Under Control - Masks, Price Gouging, and the Provisions of the Price Control Act

Article by Douglas Pang.

The outbreak of the 2019 Novel Coronavirus (now designated by the World Health Organization as COVID-19), continues to dominate the news and capture our attention. In the first few days after the first reports of cases in Singapore, long queues formed outside retailers such as Guardian and Watsons as ordinary citizens tried to purchase surgical and/or N95 masks.

Shortly after, there were reports of masks being sold at inflated prices on various online platforms, such as Lazada, Carousell, Qoo10 and Shopee (collectively, “e-commerce platforms”). These acts have been referred to colloquially as ‘price gouging’. In response, letters have been sent from the Price Controller (“the Controller”) to these platforms to request the information on the potential profiteers. The Ministry of Trade and Industry has also stated that “Profiteering is highly irresponsible and damaging in these uncertain times”. As recently as on 11 February 2020 (Tuesday), the Controller sent a letter to a retailer known as 3 Stars, following complaints from the public of masks being sold at high prices at its outlets.

These letters from the Controller has brought the lesser-known Price Control Act (“PCA”) to the fore. By way of background, the powers under the Act have only been invoked twice; once in 1973 with regards to the prices of rice, in relation to panic-buying sparked by an international oil crisis; and once in 1990, in relation to the pork market, after a few suppliers cornered the pork market.

In this article, we examine some of the powers of the Controller under the provisions of the Act.

Selling goods beyond a maximum price

Under section 4(1) of the PCA gives the Controller the power to fix the maximum sale prices of goods in Singapore by publishing an order in the Gazette. It states that the Controller may fix maximum prices for the sale of any goods in Singapore, either by declaring the maximum sale price, or by prescribing that the sale price shall not exceed the price which it cost the seller plus a stated sum or percentage of the cost price.

If the Controller does so, then the designated goods will be considered ‘price-regulated goods’. Section 9(1) of the PCA states any person who sells ‘price-regulated goods’ which exceeds the maximum price fixed shall be guilty for an offence.

We note that Malaysia has since designated face masks as price-controlled items under their own legislation, the Price Control and Anti-Profiteering Act. As of 13 February 2020, no order has been published in the Gazette designating surgical or N95 masks as a ‘price-regulated good’. While it is, not yet, an offence to sell surgical or N95 masks at high prices, the Controller has the necessary powers to go after price gougers.

Power to request information

Thus far, the Controller has sent letters to various local retailers, and to various e-commerce platforms. Under section 11 of the PCA, the Controller is empowered to require certain classes of people, including any ‘trader’ and ‘commission agent’, to provide any information relating to his trade and business. There is no requirement that the information sought relates to goods which have already been designated as ‘price-regulated goods’. Any person who refuses to furnish any information, or furnishes false information upon demand, is guilty of an offence under section 13 of the PCA, and is liable to be punished under the PCA.

According to the definitions in the PCA, a ‘trader’ includes any person who carries on the business of selling goods. The local retailers that the Controller has sent letters to (i.e. Deen Express and 3 Stars) fall within the definition of a ‘trader’ and are thus obliged to provide the relevant information to the Controller.

A commission agent means a person who acts as an agent for another in relation to the sale of goods, and is remunerated by way of commission on the price, including an agent remunerated partly by commission and partly in ‘some other manner’. As for e-commerce platforms, these conceivably fall within the meaning of a ‘commission agent’, as e-commerce platforms typically charge commissions on sales.

The e-commerce platforms have cooperated with the Controller, and have provided the information sought. Aside from complying with the Controller’s orders, some of the online platforms have stated that they would be taking their own internal measures against sellers who list items at unreasonable prices.

Conclusion

While there is no order yet to designate masks as a price-controlled item, and while no individuals or companies have been charged with any offences under the Act, there is a legal framework in place to ensure that the Government has the powers to regulate the prices of important goods and services. As can be seen from the letters issued by the Controller, the Government is keenly monitoring the situation.

Finally, beyond the legal aspects of the PCA, we encourage all Singaporeans to act responsibly and to think not only for ourselves, but for our neighbours, during these times.