FTC Gets $1 Billion and New Power to Fight Price Gouging, Targeting Firms with Over $100M in Revenue

The newly proposed Price Gouging Prevention Act of 2025 is looking to put a federal muzzle on companies that hike prices during emergencies. At its core, the bill makes it illegal to sell any good or service at a “grossly excessive price.” It also hands the Federal Trade Commission (FTC) a massive $1 billion in funding to enforce the new rules and allows State Attorneys General to join the fight, setting the stage for a major overhaul of how large companies can price their products, especially when the chips are down.

The Emergency Price Hike Playbook is Under Review

If you’ve ever seen the cost of bottled water or gas spike right before a hurricane, you know what this bill is targeting. The law kicks in hard during an “exceptional market shock”—think natural disasters, pandemics, or even major strikes. If a company raises its price during one of these shocks compared to the 120 days before, the price hike is automatically presumed to be illegal if the company also has “unfair leverage.” To fight this, the company has to prove with “clear and convincing evidence” that the price increase was strictly due to their own increased costs for getting or distributing the product. This flips the burden of proof onto the seller, which is a big deal.

Who’s on the Hook: The $100 Million Question

The bill carves out an exception for the little guys, but that exception is surprisingly narrow. If your ultimate parent company made less than $100 million in U.S. gross revenue last year, you’re generally safe from penalties. But even then, if you raise prices, you still have to prove that the increase was only to cover your uncontrollable extra costs. For any company making over that $100 million threshold—which includes mid-sized regional businesses and large corporations—they are fully exposed to the new rules and potential penalties.

The penalties are steep: up to $25,000 or 5 percent of the ultimate parent company’s annual revenue, whichever is less. If the company is also deemed to have “unfair leverage”—which is defined as having over $1 billion in revenue or controlling 40 percent or more of a market—the penalty jumps to a straight 5 percent of annual revenue. This means a multi-billion dollar company could face hundreds of millions in fines if the FTC decides they gouged prices during a crisis.

The Transparency Trap for Public Companies

Beyond just the pricing rules, the bill introduces a huge new compliance headache for publicly traded companies. If a “covered issuer” (a publicly traded company) experiences an “exceptional market shock,” they have to file a deep-dive analysis with the SEC in their next quarterly (10Q) or annual (10K) report. This isn't just a quick note; they have to provide detailed tables comparing sales, prices, and costs from the shock quarter to the one before it.

Crucially, they must provide a detailed narrative explaining their entire pricing strategy. If their gross profit margins went up in any key product area, they must explain why and detail what part of their revenue increase came from raising prices versus selling more volume. For investors and the public, this means unprecedented visibility into how major corporations price their products during a crisis. For the companies, it means a significant new administrative cost and the risk of self-incrimination if the data suggests price gouging.

What’s Next and Who Defines the Rules?

While the goal of protecting consumers from opportunistic price hikes is clear, the implementation relies heavily on the FTC. The agency has 180 days to define key terms like what constitutes a “market” and, most importantly, what a “grossly excessive price” actually is. The bill suggests the FTC should consider setting this threshold at 120 percent of the average price charged in the six months before the alleged violation. That’s a lot of power concentrated in the FTC’s hands, which is why the bill also allocates an extra $1 billion in funding to the Commission, available until 2033, ensuring they have the resources to build the rules and enforce them across the country.