Posted 08/04/2020 by Howard Maclean
On 30 March 2020, the Federal Government made use of its human biosecurity emergency powers to prohibit price gouging of personal protection equipment, hand sanitiser and alcohol wipes.
The Biosecurity Act 2015 allows for a human biosecurity emergency to be declared, giving the Minister for Health expansive powers to issue directions and set requirements in order to address the emergency. A human biosecurity emergency was declared by the Governor-General on 18 March 2020 in relation to COVID-19.
An earlier FlagPost provides information on the mechanics of the declaration and the Health Minister’s powers, as well as an overview of the first two requirements made by the Health Minister—banning international cruise ships from entering Australian ports and banning Australian citizens and permanent residents from undertaking overseas travel. A subsequent FlagPost covered a third requirement regulating access to remote communities, with a fourth requiring most retail outlets in international terminals of Australian airports (other than pharmacies and food outlets) to close, subject to granted exemptions.
The Biosecurity (Human Biosecurity Emergency) (Human Coronavirus with Pandemic Potential) (Essential Goods) Determination 2020 (the Essential Goods Determination) is the fifth requirement made under these powers.
Why was the Essential Goods Determination made?
The Explanatory Statement to the Essential Goods Determination notes:
There is growing public concern that protective gear and disinfectants are not reaching those with the greatest need, as a small number of individuals continue to purchase these goods in large quantities from retailers with the intention of re-selling them at extortionate prices (a practice known as ‘price gouging’) or sending them offshore. This practice prevents these goods from reaching the individuals who need them the most, including essential service providers such as front-line health professionals and lawenforcement, whose services are vital to preventing or controlling the spread of COVID-19 and who frequently deal with individuals who carry a high risk of transmitting the virus.
This followed earlier statements by Home Affairs Minister Peter Dutton regarding price gouging and export of high-demand items and groceries on 19 March 2020.
What does the Essential Goods Determination do?
The Essential Goods Determination prohibits a person from engaging in price gouging in relation to essential goods.
Person: means any natural person, but also any body politic or corporate. This means that corporations are subject to this requirement.
Essential goods: are any disposable facemasks, disposable gloves, disposable gowns, goggles, glasses or eye visors capable of limiting the transmission of organisms to humans, and any alcohol wipes or hand sanitiser.
Price gouging: is selling, or offering to sell essential goods for more than 120% of the price that the goods were purchased for. This requirement only applies to goods originally purchased on or after 30 January 2020. It is irrelevant if the person intended to sell the goods at the time of purchase. Any part of the resale price ‘directly attributable to costs reasonably incurred by the person in transporting or delivering the goods’ is not included in the 120% price gouging threshold.
Example 1: A person foresees surging demand for hand sanitiser due to the impending pandemic, and purchases 100 litres of hand sanitiser at $10 a litre on 17 February 2020. They now sell it at $50 a litre (+ $5 delivery) online. Selling the sanitiser at this new price is price gouging as the sanitiser (now an ‘essential good’), is being sold above 120% of its original purchase price (excluding delivery) and the hand sanitiser was purchased after 30 January 2020.
Example 2: A person panic-purchases a large quantity of alcohol wipes (an ‘essential good’) for their family on 7 March 2020. Feeling remorseful, they now offer to sell to their friends and neighbours part of their stockpile at the same price they purchased it. This is not price gouging as the wipes are not being sold above 120% of their purchase price (even though the wipes were purchased after 30 January 2020).
One friend accepts the offer of sale, and agrees to pay for postage of the alcohol wipes to their house. When postage is included, the total sale price of the alcohol wipes is above 120% of the original purchase price. However, this is not price gouging as any part of the price ‘directly attributable to costs reasonably incurred by the person in transporting or delivering the goods’ is not included in the calculation of the 120% threshold.
Example 3: A person purchases 200 N95 disposable respirator masks on 2 January 2020 at $3 a respirator. The masks were purchased for themselves, family and friends to use during bushfire emergencies. On 2 April 2020 they still have 100 unused respirators and decide to sell them at $20 a respirator, plus delivery. This is not price gouging. While N95 disposable respirator masks are an ‘essential good’ as a ‘disposable facemask capable of limiting transmission of organisms to humans’, and they are being sold above 120% of their original purchase price, the respirators were purchased before 30 January 2020, and therefore the determination does not apply.
Example 4: A person purchases a large amount of toilet paper on 25 February 2020. They now decide to sell some of the toilet rolls for $5 a roll, plus delivery costs – over ten times the purchase price of the toilet paper. This is not price gouging. While the goods are being sold above 120% of their original purchase price, and the goods were purchased after 30 January 2020, toilet paper is not an ‘essential good’ as defined by the determination.
A law enforcement officer (a member or special member of the Australian Federal Police) may issue a written notice to a person stating:
- the officer suspects on reasonable grounds that the person has engaged, is engaging or intends to engage in price gouging in relation to the goods
- the person is required to surrender the goods to the officer and
- the goods will be destroyed or given away after 21 days, unless the persons satisfies a law enforcement officer on reasonable grounds that the person has not engaged, is not engaging in and does not intend to engage in price gouging in relation to the goods.
If an officer is satisfied on reasonable grounds that the person has not engaged, is not engaging and does not intend to engage in price gouging in relation to the goods, they must then withdraw the notice, and return any goods surrendered to that officer.
If the officer is not so satisfied within 21 days after the goods have been surrendered, then the officer must give the goods to the National Medical Stockpile. If the officer believes on reasonable grounds that the goods are defective or that there is a risk that the goods are defective (and because of that risk, the goods should not be used), then the goods must be destroyed instead.
A law enforcement officer may also issue a notice requiring a person not to ‘dispose of, or deal with’ essential goods if they suspect, on reasonable grounds, that the person has engaged, is engaging or intends to engage in price gouging in relation to the goods. If the officer later becomes satisfied on reasonable grounds that a person has not engaged, is not engaging, and does not intended to engage in price gouging, then the notice must be withdrawn.
Example 5: On 3 April 2020 a law enforcement officer issues a notice in writing to a person regarding their sale of hand sanitiser (see example 1, above), requiring them to surrender the goods to the officer. The officer also issues a notice in writing requiring them not to dispose of, or deal with the goods. The person surrenders their hand sanitiser on 4 April 2020 and is unable to satisfy the officer that they were not engaging in price gouging. On 25 April 2020, the officer gives the surrendered supply of hand sanitiser to the National Medical Stockpile.
If, instead of surrendering the goods, the person attempted to sell their remaining stock of hand sanitiser at a heavily discounted price that would not be price gouging, or dispose of their remaining stock, then they commit an offence under this requirement as they have breached the notice not to dispose of, or deal in essential goods.
Example 6: On 4 April 2020 a law enforcement officer issues a notice in writing to a person regarding their sale of alcohol wipes (see example 2, above), requiring them to surrender the goods to the officer. They do so on 5 April 2020. The person then supplies the officer with the original purchase receipts, proving that they are selling their alcohol wipes at the same price at which they bought them. The officer is satisfied that the person is not, and does not intend to, engage in price gouging, and returns the surrendered alcohol wipes.
Prohibition of the export of essential goods
Export of essential goods was forbidden by the insertion of regulation 13GI of the Customs (Prohibited Exports) Regulations 1958 by the Customs (Prohibited Exports) Amendment (COVID-19 Human Biosecurity Emergency) Regulations 2020 on 30 March 2020. This prohibition is subject to a narrow range of exceptions, including personal and humanitarian use and if the person ‘exports the goods in the ordinary course of the person’s business’.
The Minister, by legislative instrument, may determine additional goods as prohibited for export.
The Essential Goods Determination provides that a Customs Officer may require a person to surrender relevant goods if the person had attempted to export the goods on or after 30 January 2020 but before the commencement of regulation 13GI on 30 March 2020, and the goods are currently in the possession of an officer of customs.
Once surrendered, the officer must give the goods to the National Medical Stockpile as soon as practicable. If the officer believes on reasonable grounds that the goods are defective or that there is a risk that the goods are defective (and because of that risk, the goods should not be used), then the goods must be destroyed instead.
Under section 479 of the Biosecurity Act, a person who intentionally engages in conduct that contravenes a human biosecurity emergency requirement commits a criminal offence punishable by a maximum penalty of imprisonment for five years and/or a fine of 300 penalty units ($63,000).
Potential offences under this determination include:
- engaging in price gouging in relation to an essential good
- failing to surrender goods to a law enforcement officer or an officer of customs as required by written notice
- disposing of, or dealing in essential goods (even if that dealing is not price gouging as defined by the determination) after a written notice has been served by a law enforcement officer.
Commencement and duration
This requirement commenced on 31 March 2020. It remains in force for the duration of the ‘human biosecurity emergency period’ which, under the current human biosecurity emergency declaration, will last until 18 June 2020. The Governor-General may extend a declaration indefinitely (with each extension being for no longer than three months) if the Health Minister remains satisfied that the conditions that required a declaration of a human biosecurity emergency continue (section 476 of the Biosecurity Act). Effectively, the human biosecurity emergency period (and this requirement) lasts as long as the emergency does.