April 14, 2021

Volume XI, Number 104

Advertisement

April 13, 2021

Subscribe to Latest Legal News and Analysis

April 12, 2021

Subscribe to Latest Legal News and Analysis

DPA Update: Biden Administration Brings Renewed Focus to Defense Production Act

As part of the federal government’s efforts to combat the COVID-19 pandemic, President Biden plans to “fully use” the Defense Production Act (the “DPA”) to compel production of medical and protective equipment, and ensure adequate supplies and distribution of vaccines. On January 21, 2021, the White House released its National Strategy for the COVID-19 Response and Pandemic Preparedness, in which it stated that “the federal government will use its full powers to prevent hoarding and price gouging, including by reviewing and expanding the designated scarce materials under the DPA.” In doing so, the new administration re-committed the federal government to using the DPA to combat price gouging, a practice started by President Trump in March 2020.

As previously covered, the DPA grants the President the power to command private industry in the name of national defense, by doing such things as compelling private companies to accept and prioritize contracts, or diverting production or materials to specified buyers. The DPA also criminalizes accumulating goods deemed “scarce” either (1) in excess of the reasonable demands of business, personal, or home consumption, or (2) for the purposes of resale in excess of prevailing market prices. The DPA is different from state price gouging laws in that it adds a requirement of “accumulation” in addition to sale at an inflated price. It remains unclear what a court would consider the reasonable demands of business or personal consumption, or what method it would use to calculate what exactly constitutes charging a price “in excess of prevailing market prices.”

Some have raised questions about the general efficacy of the Trump administration’s invocation of the DPA, including a July 28, 2020 report by the Congressional Research Service stating that the administration’s implementation of the Act was “sporadic and relatively narrow” and that it was “unclear which executive agency leads overall efforts under DPA authority, in response to the pandemic.” To the extent federal criminal charges were brought under the DPA, it was for clear acts of price gouging (including one seller charging mark-ups of up to 1,328%) that failed to shed light on the more nuanced questions surrounding the act.

Accordingly, the Biden administration will be painting on a relatively clean canvas under the DPA as it relates to price gouging enforcement. And while it is likely that the majority of the Biden administration’s efforts under the DPA will be focused on the act’s main purpose – directing the production and distribution of necessary goods, businesses can expect an expanded list of materials deemed scarce pursuant to the Act, as well as a renewed interest and focus by federal investigators. Accordingly, companies should continue to monitor the Biden administration’s use of the DPA to combat price gouging, and should continue to closely monitor their own compliance efforts.

Advertisement
© 2021 Proskauer Rose LLP. National Law Review, Volume XI, Number 41
Advertisement
Advertisement

TRENDING LEGAL ANALYSIS

Advertisement
Advertisement

About this Author

Christopher Ondeck Antitrust Litigator chair of  Proskauer Rose nationwide Antitrust Group
Partner

Chris Ondeck is a partner in the Litigation Department and vice-chair of the Antitrust Group. He focuses his practice on representing clients in civil and criminal antitrust litigation, defending mergers and acquisitions before the U.S. antitrust agencies, defending companies involved in government investigations, and providing antitrust counseling.

Chris has handled antitrust matters for clients in a number of industries, including advertising, aerospace, alcoholic beverages, appliances, building materials, defense, medical devices, metals,...

202-416-5865
John Ingrassia, Antitrust Attorney, Telecommunications, Proskauer Law firm
Special Counsel

John Ingrassia is a special counsel and advises clients on a wide range of antitrust matters in various industries, including chemicals, pharmaceutical, medical devices, telecommunications, financial services, health care, and others. His practice includes a significant focus on the analysis of Hart-Scott-Rodino pre-merger notification requirements, the coordination and submission of Hart-Scott-Rodino filings, and the analysis and resolution of antitrust issues related to mergers, acquisitions, and joint ventures. John has extensive experience with the legal, practical,...

202.416.6869
Julia D. Alonzo Litigation Attorney Proskauer Rose New York, NY
Senior Counsel

Julia Alonzo is a senior counsel in the Litigation Department with a focus on securities and corporate governance litigation. She is experienced in complex securities and white collar litigation matters, including federal securities class actions, derivative lawsuits, internal investigations and federal white collar defense.

Julia maintains an active pro bono practice, with a focus on immigration law, asylum and child welfare issues. In addition, she sits on the associate board of the Brooklyn Defender Services Family Defense Practice, which aims to provide interdisciplinary...

212-969-4558
Law Clerk

Nathaniel Miller is a Law Clerk in the litigation department. He works for the firm's New York offices. 

Education

  • New York University School of Law, J.D., 2017
  • Harvard University, B.A., 2014
212-969-354
Advertisement
Advertisement