H.R. 4720: Cracking Down on Price Gouging Act

This bill, titled the Cracking Down on Price Gouging Act, proposes amendments to the Defense Production Act of 1950 to impose stricter regulations against price gouging on essential materials and goods during emergencies.

Key Provisions

• Definition of Price Gouging: It specifically addresses the act of selling or offering to sell goods at prices that are significantly higher than the prevailing market prices, particularly during times of scarcity or acute shortages.
• Scarce Materials: The bill adds a requirement to prevent hoarding and price gouging related to scarce materials or critical goods in designated areas.
• Criteria for Unfairly Excessive Prices: A price is deemed excessively high if it reflects a gross disparity compared to the price before the material was designated as scarce or before a declared shortage. An increase of 10% or more from the prior price is a presumptive indicator of unfair pricing.
• Exceptions to Price Increases: Prices that rise due to legitimate business needs of the seller or because of external costs beyond the seller's control are not considered unfairly excessive.

Critical Goods Defined

The bill identifies critical goods which include:

• Consumer food items and household goods
• Essential medical supplies
• Energy resources such as fuel, electricity, and home heating oil
• Other essential items that promote public health, safety, or welfare

Consequences for Violations

Under the new provisions, willful violations of these regulations may result in severe financial penalties. Specifically, offenders could face fines of at least $20,000 or up to 300% of the revenue obtained through the violation.

Exceptions for Business Impact

The legislation acknowledges situations where price increases might be justified, particularly if they arise from necessary business operations or factors that affect costs beyond the seller's control.

Implementation Timeline

The provisions of the bill would come into effect upon the designation of certain materials as scarce or when an acute shortage is officially recognized, allowing for rapid responses to emerging crises.

Relevant Companies

• PG (Procter & Gamble): May face compliance costs due to restrictions on pricing of essential consumer goods.
• UNP (Union Pacific Railroad): Potential impacts on transportation costs for critical goods, affecting logistics and supply chain dynamics.
• SLB (Schlumberger): Impacts on pricing of energy resources during shortages could affect revenue and profitability.