Top Democrats rip corporations for price gouging. ‘Executives brazenly boast to investors about raising prices’

February 2, 2022, 9:36 PM UTC

A pack of 50 Kimberly-Clark N95 masks cost $2,319 in October 2021. By mid-January, the same box of masks cost $5,715, according to the Groundwork Collaborative, a left-leaning activist group focused on economic issues. 

Manufacturers like Kimberly-Clark say the price hikes are a result of supply-chain bottlenecks, worker shortages, and other pandemic-related disruptions. In December, the cost of consumer goods and services rose 7% over the past year.

Lawmakers say it’s price-gouging. And it’s not just happening in pandemic-related supplies. The cost of diapers, food and even drugs has skyrocketed dramatically in recent months as corporations have increased prices and maintained healthy profit margins, according to Democrats in Congress who conducted a hearing on pricing on Wednesday.

“Corporate greed is motivating large companies to use the pandemic and supply chain issues as an excuse to raise prices simply because they can. And a lot of executives brazenly boast to investors about raising prices on consumers without consequences—and these executives are saying they’re going to continue to do so,” House Energy and Commerce committee chairman Rep. Frank Pallone (D-N.J.) said during Wednesday’s hearing. 

American consumers have experienced “unconscionable price hikes” in everyday consumer goods, added Janice Schakowsky (D-Ill.). “We are at war with this pandemic, war with this virus. And during World War II, war profiteers were held accountable. The same should be applied here today.”

To fight this kind of price-gouging, Pallone, Schakowsky, and several Democrat co-sponsors introduced legislation earlier in the week ​​to hold companies accountable. The COVID–19 Price Gouging Prevention Act would give the Federal Trade Commission the ability to seek civil penalties from companies that raise prices to “unconscionably excessive” levels during the pandemic. The bill also gives states attorneys general the authority to enforce the legislation without losing any of their existing authority under state law. 

But enforcing this proposed legislation may be impossible, supply-chain expert Glenn Richey said Wednesday. “The legislation will have to be quite careful in uncovering what is really a price-gouging situation and what is just a natural need to increase prices,” he said. 

“It is important to remember that prices move with the market and across supply chain transactions,” said Richey, a professor and department chair in supply chain management at Auburn University’s Raymond J. Harbert College of Business.

Among the bill’s serious “flaws” is the fact that it fails to define what constitutes an excessive price increase, according to Rep. Cathy McMorris Rodgers (R-Wash.) 

“On the issue of price-gouging, standing up against those who have profiteered during the pandemic is a bipartisan issue,” McMorris Rodgers said Wednesday, chastising Democratic leadership for their “go it alone” approach and for failing to get Republican input. 

Currently, about 39 states have some kind of statute or regulation that defines price-gouging as illegal during a time of disaster or emergency, according to the National Conference of State Legislatures. But the specifics of each state’s rules vary substantially, as do the consequences. 

“The fact of the matter is there is no federal price gouging work today. While most states do have some kind of authority, those laws are inconsistent, and many failed to address the unique circumstances of the COVID-19 pandemic,” Pallone said. “So Congress has to give the FTC and state authority the enforcement tools they need to go after companies that are gouging consumers.”

Never miss a story: Follow your favorite topics and authors to get a personalized email with the journalism that matters most to you.

Read More

CryptocurrencyInvestingBanksReal Estate