May 12, 2022

Duckworth Joins Warren, Baldwin, Schakowsky, Colleagues to Introduce Bicameral Legislation to Crack Down on Corporate Price Gouging

 

[WASHINGTON, D.C.]—Today, U.S. Senator Tammy Duckworth (D-IL) joined U.S. Senators Elizabeth Warren (D-MA) and Tammy Baldwin (D-WI), as well as U.S. Representative Jan Schakowsky (D-IL-09), to introduce the Price Gouging Prevention Act of 2022, which would prohibit the practice of price gouging during all abnormal market disruptions – including the current pandemic – by authorizing the Federal Trade Commission (FTC) and state attorneys general to enforce a federal ban against unconscionably excessive price increases, regardless of a seller's position in a supply chain. This legislation also strengthens and expands requirements for public companies to disclose their pricing strategies in their filings with the Securities and Exchange Commission (SEC) and grants new funding to the FTC. This bill would build upon Senator Duckworth’s Gas Price Gouging Prevention Act that specifically focuses on unconscionably excessive gas price increases. A recent study by the Economic Policy Institute concluded that fatter corporate profit margins have driven more than half of prices increases since 2020.

“Now that President Biden finally has a majority on the Federal Trade Commission, it’s time for Congress to empower this new majority to crack down on large corporations that are outrageously taking advantage of crises like a deadly pandemic and Putin’s war of choice to rip off hardworking Americans in grocery stores, pharmacies and at the pump,” said Senator Duckworth. “I’m proud to work with my colleagues to help introduce the Price Gouging Prevention Act so we can help prevent these abuses of power and keep more dollars in the pockets of working families.”

“Prices are rising, and consumers are paying more, while giant corporations are using inflation as a cover to expand their profits,” said Senator Warren. “This bill would crack down on corporate price gouging by setting tougher rules of the road and enhancing enforcement, and I'm going to fight to get this done.”

"We can lower costs for families across Wisconsin if we take on big corporations who are using a crisis to jack up prices for consumers," said Senator Tammy Baldwin. "During COVID, Big Oil and those at the top of the food chain have used inflation to boost record profits while working families have paid the price. This legislation will shine a light on price hikes and help prevent big corporations from exploiting a period of inflation to gouge consumers with higher costs." 

“Price gouging harms consumers and is fueling the inflation hitting Americans’ pocketbooks. Corporate profit margins reached a 70-year high in 2021. Just this year, Big Pharma has increased the prices of 742 drugs. And prices at the pump remain high despite the cost of oil coming down. That’s corporate greed. During World War II, war profiteers were held accountable. The same rule should apply here. Our bill empowers the FTC to hold these price gouging companies accountable when they take advantage of American consumers, especially during times of global uncertainty,” said Rep. Schakowsky. 

American families who are already struggling to make ends meet during this public-health crisis should not be squeezed even further by companies out to boost profits. The outbreak of COVID-19 has led to a surge in demand for—and shortage of—many essential consumer products. While several retailers have taken steps to maintain access to these products, there have been numerous reports of corporations taking advantage of the current crisis to prey on consumers by hiding behind rising inflation and raising prices even more than necessary to cover any increases in their costs.

The Price Gouging Prevention Act specifically would:

  • Prohibit price gouging at the federal level. The proposed bill would allow the FTC and state attorneys general to enforce a new standard against sellers charging an unconscionably excessive price during periods of exceptional market shock. The bill clarifies that price gouging is illegal wherever it occurs in a supply chain or distribution network.
  • Create an affirmative defense for small businesses acting in good faith. Local businesses often must raise prices during crisis events because they have little negotiating power with their price-gouging suppliers. This affirmative defense protects small businesses earning less than $100 million from frivolous litigation if they show legitimate cost increases.
  • Target dominant companies that have exploited the pandemic to boost profits. The bill would create a rebuttable presumption of price gouging against firms that exercise unfair leverage and companies that brag about increasing prices during periods of inflation.
  • Require public companies to clearly disclose costs and pricing strategies. During periods of exceptional market shock, the bill requires public companies to transparently disclose and explain changes in their cost of goods sold, gross margins and pricing strategies in their quarterly SEC filings.
  • Provide additional funding to the FTC. The bill appropriates $1 billion in funding to the FTC to carry out its work.

The legislation is cosponsored by U.S. Senators Bob Casey (D-PA), Sheldon Whitehouse (D-RI), Bernie Sanders (I-VT), Ed Markey (D-MA), Jeff Merkley (D-OR) and Dianne Feinstein (D-CA). In the U.S. House of Representatives, this legislation is cosponsored by Chairman Jerrold Nadler (D-NY-10) and U.S. Representatives David Cicilline (D-RI-01), Val Demings (D-FL-10), Katie Porter (D-CA-45), Ro Khanna (D-CA-17) and Bobby L. Rush (D-IL-01).

In March of this year, Senator Duckworth introduced legislation that specifically helps prevent the oil industry from engaging in gasoline price gouging. Duckworth’s Gas Price Gouging Prevention Act would make it unlawful under the Federal Trade Commission Act for any person to sell gasoline, at wholesale or retail, during a period of an international crisis affecting the oil markets, at a price that is unconscionably excessive and indicates that the seller is taking unfair advantage of the circumstances to increase prices unreasonably.

Economic Security Project Action: "Price gouging is an insidious abuse of a market distortion that is designed to take advantage of people when they are most vulnerable. It is pure greed and is indefensible. The Price Gouging Prevention Act is a huge step towards stopping this practice by holding corporate price gougers accountable."

Consumer Federation of America: "Consumer Federation of America supports Senator Warren's Price Gouging Prevention Act and commends the introduction of this important measure," stated Erin Witte, Director of Consumer Protection at Consumer Federation of America. "The COVID-19 crisis and the market disruptions created in its wake have highlighted the need for federal protections that prohibit price gouging by all persons in the supply chain. Senator Warren's bill is an important step forward in addressing the conduct of individuals and organizations that seek to take advantage of a national emergency by excessively raising prices without sufficient justification. Consumers are under enough financial strain without the added problem of price gouging, and we endorse Senator Warren's bill and efforts to create a path of redress for consumers who have suffered from this conduct."

American Economic Liberties Project: “Many Americans find the prices for necessary goods and services going up faster than their paychecks as large corporations pad their bottom lines,” said Erik Peinert, Research Manager and Editor at the American Economic Liberties Project. “As we recover from the fallout of a once-in-a-lifetime pandemic, Americans should not be put through another round of unnecessary economic hardship. Senator Warren’s price-gouging legislation provides a critical lifeline for families and small businesses, prohibiting opportunistic price increases now and during future crises.”

This legislation is endorsed by: The Hub Project, Groundwork Collective, American Economic Liberties Project, Open Markets Institute, Economic Security Project, Consumer Federation of America, National Consumer Law Center (on behalf of its low-income clients) and Public Citizen.

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