22.04.20

Where’s the Price-Gouging Commission when you need it?

Gavin Goffe
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Where’s the Price-Gouging Commission when you need it?

In response to recent reports of price-gouging, the Minister of Industry, Commerce, Agriculture and Fisheries (“MICAF”) signed an order prohibiting retailers from selling “necessary goods” at a price higher than what was charged immediately before March 31, 2020. But there’s one major hitch: The Prices Commission, the body established by law to investigate suspected breaches of the Order, is virtually defunct.

The Trade (Sale of Goods During Period of Declaration of Disaster Area) Order, 2020 (the “Order”) was signed by Minister Shaw to halt price increases on “(i) any item used, or intended for use, as food or drink by a person; (ii) personal care items, such as soap, cleaning products, antibacterial products, toiletries, alcohol, hand sanitizers, bleach and gloves; and (ii) medical supplies, including surgical masks and prescription and non-prescription medication.” It excludes goods and produce regulated under other laws, such as sugar, bananas, livestock and fish.

The Order was signed by Minister Shaw pursuant to the Trade Act of 1955. In the early 1970s, the Trade Act was amended to establish the Prices Commission, whose functions included investigating allegations of profiteering (price-gouging) in relation to the sale of goods. It’s been many years since anyone was appointed to the Prices Commission. In the 1990s, the focus shifted away from price controls and towards liberalisation, with consumers being equipped to make their own, informed decisions within a market-driven economy.

Enter the Consumer Affairs Commission (“CAC”) in 2005, which was set up to be the main advocate for the consumer, rather than a regulator of the retailer. According to MICAF, the Prices Commission was incorporated into the CAC, but the accuracy and legality of that statement is, at best, questionable. The CAC was established by the Consumer Protection Act. The CAC’s functions, as set out in that Act, do not include investigating profiteering. There is no reference in the Trade Act to the CAC, nor is there any reference in the Consumer Protection Act to the Prices Commission. And whilst the CAC’s website states that an official name change from Prices Commission to Consumer Affairs Commission was done by way of a Cabinet decision in 1992 (curiously some 13 years before the legal establishment of the CAC), a statutory body corporate is not a highway; Cabinet can’t simply rename it. It’s also not a ministerial portfolio; Cabinet can’t reshuffle it. But, practically, how does any of this affect the price of rice?

Undoubtedly, COVID-19 related price-gouging has occurred. A box of 20 N95 masks that previously cost $2,000 now costs around $6,000. Some of that might be attributable to the acquisition cost by the business, but a 200% increase is suspicious. The Order was publicised on March 26th and came into effect on March 31st. We all witnessed how several residents of St. Catherine responded when given 2 hours’ notice of the parish’s lockdown. Retailers were given 5 days’ notice of the lockdown on prices. We, therefore, need a competent body with the power to investigate whether any price increases after March 31st constitute profiteering, or if the difference in price is attributable solely to the rising cost of sourcing these necessary goods.

Why can’t the Minister substitute one commission for the other? Although the Prices Commission and the CAC have broadly similar mandates to protect the consumer, it would be like substituting baking soda for baking powder. A statutory body only has jurisdiction to the extent of the law that created it. If the Prices Commission were around, they’d have the power, under the Trade Act, to investigate profiteering and to summon persons to attend before them and give evidence and produce their records. Failure to attend before the Prices Commission or refusing to answer their questions without sufficient cause is an offence punishable by a fine of up to 2 million dollars or imprisonment for up to 2 years. The CAC has identical powers, but only in support of its functions under the Consumer Protection Act, and that law does not mention profiteering at all.

Further, although the Order seeks to circumvent this problem by having the Minister delegate the enforcement function under the Trade Act to the CAC, he doesn’t possess investigative powers himself and therefore can’t delegate those powers to anyone else. The Minister can set price controls, but he can’t investigate offences. For good reason, Ministers are policymakers, not police. A Minister of Commerce investigating price-gouging would be no different than the Minister of Transport issuing traffic tickets in Halfway Tree, or the Minister of Labour ordering that dismissed workers be reinstated by their private sector employers.

Although the CAC’s authority to combat price-gouging is doubtful, the Order itself appears to be valid. If there are credible complaints from consumers, duly evidenced by receipts for purchases made before and after March 31 at the same store, the Director of Public Prosecutions could have the retailers charged and prosecuted. However, a summons from the Consumer Affairs Commission to a business owner suspected of price-gouging might not be worth the paper it’s written on.

Gavin Goffe is a partner at Myers, Fletcher and Gordon, and is a member of the firm's Litigation Department. He may be contacted at  gavin.goffe@mfg.com.jm  or through the firm's website www.myersfletcher.com. This article is for general information purposes only and does not constitute legal advice.