Democratic lawmakers continue their push to curb price gouging with proposed legislation that would cap price increases on essential supplies and services during emergencies.

The bills would make it illegal to raise prices on emergency and medical supplies, lodging, building materials, and gasoline and propane by more than 10% during an emergency declaration.

Critics counter that price gouging isn’t to blame for inflation and setting arbitrary price controls during natural disasters and other emergencies would “create more problems than it solves.”

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Democrats have been talking about the issue for year and are trying to pass the legislation while they still have a majority in the Legislature. The Senate Finance, Insurance and Consumer Protection Committee advanced Senate Bills 954–956 to the floor along party lines. House lawmakers heard testimony this week on their version of the bills, House Bills 5895–5897.

Republican lawmakers and business groups have questioned claims of “price gouging” and the need for the legislation. They say it’s unclear the impact the new laws would have on business owners, as well as what constitutes a state of emergency, particularly weather emergencies that are often regional.

State Rep. Greg VanWoerkom, R-Norton Shores, worries the legislation would open the door for state officials to overstep their authority and unfairly target individual businesses. Small business owners accused of price gouging could be hit with high attorney fees to defend themselves or even forced to close, according Bridge Michigan.

State Rep. Mark Tisdel, R-Rochester, covered the issue in his Tisdel Talk: Price Control Nonsense blog back in September when the issue was gaining attention during the presidential race.

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“The idea that grocery stories are ‘gouging’ customers is not supported by the facts,” he wrote. “Grocery stores have razor thin margins. In 2021, the year President Biden took office, the average profit margin for the nation’s largest grocers – Walmart, Target, Costco, Kroger, and Albertson’s – was 2.6%. Today, in 2024, the average profit margin for those same large grocers is 2.4%. Their profit margin has gone down. Where’s the gouging?”

The Mackinac Center for Public Policy, a free market think tank, called the bills “a misguided attempt to control changing prices during emergencies,” in a September blog post.

All three bills arbitrarily classify a price increase greater than 10% over pre-emergency levels as excessive. And if alleged violators cannot justify price increases to government investigators, penalties range from a $10,000 fine for individuals and up to a $1 million fine for businesses and potential criminal charges.

“Price gouging legislation may garner explosive headlines, but it only harms the people it purports to help,” Mackinac Center staff wrote. “The bills’ definition of price gouging is arbitrary. What makes 10% the approved limit? Why not 5% or 20%? The legislation offers no rationale for this specific threshold.”

Michigan’s Consumer Protection Act provides some protections against price gouging by individual businesses, but reform advocates say the current law doesn’t go far enough.

The effort to curb price gouging gained momentum during the COVID-19 pandemic, when consumers faced serious sticker shock as demand outpaced supply.

This prompted a surge in price gouging complaints and calls to Michigan’s Consumer Protection Helpline. The helpline received around 10,000 consumer complaints a year, until 2020 when it jumped to 24,000 complaints.

Michigan Attorney General Dana Nessel joined Democratic lawmakers for a news conference in the fall at the Michigan Capitol Building. According to the group, 34 states have some form of anti-price gouging protections during a state of emergency.

Nessel has investigated and filed lawsuits against businesses suspected of price gouging. The law gives the attorney general’s office and local prosecutors the authority to go after violators, according to this news release.