3 March 2021

The COVID-19 pandemic has prompted widespread calls for stricter regulation of price gouging across the European Union. Whilst the calls come from a good place, they are ignorant of the economic costs that this will impose. The TFEU already provides sufficient restrictions on price gouging, and any further efforts to clamp down on the practice would harm consumers.

Where an economic shock occurs, prices will often rise. If regulators were to intervene to prevent rising prices, then in the short run this would lead to those who need vital supplies the most being unable to procure them, and in the long-run it will ensure that any shortages that do occur become much worse. Instead, the European Commission should use the tools they already have at their disposal, which provide an effective mechanism against the more egregious offences.