COVID-19 | Disaster Profiteering Outlawed (for now)

28 April 2020
Michael Owens, Partner, Brisbane Antoine Pace, Partner, Melbourne Kelly Marshall, Director, Brisbane

The Australian Government has outlawed price gouging for some essential goods until 18 June 2020 under a new Biosecurity law.  Here is what you need to know.

  • The Australian Government has passed a new determination to prohibit price gouging for certain “essential” goods (Biosecurity (Human Biosecurity Emergency) (Human Coronavirus with Pandemic Potential) (Essential Goods) Determination 2020 (Cth)).
  • The new law applies until 18 June 2020.
  • Non-compliance with the new law can result in significant fines, prison time or both.
  • The ACCC has created a COVID-19 taskforce targeting anti-competitive conduct related to the COVID-19 pandemic.
  • Major platforms have issued new policies to respond to price gouging conduct.
  • Historically, price gouging has not been illegal in Australia, though certain provisions of the Australian Consumer Law may catch incidental conduct.
Price gouging of “essential goods” banned

A new Biosecurity Law[1] prohibits a person during the COVID-19 biosecurity emergency period from selling or offering for sale an “essential” good at more than 120% of the value that the person bought the goods.  This kind of conduct is also known as “disaster profiteering”.

An “essential good” is defined as:

  • specific equipment, being:
  • disposable face masks;
  • disposable gloves;
  • disposable gowns;
  • goggles, glasses or eye visors; and
  • disinfectant products, being:
  • alcohol wipes; and
  • hand sanitiser.

At the time of writing, the ‘COVID-19 biosecurity emergency period’ is declared until 18 June 2020.  The Governor-General may extend the emergency period as required to combat the COVID-19 outbreak.  The Biosecurity Law expires in 2030.

Price gouging other goods

Price gouging is not illegal per se under Australian law.  However, incidental conduct may be caught by Australian Consumer Law (ACL) provisions, such as misleading or deceptive conduct, false representations or unconscionable conduct.

What is the risk?

Short answer: significant fines, prison time, or both.

Under the Biosecurity Law, you must surrender all the price gouged “essential goods” if you receive a breach notification from law enforcement.

Penalties for not complying are set out in the Biosecurity Act[2] and include:

  • five years imprisonment; and/or
  • fine of up to $63,000.
ACCC’s COVID-19 taskforce

The ACCC’s COVID-19 taskforce gives guidance to consumers and businesses about their COVID-19 rights and responsibilities.  It is also contacting major platforms to take down advertisements for price-gouged COVID-19 related products.

Platforms, such as eBay, already have policies in place to combat such conduct, which includes goods such as toilet paper, baby goods including formula, wipes and nappies, and female sanitary items, as well as “essential goods” under the Biosecurity Law.  Under eBay’s terms, price gouging listings will be removed, and accounts may be suspended.

A sign of things to come

The Biosecurity Law may be a precursor to a more permanent response to price gouging in declared emergencies.  For example, certain States in America have price gouging laws that apply during ‘severe weather event emergencies’, such as hurricanes, post-storm clean-up or repairs.  Price gouging conduct may also be caught under trade practices laws for unfair or deceptive trade practices.[3]

It remains to be seen whether the new Biosecurity Law will end in June 2020 or be extended to apply to other emergency periods like similar laws do overseas, and of course whether the mandated goods will be limited to disposable face marks and hand sanitiser as in the current law or take a broader approach like the eBay terms to include other consumer goods.

 

For details of all our COVID-19 tips and updates, visit the Gadens COVID-19 Hub.

 


[1] Biosecurity (Human Biosecurity Emergency) (Human Coronavirus with Pandemic Potential) (Essential Goods) Determination 2020 (Cth).

[2] Biosecurity Act 2015 (Cth).

[3] See for example, Connecticut Unfair Trade Practices Act (CUPTA).

 


Authored by:

Michael Owens, Partner
Kelly Marshall, Director

This update does not constitute legal advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of the content.

Get in touch