Senate panel considers price gouging crackdown

State Sen. Tom Sherman, D-Rye, has proposed state enforcement of those who engage in price gouging in response to an emergency (SB 138). The Senate Commerce Committee took testimony on the measure Tuesday.

CONCORD — After the COVID-19 pandemic revealed the state was powerless to stop price-gouging, a bipartisan group of senators has gotten behind legislation to police it.

Critics said the bill (SB 138) would interfere with the free market and charged it is too restrictive.

The coronavirus outbreak caused a run on many consumer products in the spring of 2020, especially for personal protection equipment (PPE), which ran in very short supply for hospitals, nursing home and residential treatment programs.

State Sen. Tom Sherman, D-Rye, said after receiving consumer complaints about price increases, he was surprised to learn the state had no law to crack down on companies trying to exploit a public emergency for financial gain.

“We all believe in profit, but people should not be able to take advantage of people during a crisis,” Sherman said.

The bill has 10 Senate co-sponsors, including Senate Majority Leader Jeb Bradley, R-Wolfeboro, and three other Republicans.

It would outlaw profiteering in the sale of “necessities.”

“We believe the market should balance itself based on supply and demand, but we have seen during COVID times, when there is a disruption that people will take advantage of others,” said Assistant Attorney General Brandon Garod, who heads the Consumer Protection and Antitrust Bureau in the state Department of Justice.

The lengthy list of necessary items covered include “food for human or animal consumption, potable water, pharmaceutical products including prescription medications, wearing apparel, shoes, building materials, gas and electricity for light, heat, and power, ice, fuel of all kinds, and fertilizer and fertilizer ingredients, together with tools, utensils, implements, machinery, and equipment required for the actual production or manufacture of the same.”

Patterned after Maine

The proposed bill is patterned after a law in Maine. The anti-gouging legislation kicks in if a governor first declares an “abnormal market dislocation” that has caused a run on a specific product.

Maine prosecutors said they did not have to prosecute any violators last year, Garod said.

“All it took was a phone call to the company and a reference to the statute they had, and that took care of the concern,” Garod told the Senate Commerce Committee Tuesday.

To trigger a state crackdown, the product would have to be offered for sale 15% above what would be a reasonable rate of profit.

“This is talking about 15% above the usual upside which allows for a healthy profit,” Sherman said.

Brian Moran, director of government affairs for New England Convenience Store and Energy Marketers Association, said the bill should not contain an artificial limit.

“We understand the desire to want to address profiteering,” said Moran, whose group represents 900 convenience stores, including 655 that sell gasoline.

“There is a mixed message here. Are we trying to create the statutory authority to go after businesses that are profiteering or are we trying to control prices?”

Former state lawmaker Dan McGuire, an Epsom Republican, said it’s logical for prices to escalate during an emergency in order to make sure there is enough supply for those who most need the product.

“This bill is a disaster, and it would make any emergency situation worse than it would otherwise be,” McGuire said. “The price mechanism has to function during shortages, because it reduces demand and it increases supply.”

Dr. Judith Joy, a former executive director of the New Hampshire Nurses Association, is the coordinator for the COVID Alliance Senior Support Team.

Among those who have responded to the group’s survey, 22% of long-term care center purchasing agents reported price gouging while trying to obtain PPE, she said.

“One facility paying $10 for a box of gloves before COVID had to pay $100 up front in order to receive a box from their regular distributor,” Joy said.

“We have had up to 1,000% mark-up, which is unconscionable in the midst of a pandemic.”

Thursday, April 15, 2021