Attorney General James launches rule-making process to tackle illegal price gouging and corporate greed

OAG launches first process of developing rules on predatory pricing as
Big companies continue to raise consumer prices

AG James seeks public input to inform new rules on price gouging

NEW YORK — New York Attorney General Letitia James today launched a rule-making process to determine whether big business is using the pandemic and inflation as an excuse to unfairly raise the price of commodities. The first-ever process to develop rules on predatory pricing by the Office of the Attorney General (OAG) will review and address new evidence that some of the recent price hikes by big business have been driven by profit, not profit. increased costs. Through this process, Attorney General James aims to implement new price gouging rules that will crack down on pandemic-related profiteering and corporate greed.

“Rising costs of basic necessities and household items have had a real impact on working families,” said Attorney General James. “Throughout the pandemic, New York workers have struggled to make ends meet, but big business has celebrated record profits. It doesn’t stick. My office is ready to use every tool in our toolbox to crack down on price gouging and pandemic-related profiteering.

New York’s predatory pricing law prohibits businesses from taking advantage of a crisis to charge excessive prices for vital and necessary goods and services. The rule-making process will explore the growing evidence that big business appears to have used the pandemic as an excuse to charge more for necessary goods, such as gas and oil, food and cars. As evidenced by the recent surge in corporate earnings, many companies do not share the burden of the pandemic, nor are they neutral. Evidence indicates that some companies are taking advantage of increased costs for those hardest hit by the pandemic.

Since the start of the pandemic, public reports have highlighted cases of large companies steadily raising the costs of goods for consumers, despite record revenues. Here are some examples of these reports:

  • Beef prices rose 30%, while meat packers celebrated an average 120% increase in profits.
  • The cost of Proctor and Gamble diapers, toothpaste, detergent and tampons has risen throughout the pandemic, while Proctor and Gamble has made record profits.
  • Chipotle prices rose 10% from January 2021 to January 2022, which the company attributes to labor shortages, but their operating profit rose 181%.
  • While the cost of a basic cup of coffee at Starbucks soared 20%, the company’s profits rose 30%.
  • Shipping prices are on the rise, while shipping line profit margins are breaking records.
  • Chevron and Shell posted record profitability as energy costs soared.

Although not all of them are illegal, some may meet the definition of price gouging under New York law.

New York law prohibits “unreasonably excessive” pricing, which includes both “unreasonably extreme” pricing and pricing set by “unfair leverage or unreasonable means.” New York law is also unique in the wide range of goods and services covered and in the fact that it covers all actors in the supply chain of those goods and services, including manufacturers, retailers, distributors , transport companies and online platforms. The law also prohibits price gouging not only for consumers, but also for small businesses and state and local governments.

The Advance Notice of Proposed Rulemaking (ANPR) outlines evidence that some of the price increases for vital and necessary goods may violate New York law and outlines incentive structures that may lead to price gouging. ANPR also examines the unique harm caused by price gouging and the economic rationale for banning this form of profiteering. The ANPR has been submitted to the National Registry for publication and will be officially available on or around March 9.

The OAG is seeking public input on a wide range of price abuse issues, including questions about industry tools that can mask price abuse.

Public comments in response to ANPR may be submitted immediately and through April 22, 2022 to [email protected]

The request for public comment is part of the three-step process. Once public comments are submitted, the OAG will review them and then propose new rules. Thereafter, the public will have 60 days to submit comments on the proposed rules. After the 60 days, OAG will enact new rules on price gouging.

This is the first regulation initiated under the 2020 amendments to New York’s General Business Law 396-r, which expanded the scope of the predatory pricing law and granted the Attorney General regulatory authority .

“It is unconscionable that companies are using the COVID-19 pandemic as an excuse to drive up prices when so many New Yorkers are struggling,” said State Senator Brad Holyman. “I am pleased to have passed legislation in 2020 to strengthen our predatory pricing law and am now working with Attorney General James to understand the extent of this costly problem and take further action to protect New York consumers. throughout the rule-making process.”

“Excessive pricing or profiteering in times of crisis is simply not acceptable. We must do everything we can to prevent unethical profiteering and stop big business from putting profit before people’s lives,” said State Senator Kevin Thomas. “I commend Attorney General James for taking a stand against price gouging and corporate greed, for diligently watching over consumers, and ensuring that bad actors cannot use the pandemic to enrich themselves at the expense of New Yorkers.”

“As we work to protect New Yorkers from price gouging and predatory sales tactics, I encourage consumers and retailers to share their experiences,” said Assembly Member Nily Rozic. “I am grateful for Attorney General James’ partnership in this effort to protect New Yorkers from illegal price gouging.”

This case is being handled by Special Counsel and Senior Economic Justice Counsel Zephyr Teachout of the Economic Justice Division with support from Jane M. Azia and Jack Figura of the Consumer Frauds & Protection Bureau, Elinor R. Hoffmann and Michael Jo of the Antitrust Bureau, and Anisha Dasgupta of the Appeals and Opinions Division. The Economic Justice Division is led by Chief Deputy Attorney General Chris D’Angelo and overseen by Senior Deputy Attorney General Jennifer Levy.

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