Schakowsky, Warren Reintroduce Legislation to Crack Down on Price Gouging by Giant Corporations

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WASHINGTON - Today, U.S. Representative Jan Schakowsky (IL-09) and U.S. Senator Elizabeth Warren (D-MA) reintroduced the Price Gouging Prevention Act of 2024, which would protect consumers and prohibit corporate price gouging. The bill would authorize the Federal Trade Commission (FTC) and state attorneys general to enforce a federal ban against grossly excessive price increases, regardless of a seller’s position in a supply chain. 

Specifically, this legislation would crack down on major companies that brag about exploiting American consumers or exercise unfair leverage while jacking up prices. It would also protect small businesses that raise prices in good faith. Additionally, the bill would ensure that when there are major shocks to the market, public companies disclose changes in their pricing strategies in their filings with the Securities and Exchange Commission (SEC).  

“As large grocery chains continue to rake in record profits, there are many families struggling to put food on the table. The cost of basic groceries has jumped by 25% over the past four years. Price gouging is harming consumers and is fueling the elevated profit margins among greedy corporations. We live in the richest country in the world at the richest moment in history. Yet, many Americans are unable to feel the full magnitude of our wealth,” said Congresswoman Jan Schakowsky. “Our bill empowers the FTC to hold these price gouging companies accountable when they take advantage of American consumers. People must always come before profits.”

“Giant corporations are squeezing American families for fatter profits. It’s time to give the Biden administration stronger tools. Senate Democrats and I are renewing our push for a new law to crack down on corporate price gouging,” said Senator Elizabeth Warren.

The Price Gouging Prevention Act specifically would:

• Prohibit price gouging at the federal level – anytime and anywhere. The proposed bill would clarify that price gouging is an unfair and deceptive practice under the FTC Act. It would allow the FTC and state attorneys general to stop sellers from charging a grossly excessive price, regardless of where the price gouging occurs in a supply chain or distribution network. 
• Create an affirmative defense for small businesses acting in good faith. Small and local businesses sometimes must raise prices in response to crisis-driven increases in their costs because they have little negotiating power with their price-gouging suppliers. This affirmative defense protects small businesses earning less than $100 million from unjustified litigation if they show legitimate cost increases.  
• Target dominant companies that have exploited the pandemic to boost profits. The bill would create a rebuttable presumption of price gouging against firms that exercise unfair leverage and companies that brag about increasing prices during periods of inflation. 
• Require public companies to clearly disclose costs and pricing strategies. During periods of exceptional market shock, the bill requires public companies to transparently  disclose and explain changes in their cost of goods sold, gross margins, and pricing strategies in their quarterly SEC filings. 
• Provide additional funding to the FTC. The bill appropriates $1 billion in funding to  the FTC to carry out its work.

During the COVID-19 pandemic, big corporations took advantage of the crisis to prey on consumers by “price gouging”: raising prices by even more than necessary to cover increases in their costs, and hiding behind inflation and supply chain disruptions to do it. Now that the market shock of the pandemic has largely abated, corporations’ costs are coming down and profits are rising. But for hardworking Americans, prices remain high. The culprit? Corporate price gouging. Prices for consumers have risen by 3.4% over the past year, but producers’ input costs have risen only 1%. Take diapers: prices for wood pulp, the main input for diapers, declined by 25 percent last year, yet parents are still paying higher and higher prices for diapers. For many commodities and services, the cost of production has actually decreased. Meanwhile, unchecked consolidation across nearly all sectors of the economy has enabled dominant players to boost prices with few consequences, disincentivizing new entrants and harming consumers. Research shows that price gouging can—and does—occur even in the absence of a market shock.

The Price Gouging Prevention Act is co-sponsored by Representatives Jerrold Nadler (NY-12), Ro Khanna (CA-17), Katie Porter (CA-47), Eleanor Holmes Norton (DC-AL), Henry C. "Hank" Johnson Jr. (GA-04), Paul Tonko (NY-20), Mary Gay Scanlon (PA-05), Mark Takano (CA-39), and Senators Tammy Baldwin (D-WI), Bob Casey (D-PA), Bernie Sanders (I-VT), Sheldon Whitehouse (D-RI), Jeff Merkley (D-OR), Ed Markey (D-MA), and Richard Blumenthal (D-CT).

This reintroduction comes as President Joe Biden and other lawmakers have drawn attention to corporate “shrinkflation” and other ways corporations are price gouging consumers.

The Price Gouging Prevention Act is endorsed by the American Economic Liberties Project, Consumer Federation of America, Groundwork Collaborative, Unrig Our Economy, Economic Security Project Action, Public Citizen, Farm Action Fund, and the National Consumer Law Center (on behalf of its low-income clients).

“During the COVID-19 pandemic, working families suffered as big corporations hiked costs for no other reason than to line their own pockets and pad their bottom line. Unfortunately, price gouging is just business as usual for big corporations in an economy rigged by corporate greed and against the American people. With the Price Gouging Prevention Act, Senators Warren, Baldwin, and Casey, and Congresswoman Schakowsky are standing up for working people by saying ‘no more’ to corporate profiteering during times when every day people are hurting the most. Unrig Our Economy is proud to endorse this legislation, which takes an important step toward building an economy that works for all working people, not corporate interests,” said Kobie Christian, Spokesperson for Unrig Our Economy.

"Corporations have exploited our inflation crisis with price hikes that have fed record-high profit margins and left families struggling to make ends meet. The Price Gouging Prevention Act takes important steps to safeguard families from excessive corporate profit chasing and tackles the rampant corporate power that enabled this in the first place,” said Dr. Rakeen Mabud, Chief Economist and Managing Director of Policy and Research at Groundwork Collaborative.

"Price gouging keeps basic goods like housing, groceries, childcare, and prescription drugs more expensive and increasingly out of reach for millions of families.  It is pure greed and is indefensible. The Price Gouging Prevention Act is a huge step towards stopping this practice by holding corporate price gougers accountable," said Adam Ruben, Director of the Economic Security Project Action.

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