Price Gouging and Industry Collusion- Why not act ?

 

Price gouging occurs when a seller significantly increases the prices of goods, services, or commodities to a level much higher than is considered reasonable or fair, typically during a demand spike caused by natural disasters, emergencies, or other crises. This practice is illegal because it exploits consumers with few alternatives and is viewed as an unfair business practice that takes advantage of vulnerable people in need. Many states in the U.S. have laws that expressly prohibit price gouging during emergencies, usually by limiting the percentage by which prices can be increased and imposing penalties for violations.

On the other hand, industry collusion occurs when businesses within the same industry conspire to fix prices, limit production, divide markets, or engage in other practices that restrict competition and harm consumers. Collusion is illegal under U.S. antitrust laws because it undermines the principles of free and fair competition, leading to artificially high prices, reduced innovation, and limited consumer choices. The Sherman Antitrust Act is the primary federal law prohibiting such practices, which makes it illegal for competitors to agree to fix prices, rig bids, or allocate markets.

The U.S. Department of Justice (DOJ) plays a crucial role in investigating and prosecuting violations of federal antitrust laws, including collusion and other anti-competitive practices. The DOJ's Antitrust Division is tasked with enforcing these laws to ensure that markets remain competitive. If the DOJ suspects that price gouging or collusion is occurring, it can launch an investigation, which may involve issuing subpoenas, reviewing documents, and interviewing witnesses. Should evidence of illegal activity be found, the DOJ can bring civil or criminal charges against the companies or individuals involved. Penalties for those guilty of collusion or price gouging can be severe, including fines, injunctions, and even imprisonment. Additionally, the DOJ may seek to dissolve or restructure companies involved in such illegal activities to restore competitive conditions.

Price gouging and industry collusion are illegal because they create unfair and exploitative conditions that harm consumers and the market. The Justice Department has the authority to investigate and take action against these practices to maintain a fair and competitive marketplace.