust as advertised by the DOJ, federal price gouging enforcement is real and must be considered in any compliance program.

While a general prohibition on price-gouging may seem familiar, two distinctions are worth highlighting with respect to federal enforcement. First, the DPA explicitly focuses on accumulation of materials. This is in contrast to many state price gouging laws that focus solely on whether the price being charged is in excess of a determined baseline level, with various exceptions like for increases in costs.

Second, while many state price gouging statutes have either specific benchmarks for price increases (generally ranging from 10-30%) or use specific language to target only extreme price increases (such as “excessive” or “unconscionable”), the DPA simply prohibits “resale at prices in excess of prevailing market prices.” Because “excess” is not defined in statute and has not yet been defined by the courts, it is unclear what exactly qualifies as price gouging under the DPA (though state laws probably provide a reasonable analogue). In comments before the Senate Judiciary Committee on the progress of the Task Force, DOJ attorneys stated that the Task Force is focused on “profiteering.” However, despite further noting that traditional costs may play a role in determining whether price gouging has occurred, the DOJ declined to offer any bright line rules.

Enforcement to date offers some guidance. In the first case brought by the federal government for COVID-19 related price-gouging, criminal charges were brought against a defendant for allegedly using his retail sneaker and sports apparel store to amass and sell large quantities of PPE at a more than 1,000% markup. In other instances, federal prosecutors have brought criminal charges against companies and individuals, alleging either attempts to overcharge the government for PPE or simply defrauding the government with offers to sell equipment that never existed in the first place. However, while federal enforcement to date might seem focused on “bad actors” selling and hoarding PPE and other medical equipment associated with the COVID-19 pandemic, the broad language of the DPA, along with accounts of active DOJ inquiries, makes it important to continue to monitor federal actions in this space and to consider federal restrictions when putting a price gouging compliance program in place.

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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

When competition or antitrust questions arise, John Ingrassia is sought out for his knowledge, reputation and credentials.

John is a recognized authority on Hart-Scott-Rodino antitrust merger review, and for more than 20 years has counselled businesses facing the most challenging antitrust issues and…

When competition or antitrust questions arise, John Ingrassia is sought out for his knowledge, reputation and credentials.

John is a recognized authority on Hart-Scott-Rodino antitrust merger review, and for more than 20 years 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 or joint ventures.

John is a senior counsel at the Firm, advising on the full range of antitrust matters in diverse industries, including chemicals, pharmaceutical, medical devices, telecommunications, financial services and health care, among others.  His practice focuses on the analysis and resolution of antitrust issues related to mergers, acquisitions, and joint ventures, and the analysis and assessment of pre-merger notification requirements. John has extensive experience with the legal, practical, and technical requirements of merger clearance and is regularly invited to participate in Federal Trade Commission and bar association meetings regarding Hart-Scott-Rodino practice issues.

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.

Photo of Nathaniel Miller Nathaniel Miller

Nat Miller is an associate in the Litigation Department.

Nat earned a J.D. degree from NYU School of Law, where he was a Managing Editor of the Journal of Law & Business, and a B.A. from Harvard University. While at NYU Law, he…

Nat Miller is an associate in the Litigation Department.

Nat earned a J.D. degree from NYU School of Law, where he was a Managing Editor of the Journal of Law & Business, and a B.A. from Harvard University. While at NYU Law, he worked as a research assistant for Professor Arthur R. Miller on his treatise, Federal Practice and Procedure. After law school, Nat served as a law clerk to the Honorable Claria Horn Boom of the Eastern and Western Districts of Kentucky.

Photo of Nicollette R. Moser Nicollette R. Moser

Nicollette Moser is an associate in the Litigation Department and a member of the Antitrust Group and the Price Gouging team.

Nicollette represents clients on matters related to mergers and acquisitions, allegations related to unlawful conspiracy and anticompetitive agreements, price fixing claims and…

Nicollette Moser is an associate in the Litigation Department and a member of the Antitrust Group and the Price Gouging team.

Nicollette represents clients on matters related to mergers and acquisitions, allegations related to unlawful conspiracy and anticompetitive agreements, price fixing claims and price gouging class actions. She also counsels clients on state Attorneys General and Department of Justice investigations regarding price gouging allegations.

Nicollette is a regular contributor to Proskauer’s commercial litigation blog, Minding Your Business.

Nicollette earned her J.D. from Georgetown University Law Center, where she was as an editor of the Georgetown Journal of Law & Public Policy. While at Georgetown, she served as an intern to the Hon. Craig Iscoe of the Superior Court of the District of Columbia. In addition, Nicollette was a law clerk with the House Judiciary Committee’s Subcommittee on Regulatory Reform, Commercial and Antitrust Law.

Photo of Jennifer Tarr Jennifer Tarr

Jennifer E. Tarr is a senior associate in the Litigation Department, and a member of Proskauer’s Sports Law and Antitrust Groups. She regularly litigates on behalf of sports leagues and counsels clients active in the sports industry on a variety of matters, including…

Jennifer E. Tarr is a senior associate in the Litigation Department, and a member of Proskauer’s Sports Law and Antitrust Groups. She regularly litigates on behalf of sports leagues and counsels clients active in the sports industry on a variety of matters, including issues pertaining to antitrust, team relocation, league governance, contract disputes, sponsorship and fan-league relationships.

In addition to sports antitrust work, Jennifer also has experience counseling and defending clients on issues related to mergers and acquisitions, claims related to unlawful conspiracy and anticompetitive agreements, monopolization claims, and price fixing claims. Jennifer is also a member of the firm’s price gouging team.

In 2019, she was a panelist on the Environmental Law Institute’s Managing Private Sector Environmental Initiatives panel, where she spoke about the Antitrust Implications of Corporate Environmental Collaborations.

Jennifer maintains an active pro bono practice and is a member of the Firm’s Pro Bono Committee. She received Proskauer’s Golden Gavel Award for excellence in pro bono work in 2018 and 2019.

Prior to joining Proskauer, Jennifer clerked for the Honorable Lorna G. Schofield on the United States District Court for the Southern District of New York. She also was a Staff Attorney at the Environmental Law & Policy Center, where she represented clients as lead counsel in litigation before multiple federal district and appellate courts and in federal mediation.

While in law school, Jennifer was a member of the Harvard Legal Aid Bureau, one of three honors societies at the law school and the nation’s oldest student-run legal services center. In that capacity, she argued and won a case of first impression before the Massachusetts Supreme Judicial Court. She also argued over 20 motions in state trial court and successfully represented clients in federal mediation and before federal administrative tribunals.