DOJ Threatens to Prosecute Anyone Fixing Prices on Sterile Gloves, Face Masks Amid Coronavirus Outbreak

Businesses have been warned: if you unlawfully attempt to profit off of the fear of the American people during the coronavirus outbreak you will face criminal prosecution.

The Department of Justice Office of Public Affairs on Monday put out a press release with a statement from Attorney General William Barr himself. The press release specifically said that individuals or companies attempting to “fix prices” or “rig bids” on health protection equipment like sterile gloves, face masks, and respirators could be prosecuted for violating antitrust laws. That applies to the manufacture, distribution or sale of these types of equipment.

What price fixing means and entails, per the Federal Trade Commission:

Price fixing is an agreement (written, verbal, or inferred from conduct) among competitors that raises, lowers, or stabilizes prices or competitive terms. Generally, the antitrust laws require that each company establish prices and other terms on its own, without agreeing with a competitor. When consumers make choices about what products and services to buy, they expect that the price has been determined freely on the basis of supply and demand, not by an agreement among competitors. When competitors agree to restrict competition, the result is often higher prices. Accordingly, price fixing is a major concern of government antitrust enforcement.

A plain agreement among competitors to fix prices is almost always illegal, whether prices are fixed at a minimum, maximum, or within some range. Illegal price fixing occurs whenever two or more competitors agree to take actions that have the effect of raising, lowering or stabilizing the price of any product or service without any legitimate justification. Price-fixing schemes are often worked out in secret and can be hard to uncover, but an agreement can be discovered from “circumstantial” evidence. For example, if direct competitors have a pattern of unexplained identical contract terms or price behavior together with other factors (such as the lack of legitimate business explanation), unlawful price fixing may be the reason. Invitations to coordinate prices also can raise concerns, as when one competitor announces publicly that it is willing to end a price war if its rival is willing to do the same, and the terms are so specific that competitors may view this as an offer to set prices jointly.

Predatory business practices and collusion during an uncertain and worrisome time such as this, the Attorney General said, will not be tolerated.

“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,” Barr said. “I am committed to ensuring that the department’s resources are available to combat any wrongdoing and protect the public.”

[Image via Sarah Silbiger/Getty Images]

Matt Naham is managing editor of Law&Crime. He formerly worked as news editor and weekend editor at Rare.

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