Smart & Final fined for pandemic price gouging

As panicked shoppers stocked up on grocery essentials during the early days of the COVID-19 pandemic, Smart & Final made them pay.

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

Following Gov. Gavin Newsom’s state of emergency declaration on March 4, 2020, companies were prohibited from selling food and other necessities for more than 10% higher than pre-emergency prices, unless it was a direct result of increased supply or labor and production costs.

According to Bonta, Smart & Final sold more than 100,000 cartons of illegally priced eggs, having raised the price on some items by approximately 25%.

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

“It is unacceptable to take advantage of hard-working California families during times of crisis,” said 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.”

The price hikes were focused on organic and cage-free eggs, according to Bonta. They came during the onset of the pandemic, as a rush on stores resulted in empty shelves, leaving shoppers scrambling to purchase whatever was still available.

“While these were premium products, remember that during this time, shelves were often bare, there weren’t a lot of choices,” Bonta said. “Consumers had few, if any options.”

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Bonta said customers tipped off his office of the price gouging. The $175,000 in fees — which was based on the penalty provision in the unfair competition law — 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 had fielded accusations of other companies unlawfully 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 hikes to fluctuations in egg prices charged by its suppliers.

“Since the beginning of the pandemic, we have experienced numerous supplier price increases in multiple product categories,” the company said. “In response to the rapid pace of these price increases, we briefly and unintentionally raised the price of premium eggs to align with 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 pricing to ensure it remains compliant.”

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 over 3,900 accounts after they inflated the price of suddenly-hot commodities such as masks and hand sanitizer.