Opinion: give regulators emergency powers to tackle Coronavirus rip-offs

Retailers are milking consumers by hiking prices sky high on certain items, but the CMA can't do anything about it at present.

It’s been a mixed time for businesses. While some have seen their normal practices take a hit due to the Coronavirus pandemic, others have been more in demand.

Unfortunately, some businesses have seen the opportunity to really make the most of the crisis by hiking prices on items people are most desperate for.

And that’s why the competition regulator has now called on the Government to give it emergency new powers to prevent innocent shoppers from being ripped off.

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Price gouging

The Competition and Markets Authority (CMA) has been swamped with complaints about blatant price gouging since the pandemic really took hold in the UK.

The organisation says that between March 10 and April 19 it received a whopping 21,000 complaints related to Covid-19, with significant numbers related to retailers hiking the prices of certain products.

The pricing of hand sanitiser, for example, has jumped incredibly, rising by an average of 367% according to the CMA.

While this is the most striking example, the average price increase across all reports stood at 130%, showing that retailers are seeing far more opportunities to crank up prices of items in demand.

We can’t stop them

Now you might imagine that an organisation named the Competition and Markets Authority would be able to do something about this blatant price gouging.

Yet apparently that’s not the case, with the Financial Times reporting that the limited competition legislation in the UK doesn’t cover the subject, leaving the CMA unable to do much about it.

As a result, it has now appealed to the Government to grant it temporary powers to crack down on these Covid-19 rip-offs.

Andrea Coscelli, the CMA’s chief executive, told the paper: “Consumer and competition law are not really designed for emergencies.

Part of our role is to use everything we have but if there are gaps, to explain to the Government what those gaps are. Ultimately though it’s for the Government and parliament to decide.”

The fact that we bother having these regulators without giving them the tools to do their job is obviously deeply troubling, and needs to be rectified properly at a later date.

But in the meantime, the absolute minimum should be giving them real enforcement powers now.

Retailers feel emboldened when hiking their prices like this because they know that there won’t be any real repercussions, that they can keep ramping up prices to completely unjustifiable levels without ever being on the receiving end of anything harsher than a light rap on the knuckles.

This isn’t the fault of the CMA, or any of the other toothless regulators in place in the UK today. It comes down to the mediocre legislation behind them, and the authorities who handicap the regulators from the off.

But this can be put right, at least temporarily, by giving the CMA real powers of enforcement right now. We’ve already seen France and the US pass such laws as a result of Covid-19 ‒ why can’t we?

A question of supply and demand

Now there will be some who question whether these retailers are doing anything wrong. 

It’s all about supply and demand, right? And the sad fact is that certain items ‒ like sanitiser and hand masks ‒ are seriously in demand currently, so why can’t retailers increase their profit margins?

But this absolutely misses the point. At a time of crisis like this, it’s absolutely immoral for any retailer, large or small, to line their pockets by hiking their prices to levels that are simply unjustifiable.

Nobody objects to retailers making a profit ‒ they aren’t charities, and need to have something to show for their efforts.

But milking shoppers at a time like this is a diabolical practice, and regulators need to have the powers to clamp down on it more effectively than they can at present. 

Do you think the CMA needs to step in or is the free market working as it should? Vote in our poll and share your thoughts in the comments section below.