The rapidly evolving COVID-19 (coronavirus) situation is impacting local and global companies, disrupting supply chains, creating volatility in the stock market, and causing great concern in local communities. As part of the federal government’s response to the coronavirus outbreak, the Department of Justice (DOJ) and the Federal Trade Commission (FTC) have announced that they will use their competition and consumer protection enforcement powers to go after offenders taking advantage of the concerns triggered by the COVID-19 outbreak. The DOJ will focus on “hard-core” Section 1 antitrust violations, like price-fixing of personal health protection products, while the FTC will focus on consumer protection violations, like scammers selling fake coronavirus treatments or vaccines.
On March 9, 2020, the U.S. Department of Justice released a statement that it intends “to hold accountable anyone who violates the antitrust laws of the United States in connection with the manufacturing, distribution, or sale of public health products such as face masks, respirators, and diagnostics.” The DOJ will focus on prosecuting instances of “price fixing, bid rigging, and market allocation” of personal health protection equipment and public health products in order to “make sure that bad actors do not take advantage of emergency response efforts, healthcare providers, or the American people during this crucial time.”
On March 9, 2020, the Federal Trade Commission issued warning letters to “seven sellers of unapproved and misbranded products, claiming they can treat or prevent the Coronavirus” as violating consumer protection laws. The FTC “will continue to monitor social media, online marketplaces and incoming complaints to help ensure that the companies do not continue to market fraudulent products under a different name or on another website.” The FTC released a statement on March 10, 2020 warning consumers of scams surrounding the coronavirus, including offering unproven treatments and fake vaccines, spreading false information, seeking donations to fake charities, or offering speculative investment opportunities into companies that may treat or cure the virus.
Sheppard Mullin has been closely monitoring the effects of COVID-19 on various aspect of our clients’ businesses, and has created a multi-disciplinary taskforce to advise clients on the multitude of legal issues that will arise as the situation progresses. The Sheppard Mullin COVID-19 insights page is located at https://www.sheppardmullin.com/coronavirus-insights.