Competition Corner

In this episode of Winston & Strawn’s Competition Corner Podcast, Attorneys Molly Donovan and Jeff Amato discuss the general legal framework of price-gouging prohibitions that have been triggered by the ongoing crisis. They provide best practice tips for companies to minimize liability including legitimate justifications for increasing prices during an emergency.

New York Attorney General Letitia James has made the prosecution of price gouging offenses a top priority during the COVID-19 pandemic. However, the AG’s Office hit its first major roadblock on September 23 when the New York Supreme Court dismissed its case against a wholesaler that was accused of doubling the price for Lysol Disinfectant Spray during the pandemic. The court’s decision, which is the first to apply New York’s price gouging laws in the context of COVID-19, may shed light on some of the obstacles that the AG will face as other pandemic-related price gouging cases move forward.

In the wake of the COVID-19 pandemic, Attorneys General from numerous states have been actively investigating potential instances of price gouging by sellers. On August 11, New York Attorney General Letitia James filed a lawsuit accusing Hillandale Farms, a major Pennsylvania egg producer, of taking advantage of consumers by illegally hiking prices during the crisis.

While the antitrust laws have long protected a merchant’s freedom to charge a price as high as the market will bear so long as it is set unilaterally, price-gouging laws curtail that freedom when a state of emergency has been declared. At both the state and federal level, COVID-19 has given rise to a substantial new focus on pricing practices in an effort to combat price gouging on a broad range of products, including essential supplies like hand sanitizer, food products, and personal protective equipment.