Although it is unlawful in many jurisdictions, including the US, price gouging is not currently unlawful in the UK. However, the UK's Competition & Markets Authority (CMA) wants to change that - and fast!
'Price gouging' is the practice of drastically inflating prices to take advantage of sudden demand, including in a time of national crisis or emergency. Think of the suddenly inflated price of hand sanitiser and masks in the UK at the outbreak of the current pandemic.
The problem is that this practice is hard to define during normal times (prices in capitalist societies being driven to a large extent by the main market forces of supply and demand), but, during extraordinary times, it seems much easier to identify.
If the price of a small bottle of hand sanitiser has been around £1 for many years, perhaps creeping up by about 5-10% over the course of several years, then, suddenly, at the outbreak of a pandemic the price is inflated by 100% or 300% or 500% or more, that is price gouging.
Consumers know instinctively what it is and that it is morally wrong, with many being surprised that it isn't technically unlawful in most cases.
They have made their voices heard on social media by naming and shaming everyone from large businesses and retail chains to individual local traders who have been involved in this practice.
They have also written to the CMA in their droves. The CMA received almost 21,000 complaints about coronavirus-related issues during the first few weeks of the pandemic (10 March - 19 April).
Price Gouging - one in the eye for immoral traders?
Despite it not being unlawful in the UK in the vast majority of cases, the CMA is investigating complaints of what it calls "unjustifiable price rises", and taking steps to stamp it out.
The CMA has written to 187 traders that have collectively been the subject of over 2,500 complaints. It is also collecting further evidence, including about price rises further up the supply chain. It says that "Where there is evidence that competition or consumer protection law has been broken"... it "will not hesitate to take enforcement action if warranted."
The problem is that they don't really have the power to back this up... yet. But the CMA is lobbying for an urgent change in the law. It doesn't seem to mind if such legislation is only be temporary or very specific in scope.
But perhaps the window of opportunity is closing. The volume of price-related complaints received by the CMA has declined in recent weeks, which could mean that the market has taken care of itself. But, more likely, it simply means that the moment of greatest consumer harm has passed - for now - and that it could come again if legislation is not introduced.
Of course, it isn't too late to prepare for future waves of the pandemic, and other unforeseeable issues, if, God forbid, we go through all this again.
Even now, the CMA is concerned that "the coronavirus outbreak, and the necessary restrictions on businesses and people, continue to present significant risks that prices are raised above justifiable levels in a number of sectors." It is ambitious to think that the CMA could or should investigate prices which are slightly higher due to general market forces, however temporary or unusual those might be, but where there is clear evidence of sudden and significant price inflation in specific sectors or for specific products, the CMA is seeking the powers to act, and it seems to have the backing of tax paying voters, so it is likely the government will want to be seen to act.
It certainly can't be seen to be washing its hands of it by bowing to pressure from businesses...
In order to be effective, such powers will need to enable the CMA to act swiftly and decisively, therefore the powers will need to be carefully considered, with the appropriate checks and balances in place.
The fact that the UK is behind the curve on this issue at least means we can look to other capitalist countries for inspiration.
This is likely be an area which evolves quickly, and we will update you over the coming months.
It isn't the only area the CMA is investigating either. With cancellations and refunds being high on their agenda as consumer focus shifts to different problems over the evolution of the lockdown and resumption of daily life.
In the meantime, you can find more information here.
A large proportion of complaints initially received by the Taskforce related to price rises, particularly for personal hygiene goods such as hand sanitiser and basic food products such as meat. Over time, however, there has been substantial growth in the number of complaints about cancellations and refunds, and a decline in complaints about prices. Cancellation complaints decisively overtook price complaints on 9 April, and now account for around four in five complaints.