'Perilous Fires, Pandemics and Price Gouging: The Need to Protect Consumers from Unfair Pricing Practices During Times of Crisis' by Mark Giancaspro in (2021) 44(4) UNSW Law Journal 1458 comments -
Recent crises affecting Australia, including the Black Summer bushfires and Coronavirus pandemic, have devastated social morale and crippled our economy. Countless lives and properties have been damaged or lost. These conditions have inflated demand for basic consumer goods and services, such as hygiene products, staple foods, and utility services. Sadly, some sellers have exploited public desperation, with widespread reports of price gouging. This notorious practice involves pricing high-demand essentials at levels significantly higher than what is commonly considered acceptable, reasonable or fair. This article critically analyses moral and economic arguments surrounding statutory controls before proposing a model law regulating price gouging during times of crisis. It argues that such a law is both essential and easily adaptable to Australia’s consumer law framework. The model law provides a basis for the federal government to consider desperately required change to ensure consumers do not suffer during current crises or those to come. ...
The 2019–20 Australian bushfire season, referred to by Prime Minister Scott Morrison and others as the ‘Black Summer’, was one of the worst in the nation’s history. A series of ferocious fires burned relentlessly and caused widespread devastation across the country, primarily throughout New South Wales and the Australian Capital Territory. More than 10 million hectares were scorched, 3,000 homes and 7,000 other buildings were destroyed, 33 people and one billion animals killed. Disturbingly, in the midst of the crisis, reports surfaced of some retailers doubling the price of bottled water and tripling the price of loaves of bread.
As the fires were finally contained and extinguished, Australia, as with the rest of the world, was then gripped by a Coronavirus (COVID-19) disease pandemic. The illness rapidly spread, infecting millions and killing hundreds of thousands. Governments around the globe have responded swiftly, imposing ‘lockdowns’ of various kinds, most of which have forced many non-essential businesses to close temporarily. Following the formation of the National Cabinet on 13 March 2020, the Australian federal, state and territory governments imposed a series of restrictions on non-essential gatherings, travel, events and business trade. As at October 2021, some nations which have successfully ‘flattened the curve’ are beginning to relax restrictions while others continue to struggle with containment. A selection of countries, like Australia, find themselves in the middle of the spectrum (with some parts of the country being effectively free of the virus and others battling growing numbers of infections). Again, like when the Black Summer struck, the selfish side of humanity reared its head, with widespread reports of profiteering by retailers and private sellers. In some cases, retail prices on basic goods such as toilet paper and hand sanitiser, as well as medical supplies such as surgical face masks, skyrocketed as panic-driven demand surged.
These pricing practices are classic instances of ‘price gouging’. This term describes the practice of sellers pricing goods or services at a level significantly higher than what is objectively considered acceptable, reasonable or fair. This practice is normally a response to abrupt increases in demand or decreases in supply, with such fluctuations invariably being triggered by crises such as natural disasters. The exorbitant price increases are generally short-lived and confined to a particular geographical area, especially those which are remote and have difficulty accessing coveted goods and services.
This article argues that this practice is reprehensible and advocates for legal reform to protect consumers from the same during times of crisis. It does so in four parts. Part II briefly investigates the economic forces driving this behaviour. Part III explores existing legal protections in Australia and abroad pertaining to price gouging, considering and appraising the various models that exist. Part IV evaluates the arguments both for and against the introduction of laws specifically proscribing price gouging, submitting that the benefits of such laws outweigh the drawbacks. Finally, Part V suggests a model anti-price gouging law for inclusion within the Australian Consumer Law (‘ACL’). It is ultimately argued that laws prohibiting price gouging are not only justifiable but essential.
