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The economics of potential price gouging during Covid-19 and the application to complaints received by the CMA

Author

Listed:
  • San Sau Fung

    (Competition and Markets Authority (CMA))

  • Simon Roberts

    (Centre for Competition, Regulation and Economic Development (CCRED), University of Johannesburg Centre for Competition Policy, University of East Anglia)

Abstract

The CMA received a large number of complaints about price hikes during Covid-19. In this paper, we first review the economic framework of price gouging and identify the situations when intervention by competition authorities is justified. We then analyse the CMA’s consumer complaints data. We find that most complaints related to essential products sold by small local retailers, including many that operate in some of the most deprived areas of the UK, and their price hikes were particularly likely to harm vulnerable consumers. We also explain the CMA’s antitrust investigations into the pricing of hand sanitisers by retailers. This product, essential for reducing Covid-19 transmission, saw substantial and sustained price increases around March to June 2020. We conclude by discussing the merits of, and challenges for, competition authorities in responding to price gouging concerns and in playing a market observatory role more generally.

Suggested Citation

  • San Sau Fung & Simon Roberts, 2021. "The economics of potential price gouging during Covid-19 and the application to complaints received by the CMA," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2021-02, Centre for Competition Policy, University of East Anglia, Norwich, UK..
    • Handle: RePEc:uea:ueaccp:2021_02
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    2. Xavier Jaravel & Martin O'Connell, 2020. "Inflation spike and falling product variety during the Great Lockdown," IFS Working Papers W20/17, Institute for Fiscal Studies.
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