Coronavirus: Profiteering during the pandemic

The Covid-19 outbreak in the UK has seen short-term shortages in some retail goods. This has been due to delays to supplies reaching retail outlets and customer stockpiling. As a result, there has been evidence of people using online marketplaces, such as Amazon and eBay, to sell scarce items at inflated prices, a practice known as ‘price gouging’. 

Evidence of price gouging 

In April 2020, Which? reported examples of household items being sold at high prices on online marketplaces. This included items such as branded cleaning products, toilet roll and antibacterial hand gel. Which? also said that some adverts for these goods featured photographs of the seller having bulk-bought items for re-sale, contributing to shortages in shops.  

The Competition and Markets Authority (CMA) has said that it has received thousands of complaints since the start of the outbreak about price gouging. It said that most of these complaints related to food, drink and hygiene and personal care products, such as hand sanitiser, toilet paper and face masks. 

Local Trading Standards offices have also cited instances of price-gouging by some retailers. For example, Lambeth Trading Standards reported on 1 April 2020 that it had received complaints of hand sanitiser being sold for £30 and an already opened box of disposable gloves being offered at £80. 

Combating price gouging 

The CMA issued a statement on 5 March 2020 saying it would take enforcement action against traders breaking competition and consumer protection law during the Covid-19 outbreak. On 20 March, the CMA confirmed it would be creating a task force to monitor market developments and identify harmful practices as they emerge. Later that month, the CMA said it had written to 187 firms following complaints about large price rises for hygiene products, including hand sanitiser, and food. 

Responding to complaints by consumers, eBay has said it has taken action to restrict the sale of masks and hand sanitiser on its website. In March 2020, the online retailer said it had removed over 350,000 items and suspended hundreds of accounts it said had been selling goods at inflated prices. On 27 April, the Telegraph report this number had grown to more than 800,000 listings. Amazon has also said it was taking action to remove listings.  

Existing powers to regulate the market 

The CMA has said it would advise the Government to introduce emergency legislation to further regulate prices if it believed it were necessary. The CMA has said that part of the role of its Covid-19 taskforce would be to monitor whether the CMA’s existing powers were sufficient to prevent practices by firms that were harmful to consumers.  

Commenting on the powers of the CMA to combat price gouging and profiteering during the outbreak, the head of the UK competition practice for Linklaters, Nicole Kar, has argued that the regulator’s current legal powers over price rises were limited. She described there being no prohibition against high prices in UK consumer law unless they were unfairly hidden from the consumer or a firm was using its market dominance to charge excessive prices.  

Which? has argued that the Government needs to introduce emergency legislation to cap prices on essential products during the Covid-19 outbreak.  

Some MPs have also called for new regulations to control prices during the Covid-19 outbreak. On 4 May, Patricia Gibson (SNP MP for North Ayrshire and Arran) sponsored an early day motion (EDM) drawing attention to price gouging by sellers online. It urged eBay and Amazon to do more to address this. It also called on the Government to introduce “stronger regulations” and give greater powers to the CMA. At the time of writing, this EDM had received 36 signatures. A similar EDM, tabled on 23 March 2020 by Apsana Begum (Labour MP for Poplar and Limehouse), had received signatures from 23 MPs. 

The Government has said that excessive price rises and the exploitation of the outbreak for financial gain are unacceptable. Responding to a written question on 26 March 2020, the Parliamentary Under Secretary at the Department for Business, Energy and Industrial Strategy, Paul Scully, said the Government was monitoring the situation with the CMA and that it would “take further action if it is necessary”. More recently, on 11 May 2020, Mr Scully confirmed the Government was “keeping all options under review” to tackle price gouging. 

PPE price rises 

As well as online sales of consumer goods, concerns have been raised about the prices charged for personal protective equipment (PPE) by medical suppliers.  

On 3 March 2020, NHS Supply Chain, the body responsible for supporting the supply of goods to the NHS, confirmed there was an increase in demand for PPE products by NHS trusts at the beginning of the Covid-19 outbreak. On 1 May 2020, the publication Management in Practice reported that some PPE suppliers were increasing prices in response to higher demand, citing an example of one company selling face masks at a 650% mark-up compared to June 2019.  

On 5 May 2020, the Secretary of State for Health and Social Care, Matt Hancock, told the House of Commons that the UK was looking to increase domestic production of PPE as a result of the global increase in demand for PPE. Mr Hancock argued this would increase the supply of PPE and reduce its cost. 

Cancellations and refunds 

In addition to complaints about price rises, the CMA has also received complaints from consumers unable to get cancellations and refunds from firms following the outbreak. For example, consumers reported being unable to cancel venues hired for weddings or holiday bookings following the introduction of social distancing guidance by the government.  

The CMA has said complaints about price rises made up a large proportion of the complaints it received at the beginning of the outbreak. However, as the outbreak continued, there was a reduction in complaints about prices and a growth in complaints about cancellations and refunds. On 24 April 2020, the CMA said these types of complaint accounted for 4 out of 5 of the complaints it now received

Image by Kelly Sikkema from Unsplash.