Coronavirus – CMA and General Pharmaceutical Council’s letter over inflated prices - UK

• United Kingdom

• Commercial agreements
• Competition, EU and Trade
• Coronavirus
• Consumer
• Health and life sciences

30-06-2020

The Competition and Markets Authority (“CMA”), together with the General Pharmaceutical Council, have published an open letter to pharmacy owners and superintendent pharmacists raising concerns over unjustifiably high prices being charged for essential products such as hand sanitiser, face masks and paracetamol during the COVID-19 pandemic.

In particular, the CMA has raised  concerns with higher prices being charged (compared to those that would prevail under “normal competitive market conditions”) where these are as a result of pharmacies adding higher than usual mark-ups. 

Whilst the CMA acknowledged that pharmacies may be incurring additional operational costs  (e.g. for additional cleaning and PPE) and such costs might justify a limited increase in general mark-ups, the CMA does not consider that such additional overheads would justify disproportionate mark-ups on essential products unless the additional costs specifically relate to the sale of those products.

The CMA confirmed that to date, investigations  have been launched into four retailers, including pharmacies, that it suspects have charged unfair and excessive prices for hand sanitiser during the current pandemic. For further information regarding the CMA’s investigations, view our previous article ‘CMA opens investigation into price gouging’.

A copy of the letter can be found here.

A comment from Matthew Gough, head of Eversheds Sutherland’s consumer law team:

“It seems apparent that the CMA considers the application of disproportionately high mark-ups on essential items a potential unfair business practice when considered in the context of the COVID-19 outbreak.  Whilst this letter has been addressed to pharmacies, it provides a stark warning to the retail sector more widely when it comes to implementing pricing policies and business practices during this uncertain time.”

A comment from Nicola Holmes, Legal Director in Eversheds Sutherland’s Competition, EU & Trade team:

“This letter comes hot on the heels of the CMA’s new excessive pricing investigations and the wide ranging information gathering exercise they carried out in respect of pricing. The CMA seems determined to crack down on suspected excessive pricing, notwithstanding the difficulties of bringing these investigations under competition law.  This should act as a warning to businesses in all sectors that any price increases could face intense scrutiny.”

If you would like any further information or need advice on consumer law, please contact us.