Member Article

On March 15, 2020, Governor Whitmer issued an Executive Order, effective 9 a.m. March 16, 2020, through April 13, 2020, imposing two restrictions aimed at preventing price gouging during the COVID-19 emergency. These restrictions, issued pursuant to her powers after declaring a State of Emergency on March 10, 2020, apply to offers or sales of products in Michigan.

• The first restriction applies only to resales of products acquired from retailers. It prohibits individuals and business entities who acquired any products from a retailer from reselling such products at prices “grossly in excess of the purchase price at which the person acquired the product.” The order does not define what “grossly in excess” means.
• The second restriction is more broad-reaching and likely applies to all retail and wholesale sales. It prohibits individuals and business entities from selling or offering for sale any product “at a price that is more than 20 percent higher than what the person offered or charged for that product as of March 9, 2020, unless the person demonstrates that the price increase is attributable to an increase in the cost of bringing the product to market.”

Both restrictions apply to a broad range of “products,” which are defined to mean “any good, material, emergency supply, or consumer food item.” This broad definition appears to encompass consumer, industrial and other products, and not simply emergency products such as face masks, hand sanitizers, cleaning supplies and paper products.

The second restriction is similar to price gouging laws already in effect in several other states, many of which define price gouging as increasing prices for certain products by more than a certain percentage (generally between 10-20 percent) over prices charged prior to the declaration of emergency.

A violation of this Order, as well as any other order issued by the Governor during a declared State of Emergency, is punishable as a misdemeanor.

If you are considering a non-trivial price increase at this time or would like any other information about antitrust compliance programs, antitrust risks and applicable state laws, or other services provided by Dykema’s Antitrust and Trade Regulation Group, you may wish to contact Howard Iwrey ([email protected]), Cale Johnson ([email protected]), or Cody Rockey ([email protected]), or visit us online at www.dykema.com.

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