(August 16, 2006) California Chamber of Commerce-opposed legislation that significantly and arbitrarily expands price control laws and hurts consumers awaits a vote on the Senate floor any day now.
AB 457 (Núñez; D-Los Angeles) a "job killer" bill that creates burdensome and arbitrary new standards for price controls on numerous industries and opens the door to unfair competition prosecutions brought at the subjective whim of the Attorney General.
Send a letter of opposition.
AB 457 significantly and arbitrarily expands price control laws, criminal sanctions and Section 17200 unfair competition liability for numerous types of goods and services providers, including: farmers, food companies, grocers, retailers of all types, electronics companies, construction companies, building material and supply companies, paper product companies, pharmaceutical companies, oil companies, transportation, freight and storage companies, rental housing owners or companies, restaurants, hotels and motels.
The creates a vague new trigger for price controls. Currently, price control laws apply to companies only when there is a clearly defined, officially declared “state of emergency,” such as an earthquake, fire, flood, or riot. AB 457 significantly broadens these laws to apply also when there is an “abnormal market disruption.” The bill’s definition of “abnormal market disruption” is extremely vague, including any “disruption” caused by any “activating event” anywhere in the world that suddenly reduces supply or damages distribution of a product.
This opens up price controls to be applied arbitrarily since disruptions and spikes and valleys in supply and distribution are normal and common in the marketplace. This vague new trigger also makes use of price controls vulnerable to political pressure and trends.
Current price control laws apply to retailers; AB 457 expands the law to include any type of company that is in the chain of distribution or supply.
AB 457 doubles the period of time for which the state can mandate an artificial price cap. Under current law, for at least 30 days following the declaration of a “state of emergency”, a 10 percent cap applies to price increases on food and numerous types of goods and services. For example, a $2 per pound produce item cannot increase in price above $2.20 for at least a month, regardless of market conditions or supply and demand. The 30 days can be extended if necessary in 30-day increments. Without justification, AB 457 expands the minimum time increments to 60 days. Placing undue restraints on competition and interfering with the laws of supply and demand, especially when there is a product shortage, can harm consumers and the economy.
Action Needed
The Chamber strongly urges members to express their opposition to this legislation by either writing their senators or calling the senators’ offices.
Send a letter of opposition.
Staff Contact: Kyla Christoffersen