OAKLAND – California Attorney General Rob Bonta today announced a settlement with Smart & Final resolving allegations that the grocer engaged in price gouging of certain types of eggs during the COVID pandemic. Smart & Final operates more than 250 retail stores throughout the western United States, selling groceries and supplies to households and small businesses. Between March 4, 2020 and June 22, 2020, Smart & Final increased the price of four premium egg products beyond what was allowable during a state of emergency. Today’s settlement requires Smart & Final to pay $175,000 in penalties and permanently enjoins Smart & Final from future violations of the Unfair Competition Law, Penal Code section 396, or any related Executive Orders related to price-gouging.
“It is unacceptable to take advantage of hardworking California families during times of crisis,” said Attorney General Bonta. “When California first went into lockdown at the beginning of the pandemic, there was a run on essential supplies, and unfortunately, some businesses saw this as an opportunity to pad their bottom line. Let me be clear, price gouging during a declared state of emergency is illegal. Today’s settlement should serve as a warning to grocers and other sellers of essential supplies: Follow state price gouging laws, or you will be held accountable.”
On March 4, 2020, California Governor Gavin Newsom declared a state of emergency triggering California Penal Code 396’s price gouging protections. Penal Code 396 makes it unlawful during the thirty days following a declaration of emergency to sell goods and necessities, including food items, at prices more than 10% higher than the prices charged for that same item immediately before the declaration was issued, except where the price increase is the result of increased supply or labor and production costs. On April 3, 2020, Governor Newsom issued an executive order extending price gouging protections for an additional five months.
Following Governor Newsom’s emergency declaration, the Attorney General’s Office received a large number of price-gouging complaints reporting dramatic increases in the retail price of eggs. Many of these complaints related specifically to price spikes at Smart & Final stores across the state.
As a seller of consumer goods and food items, Smart & Final was prohibited under state law from increasing its prices on eggs by more than 10%, unless the increase was the result of increased acquisition or labor costs. Nevertheless, Smart & Final raised the prices of certain products by more than 10% over pre-emergency prices with no accompanying increase in supply costs. The Attorney General's investigation found that Smart & Final sold over 100,000 cartons of unlawfully priced eggs while price gouging protections were in place.
The Attorney General's Office thanks the Alameda and San Mateo County District Attorney’s Offices for their assistance in this investigation.
If you believe you have been the victim of price gouging, or have information regarding potential price gouging, you can file a complaint at oag.ca.gov/report.
A copy of the settlement can be found here.