DOJ Warns Businesses Against Price Fixing Amid Coronavirus Outbreak

A pharmacy worker sells N95 face masks in the Manhattan borough of New York City, on Feb. 27, 2020. (Carlo Allegri/Reuters)

The Justice Department (DOJ) has warned that it plans to hold businesses accountable if they attempt to violate antitrust laws because of the coronavirus outbreak.

The department has cautioned that individuals and companies who fix prices or rig bids on items such as sterile gloves, protective masks, and other personal protective equipment could face criminal prosecution. It also warned against allocating consumers of public health products among competitors.

“The Department of Justice stands ready to make sure that bad actors do not take advantage of emergency response efforts, healthcare providers, or the American people during this crucial time,” Attorney General William Barr said in a statement on March 10. “I am committed to ensuring that the department’s resources are available to combat any wrongdoing and protect the public.”

The department’s Procurement Collusion Strike Force, which was formed as a national response to combat antitrust crimes, is also on high alert for collusive behavior in the sale of the health products across the country.

According to the Federal Trade Commission (FTC), price fixing is an agreement among competitors to raise, lower, or stabilize prices or competitive terms of any product or service. This conduct is illegal because it restricts competition and often results in higher prices.

The announcement came on the same day the lobbying group Consumer Brands Association (CBA) sent a letter to Barr urging him to address the issue of price gouging of various consumer products amid the outbreak of the new coronavirus, which causes the disease COVID-19. Price gouging is when vendors increase prices of goods and services to levels much higher than what is deemed fair and reasonable, and is widely viewed as exploitative.

“Consumer Brands fears price gouging for consumer products—which has been on the rise in recent weeks—could prevent consumers from obtaining the preventative consumer products they need to protect themselves from the spread of COVID-19,” Bryan Zumwalt, CBA’s executive vice president of public affairs, wrote in his letter (pdf). Colgate-Palmolive Co., Clorox Co., and Procter & Gamble Co. are among the association’s members.

Zumwalt said there have been recent reports that consumers are forced to “pay exorbitant prices” for basic preventive care products while citing numerous news articles. In one example, consumers have reported paying eight times the normal price for disinfecting wipes, 10 times the normal cost for hand sanitizers, and over 20 times for the typical cost for masks.

The association warned that if price gouging continues, Americans would increasingly become unwilling or unable to pay the excessive prices and that could possibly decrease the likelihood someone would take the recommended preventative actions. It urged the DOJ to take action to counteract such predatory business practices and prosecute vendors who engage in such behavior.

In a statement later on March 9, the association praised the DOJ for its “swift response” to CBA’s request to combat price gouging.

“The Consumer Brands Association represents companies that work every day to keep products available and affordable for Americans. Price gouging undermines that mission and threatens public health as we navigate coronavirus,” the association said in an emailed statement to The Epoch Times.

The Food and Drug Administration and the Federal Trade Commission (FTC) also issued a consumer-product related warning to seven companies on March 9 for selling fraudulent unapproved drugs claimed to cure, treat, or prevent diseases such as COVID-19. Other products cited in the warning letters include teas, essential oils, tinctures, and colloidal silver.

The two agencies said these products pose significant risks to patient health and violate federal laws. They added that there are currently no vaccines or drugs approved to treat or prevent the outbreak and that vaccines and treatments are under development.

“There already is a high level of anxiety over the potential spread of coronavirus,” FTC Chairman Joe Simons said in a statement. “What we don’t need in this situation are companies preying on consumers by promoting products with fraudulent prevention and treatment claims. These warning letters are just the first step. We’re prepared to take enforcement actions against companies that continue to market this type of scam.”

There are currently 22 deaths in the United States from the virus and over 600 cases identified in the country. The virus has spread to over 80 countries and territories and has killed thousands around the world.