Explainer: Harris’ Anti-Price Gouging Plan Could Build on U.S. State Law, According to Reuters

By Jody Godoy

As Vice President Kamala Harris prioritizes price gouging in her presidential campaign, various state laws and proposals from her Senate colleagues suggest possible avenues for addressing soaring prices.

The Democratic candidate is set to outline her initiatives against price gouging and other economic issues in a speech scheduled for Friday in Raleigh, North Carolina.

Generally, price gouging laws prohibit excessive profiteering during emergencies, though their implementation can vary significantly. Lindsay Owens, the head of Groundwork Collaborative, an anti-monopoly think tank, notes that thirty-four states have enacted some form of anti-price gouging law. She emphasizes the effectiveness of these laws in preventing companies from exploiting crises for profit.

Harris plans to propose "the first-ever federal ban on price gouging on food and groceries," which her campaign believes would deter large corporations from unfairly burdening consumers while reaping substantial profits.

New York’s law is considered one of the most robust, prohibiting excessive price increases on essential goods during significant market disruptions. Notably, drugstore chain Walgreens reached a settlement last year after being accused of inflating baby formula prices in response to a nationwide shortage that followed a recall in 2022. New York Attorney General Letitia James alleged that Walgreens raised formula prices by 10% to 70% during this crisis.

Currently, the only federal law addressing price gouging is limited to wartime or national emergencies and prohibits the hoarding of designated scarce items for resale above market price.

In 2020, while serving as a U.S. senator, Harris co-sponsored legislation that aimed to define price gouging during emergencies as charging more than 10% above the average price prior to the crisis. This proposal included protections for sellers whose price increases could be attributed to their own cost hikes and was modeled after California’s existing law, which Harris had previously cautioned businesses against violating as the state attorney general.

Although supply chain issues from the pandemic have improved, consumer advocates and some Democratic lawmakers assert that corporations are still using the pandemic and inflation as pretexts to increase prices and boost profits.

Earlier this year, Democratic senators, including Elizabeth Warren, introduced a bill that would make it unlawful to sell goods or services at a "grossly excessive price," a term to be defined by the U.S. Federal Trade Commission. One definition being considered includes prices at least 20% higher than the average market price in the previous six months. Additionally, the bill would require publicly traded companies to disclose their profit margins and pricing strategies following emergencies.

While this particular bill lacks Republican support, other pricing-related legislation, such as proposals to reform drug prices, has garnered bipartisan backing. Republican Senator Chuck Grassley has been active on these issues, also co-sponsoring measures targeting the consolidation effects in the meatpacking industry—an issue expected to be highlighted by Harris.

Even without new federal laws, a potential Harris administration would inherit certain tools to combat price gouging. Under the Biden administration, the Federal Trade Commission has already used its authority to challenge Kroger’s proposed $24.6 billion acquisition of Albertsons and to initiate a study of grocery pricing.