Government Moves to Cap Prices During Emergencies to Protect Consumers

In a significant step toward consumer protection, the Government has enacted a law decree that seeks to cap the prices of services and products during emergency situations. This move is aimed at preventing unjustified price increases that often burden consumers during crises. The Council of Ministers has approved this regulation, which will undergo parliamentary processing to address exceptional circumstances that may disturb supply and demand. The proposed regulation prohibits price hikes, ensuring that prices do not exceed the maximum charged in the previous 30 days, nor surpass 50% of the average for that period. This measure is particularly crucial in light of recent events, such as the train accident in Adamuz, Córdoba, which led to soaring prices for alternative transportation. Similar abuses were noted following last summer’s wildfires and the DANA event in Valencia. Price capping will be triggered during civil protection emergencies as declared by the government, and will also include additional scenarios specified by the Council of Ministers. The law, prepared by the Ministry of Social Rights, Consumption, and the 2030 Agenda, modifies the existing General Law for the Defense of Consumers and Users. It grants the Government the authority to require marketers to disclose the average and maximum prices charged over the 30 days preceding an emergency situation. Under this new law, price increases will only be permissible if they are objectively justified by verifiable cost increases or if they are necessary to introduce new supply that addresses shortages, provided that these do not result in increased profit margins for the operators involved. For goods or services that exhibit significant seasonality, the price from the same period in the previous year, adjusted according to the Consumer Price Index (CPI), can also serve as a reference point. Moreover, the legislation guarantees consumers the right to an automatic refund for any amounts paid above the maximum applicable price. This effort reinforces the government's commitment to ensuring that no one profits at the expense of citizens' vulnerabilities. Minister Pablo Bustinduy highlighted during a press conference that the objective is to prevent exploitation in situations where citizens are most vulnerable. He referenced the recent train accident in Adamuz, underscoring how some service providers have raised prices unreasonably high, not due to increased costs, but to maximize profit from the misfortunes faced by citizens. The law allows for price limitations to be activated in the wake of a civil protection emergency declaration or in instances of accidents, technical emergencies, force majeure, or other unforeseen events that cannot be attributed to the consumers. The Council of Ministers will outline the specific situations in which these measures come into play, detailing the start and end dates for applicable services or products and the price limits during those periods. With this proactive legislative move, the government aims to create a fairer market environment and protect consumers from exploitative pricing practices during times of crisis. Related Sources: • Source 1 • Source 2