How to avoid violating Florida’s price gouging law

Michael Giberson

For a while now Exxon-Mobil Corporation has been seeking clarification from the State of Florida, Department of Agriculture and Consumer Services (DACS) on just how the state’s price gouging law is applied. (Some background in this post from a year ago.) The company wants to know what it needs to do to comply with the law, or possibly, if the burden of the law will be excessive, whether it should exit the state.  The Florida DACS refused to answer Exxon’s request at first, citing procedural grounds, but on review a court has directed the agency to answer two questions: (1) whether the law applies to wholesale exchange, and (2) whether a regional price index is sufficient to reflect national or international trends in prices.

Florida’s price gouging law seeks to prohibit charging a price that “represents a gross disparity between the price of the commodity … and the average price at which that commodity … was rented, leased, sold, or offered for rent or sale in the usual course of business during the 30 days immediately prior to a declaration of a state of emergency, and the increase in the amount charged is not attributable to increased costs [due to] … national or international market trends.”

Historically the law has been enforced against retailers, but at least since receipt of investigatory subpoenas from DACS last year Exxon has been interested in how the law may be applied to wholesalers.  In addition, Exxon stated in its request to DACS that traditionally it has relied upon the Gulf Coast Regional Platts Index as a guide to changing costs, but it wonders whether or not this regional index can be taken to reflect “national or international market trends.”

State price gouging laws frequently employ language prohibiting “unconscionable” or “grossly excessive” price increases, and only sometimes do the laws clarify the distinction between price increases that are grossly excessive and price increases which are merely excessive under the law.  So far the Florida DACS has been unwilling to clarify how the law may apply to Exxon and other wholesale marketers, but with the recent court decision at least some greater clarity should emerge.

Advertisements

3 thoughts on “How to avoid violating Florida’s price gouging law

  1. This is a near-perfect example of the reasons why lawyers should not be permitted to make law.

    My father used to tell me that “ignorance of the law is no excuse”. However, even awareness of this law is totally inadequate, since it cannot be understood or interpreted on its face. It was not and is not intended to be understood. It is, rather, intended to be a very “flexible” weapon. It is intended to require the involvement of three lawyers to interpret: a judge, a plaintiff’s lawyer and a defendant’s lawyer.

    This is a law which is intended to be avoided, not observed. This law makes it far safer to sell out and close down than to allocate by price.

  2. Three prisoners in a U.S. jail.

    One:  I charged higher prices than my competitors. I’m in for exploiting consumers, profiteering, and monopoly.

    Two:  I charged lower prices. I’m in for predatory pricing and cutthroat competition.

    Three:  I charged the same prices. I’m in for collusion, price fixing, and cartelization.

  3. Andrew, that might be funnier if it were not so true. We’ve blogged here before about state prosecution of retailers for selling gasoline at “too low” of a price. In fact Florida is a state which has sought to discourage both too high and too low gasoline prices in various cases. And by the way, “discourage” is a fairly neutral word to use in this case since the tools of the state are in full force: investigations and lawsuits at taxpayer expense, fines, potential loss of business licenses and other penalties. Don’t know if Florida offers jail time for any of the related violations, but certainly everything short of it.

Comments are closed.