CMA cautions retailers against exploiting Covid-19 fears

09 March 2020 4 min. read
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Predatory retailers have been warned against exploiting the Coronavirus outbreak to improve their sales figures. The UK’s Competition and Markets Authority has said any company to charge excessive prices of protective items such as hand sanitiser – which is in short supply, as people seek to protect themselves from Covid-19 – will be subject to direct enforcement action by consumer protection law.

Across 2019, at least 21,816 jobs across 1,147 locations were lost due to businesses going into administration, with the retail sector undoubtedly seeing the worst of this. According to a recent study, while the number of administrations in the sector remained steady at 124, much worse could soon be on the cards for the beleaguered sector, as the number of alternative insolvency procedures retailers are able to deploy to avoid collapse has declined dramatically.

Continuing a trend lasting the best part of a decade, stagnant wages and the spiralling cost of living mean that many consumers in the UK currently earn less in real terms than they did a decade ago. At the same time, Britain’s faltering withdrawal from the European Union has destabilised the national currency, and the devalued pound does not go as far as it once did with imported goods as a result – ramping up prices, while customers have become increasingly reluctant to spend on anything approaching ‘luxury’ in anticipation of a recession. Amid this, some retailers are desperate enough to try anything to improve results.

CMA cautions retailers against exploiting Corvid-19 fears

The global outbreak of Covid-19 has seen the infectious disease – which can progress to pneumonia and multi-organ failure in the most vulnerable – cause a wave of panic to travel around the countries afflicted so far, and it has been something that a number of predatory retailers have already sought to exploit. While the on-going battle for toilet-roll in Australia is still seen as something of a global outlier, retailers in Europe and the UK have already sought to cash in on the sudden popularity of hand sanitiser and soap – both of which governments have continuously told citizens can halt the spread of the Coronavirus.

So exploitative is the situation that the UK’s competition watchdog has sought to intervene. The Competition and Markets Authority (CMA) is reportedly considering asking the Government to regulate prices of hand sanitiser and other protective kit relating to the Coronavirus, amid concern that businesses and individuals are treating a potential public health crisis as a cash-cow. The CMA issued a statement to the press which said it was monitoring reports of price rises and other changes in sales practices during the outbreak, and was keen to ensure that “traders do not exploit the current situation to take advantage of people.”

In addition, the watchdog issued a warning to companies considering profiteering from shortages in hygiene products that they would face “direct enforcement action,” if they were found to violate competition or consumer protection law. Companies would fall foul of this if, for example, they were found to have charged “excessive prices” or made “misleading claims about the efficacy of protective equipment” they sell. There is a precedent for such action, as the CMA has previously taken such action against misleading tactics by hotel booking sites.

CMA Chief Executive Officer Andrea Coscelli commented, “We urge retailers to behave responsibly throughout the Coronavirus outbreak and not to make misleading claims or charge vastly inflated prices. We also remind members of the public that these obligations may apply to them too if they resell goods, for example on online marketplaces.”