Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Harris proposes ban on price gouging in food/grocery industry, (Aug 16, 2024)
Presidential-hopeful’s economic plan for ‘price controls’ receives criticism from across the political spectrum. Harris also pushing for crackdown on collusion in housing rental prices.
Vice President Kamala Harris detailed her economic plan for her possible presidency during a campaign speech in Raleigh, North Carolina, on August 16. “When I am elected president, I will make it a top priority to bring down costs and increase economic security for all Americans,” said Harris. “As president, I will take on the high costs that matter most to most Americans, like the cost of food.”
Among her campaign’s proposals to address high food costs is a ban on “corporate price gouging” in the food and grocery industries. In her speech, she said that she would work to pass the “first ever federal ban on price gouging on food.” She continued that the plan would include “new penalties for opportunistic companies that exploit crises and break the rules,” adding that “we will support smaller food businesses that are trying to play by the rules and get ahead.”
The Harris campaign has said that the ban on “excessive prices unrelated to the costs of doing business” would be implemented within her 100 days of Harris taking office. While the vice president did not provide many details of the plan in her speech, the FTC and states would be given authority to impose civil penalties on companies that engage in price gouging. Mergers and acquisitions are also on the radar as consolidation is blamed for the high food costs. At the same time, in her speech, Harris said that she would focus on “cutting needless bureaucracy and unnecessary regulatory red tape.”
With grocery prices rising over the last few years, consumers might cheer the plan. However, profit margins for supermarket operators are low. And economists have identified a number of factors contributing to inflation. As a result, questions have been raised about the proposal from both the right and left.
Reaction. Former President Donald Trump, who has faulted the Biden-Harris Administration for high inflation and grocery prices, was quick to criticize Harris’s “price controls.” His campaign earlier released a statement, describing the “government price fixing scheme” as “more reminiscent of a third-world regime than the United States.”
Republican Senator Rick Scott of Florida called “the Harris Price Hikes … big government on steroids—where Washington bureaucrats stick their hands into American businesses and say what they can and can’t sell a product for.”
Even The Washington Post questioned the proposal. An August 15 opinion piece, titled “When your opponent calls you ‘communist,’ maybe don’t propose price controls?” and noted that the thin profit margins for supermarkets suggest that “at best” the proposal “would lead to shortages, black markets and hoarding, among other distortions seen previous times countries tried to limit price growth by fiat.”
The New York Times was a bit more subtle. In an article also published August 15, the Times said that the issue was “complicated” and that multiple factors have played into stubborn inflation and higher grocery costs. A Harvard economist who served in the Obama administration, Jason Furman, said the policy was “not sensible” and could “keep the economy from adjusting.”
In her remarks in Raleigh, Harris seemed to try to allay concerns with the proposal by stressing her belief that “competition is the lifeblood of our economy.” She added that “more competition means lower prices.”
Past congressional efforts to tackle price gouging. Calls for a ban on price gouging at the federal level are not new. In February, Democratic lawmakers re-introduced the Price Gouging Prevention Act of 2024 (S. 3803, H.R. 7390), which would appear to be the model for Harris’s proposal. The measure would give rulemaking authority to the FTC. The states would also be granted the right to sue for violations. A Senate subcommittee held a hearing on the bill in May at which Senator Elizabeth Warren (D., Mass.) called out the profits of “Big Food.” Past federal legislative efforts have also targeted price gouging of particular products, such as gas and medications, during emergencies.
Agency strike force meeting. The focus on illegal pricing has also been a topic of discussion for federal agencies. The FTC and Department of Justice, along with other federal agencies, have been considering how to address high prices. In March, the Administration announced a Strike Force on Unfair and Illegal Pricing. FTC Chair Lina M. Khan and Jonathan Kanter, Assistant Attorney General in charge of the Department of Justice Antitrust Division, along with other agency representatives held their first public meeting on August 1.
When the strike force was unveiled by the White House, the U.S. Chamber of Commerce voiced opposition to the proposal. Chamber Vice President Neil Bradley described the strike force as an attempt to return to the failed policy of government price controls which President Nixon tried fifty years ago.
Crackdown on collusion on home rental prices. Another proposal related to antitrust and consumer protection raised by Harris in her speech takes issue with collusion among landlords. “Some corporate landlords collude with each other to set artificially high rental prices, often using algorithms in price fixing software to do it,” she said. “I will fight for a law that cracks down on these practices,” Harris pledged.
In January, the Preventing the Algorithmic Facilitation of Rental Housing Cartels Act (S. 3692) was introduced in the Senate to address this conduct. Senate Finance Committee Chair Ron Wyden (D., Ore.) co-sponsor of the measure said in response to Harris's remarks, “I’m pleased she is endorsing my Preventing Algorithmic Facilitation of Rental Housing Cartels bill, to crack down on private equity landlords colluding via software and jacking up rents.”
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