Last week (10/30), Democratic attorneys general from 15 states and the District of Columbia issued a letter to congressional leaders, calling for federal legislation banning price gouging during emergencies. Distinguishing between price caps, such as those imposed on gas prices in the 1970s and 1980s, the Attorneys General called on lawmakers to empower the Federal Trade Commission to investigate and bring suit against companies that engage in price gouging across state lines.
Karl Racine, former Attorney General for the District of Columbia and president of the National Association of Attorneys General, commented that the letter “tracks and supports the policy recently articulated by Democratic presidential candidate Kamala Harris to combat inflation and punish corporate greed, an issue that is top of mind to voters and about which the Democrats and Republicans disagree on the cause of inflation in the last few years. Republicans generally blame the Biden administration for higher prices.”
Beyond the 2024 presidential election, the letter signals that Democratic AGs will be more aggressive in scrutinizing price increases in weather-related and other emergencies. Traditionally, AG price gouging cases are limited to discrete conduct in their own states. In the absence of federal legislation, AGs may explore greater coordination and joint multi-state efforts that bring more resources to cases, and, thus, more potential exposure to companies that operate in the supply chain that does not directly interact with customers. Companies that conduct business in a number of states, and companies that have labor and supply chains that operate across multiple states, could be impacted by this priority, especially given the increasing frequency of extreme weather, natural disasters, and other crises.
Companies would be wise to document the reason for sharper than usual price increases for their goods and services. The heightened attention on price increases may portend legislative changes in the statehouses that authorize state AG inquiries into higher prices without the precondition of an emergency. Energy, food and beverage (including water), transportation, lodging, furniture, paper, technology, healthcare, clothing, sporting goods, firearms, and utilities are examples of industries and sectors that may garner greater scrutiny.
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