Profiteering and price gouging

Price increases

You may notice that prices for basic goods increase during a health emergency or after a natural disaster. For example, items such as face masks, bottled water, bread, milk, fruit and vegetables and petrol.

This often happens because it costs businesses more to get goods into their shop.

A business may have to:

  • transport their goods further due to road closures, which means higher petrol costs
  • fly goods into town, which greatly increases costs.

Health emergencies and natural disasters can also affect the supply of goods. When goods are in short supply, there is more demand. Greater demand means higher prices.

A business may set whatever prices it chooses for its goods or services. Government agencies will not interfere unless there is evidence of illegal conduct (e.g. collusion).

For example

In 2011, Cyclone Yasi destroyed 75% of North Queensland’s banana crop when it passed through the area. Bananas were still available from other growers around the country. However, the reduced supply forced up demand. This led to higher prices.

Unconscionable conduct

Unconscionable conduct is against the law.

Generally, unconscionable conduct is a statement or action so unreasonable it is not considered acceptable behaviour in society. Business behaviour may be deemed unconscionable if it is particularly harsh or oppressive and is beyond hard commercial bargaining.

You must not act unconscionably when:

  • selling or supplying goods and services to a customer
  • supplying or acquiring goods and services to or from a small business.

Examples of unconscionable conduct can, depending on the circumstances, include:

  • not properly explaining the conditions of a contract to someone you know does not speak English or has a learning disability
  • not allowing enough time to read an agreement, ask questions or get advice
  • using a friend or relative of the customer to influence their decision
  • making the customer sign a blank or one-sided contract
  • taking advantage of a low-income customer by making false statements about the real cost of a loan
  • failing to disclose key contractual terms
  • using high-pressure tactics (e.g. refusing to take ‘no’ for an answer).

If found guilty of unconscionable conduct, the maximum fines are:

  • for a corporation, the greater of either
    • $10 million
    • 3 times the value of the benefit received
    • 10% of annual turnover in the preceding 12 months (if the court cannot determine the benefit from the offence)
  • for an individual, $500,000 per breach.