Price Gouging Law Carries a Big Stick

Persons who contravene the new Price Gouging Control (Emergency Circumstances) Law 2004 could be fined up to $100,000 on summary conviction by the Courts. The law, which came into effect on 1 November 2004, and is only applicable after a declaration of a state of emergency in the Islands following a tropical storm, a hurricane or some other natural disaster, puts the burden of proof on the person accused of price gouging to show that any price increase is “reasonable and not unconscionable.”

It further provides that a five-member commission will be appointed to enquire into these matters. The law provides a basic benchmark for judging a price “unconscionable.” Increases will be deemed thus if there is a gross difference between what people paid on average for the item in the thirty days before a tropical storm, hurricane, natural disaster or state of emergency, and the price of those same goods following these circumstances.

The law does, however, allow for inevitable price increases, due to the cost of goods; the need of the supplier for adequate working capital and the establishment of reasonable reserves; a reasonable rate of return on investments; public interest or any other reason the commission finds relevant.

Once the commission begins its work during the relevant period, businesses will be required to provide details of planned major price increases. Before introducing them, businesses will be required to submit written requests to the commission, who will set out the terms and conditions under which the increases may be made.

Members of the public can obtain a copy of the law published in Extraordinary Gazette No. 35, dated 19 November 2004, from the Legislative Assembly, for CI$4.00, or they can read the law online at www.gov.ky. Click on Publications in the top right hand corner and scroll down the Extraordinary Gazettes.