Smart & Final fined for pandemic price gouging

As panicked shoppers stocked up on essential groceries at the start of the COVID-19 pandemic, Smart & Final made them pay.

The grocery chain indulged in price gouging on four premium egg products between March 4 and June 22, 2020, Atty said. General Rob Bonta said on Tuesday as his office announced a settlement with the Commerce-based supermarket company.

Following Governor Gavin Newsom’s declaration of a state of emergency on March 4, 2020, businesses were banned from selling food and other basic necessities at prices more than 10% above pre-emergency prices, unless this is the direct result of an increase in supply or labor and production costs. .

According to Bonta, Smart & Final sold more than 100,000 cartons of eggs at illegal prices, raising the price of some items by around 25%.

The grocery chain will pay $175,000 in penalties.

“Taking advantage of hard-working California families in times of crisis is unacceptable,” Bonta said. “When California first went into lockdown at the start of the pandemic, there was a shortage of essential supplies, and unfortunately some businesses saw this as an opportunity to increase their bottom line.”

The price increases have focused on organic and cage-free eggs, according to Bonta. They came at the start of the pandemic, as a rush to stores resulted in empty shelves, leaving shoppers scrambling to buy whatever was still available.

“Although these are high-end products, remember that in those days the shelves were often empty, there was not much choice,” Bonta said. “Consumers had few, if any, options.”

Bonta said customers informed his office of the price hike. The $175,000 fee – which was based on the penalty provision of the Unfair Competition Act – will not go to customers who paid extra, but will be used to help “fight for workers, Californians and consumers,” according to the Attorney General.

Bonta said his office accused other companies of illegally raising the prices of products such as onions, green beans and instant noodles, but could not comment on ongoing investigations.

In a statement, Smart & Final attributed the price increases to fluctuations in egg prices charged by its suppliers.

“Since the onset of the pandemic, we have experienced numerous supplier price increases across multiple product categories,” the company said. “In response to the rapid pace of these price increases, we briefly and unintentionally increased the price of premium eggs to match supplier price increases on standard eggs. We want our valued customers to know that price gouging has no place in our stores. We will continue to review our prices to ensure they remain consistent.

Smart & Final, which was acquired by Bodega Latina Corp. in 2021, wasn’t the only company accused of unfairly profiting during the pandemic. In March 2020, Amazon suspended more than 3,900 accounts after inflating the price of suddenly hot products such as masks and hand sanitizer.