Mary Inman and Taline Sahakian: Are high prices really inflation? Pa. lawmakers want your help to find out.
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There is no doubt that recent economic forces have driven up prices — inflation is creating hardship for consumers in Pennsylvania and the rest of the country. But alongside rising oil costs and supply chain woes, politicians (and pundits) suspect something more sinister may be afoot.
The economics that explain why prices are rising at 8.6% are complex, making it difficult to know whether current prices need to be as high as they are — or whether, in some cases, companies see headlines about inflation as an opportunity to conspire to charge consumers more and get away with it. This practice, known as price fixing, is illegal, and occurs when competitors agree to set a price for a product or service, typically a price that is higher than what they could charge if they were competing with each other. By way of example, in a recent lawsuit filed by the Pennsylvania attorney general, generic drug manufacturers were accused of artificially manipulating and inflating drug prices and overcharging consumers by millions of dollars. Often, the only way to find out that price fixing is going on is from an insider with direct knowledge of deals made behind closed doors.
With the introduction in June of the Stop Price Fixing Act, Pennsylvania is one of the only states that is trying to increase detection of price-fixing by incentivizing whistleblowers to come forward with information.
Among other reforms, the new Stop Price Fixing Act would provide protections and rewards for whistleblowers to come forward with information about price fixing. Pennsylvania would become the first state enacting this kind of antitrust whistleblower reward program and it would be the third state to enact a whistleblower reward program — preceded by Maryland and Florida, which have rewards programs for reporting tax fraud and insurance fraud, respectively.
Under the Stop Price Fixing Act, whistleblowers who come forward with original information, which leads to a successful recovery by the attorney general, would be eligible to receive an award between 10% and 30% of “what has been collected of the monetary sanctions imposed.” Given their success in helping other federal agencies enforce their laws and regulations, whistleblower reward programs could help give a boost to efforts to detect and deter price fixing here in Pennsylvania.
The next stop for the Stop Price Fixing Act is the House Committee on Consumer Affairs, where it was referred shortly after being introduced. The committee will examine and propose any amendments to the bill in the first instance.
Members of the Pennsylvania Legislature would be wise to look to the success of the Securities and Exchange Commission, Commodity Futures Trading Commission and IRS whistleblower reward programs in prosecuting securities, commodities and tax fraud and choose to endow the Pennsylvania attorney general’s office with similar powers to address price fixing by adopting the bill.
If you’re serious about tackling price fixing, you can inform your legislator and encourage them to pass the bill. Until then, the progress of the bill can be followed here.
Mary Inman and Taline Sahakian are attorneys at Constantine Cannon specializing in the representation of whistleblowers.