Food Markets Warned Against Possible Milk Price Gouging

Attorney General Spitzer said today that an investigation by his office has revealed that dozens of food markets across New York are selling milk at prices that may violate state price gouging statutes.

Spitzer said a precipitous drop in producer prices in recent weeks has not been fully passed on to consumers as is called for by New York law.

"By continuing to sell milk at inflated prices, these stores are taking advantage of both consumers and farmers," he said. "We are taking appropriate action to encourage these retailers to reduce the price of milk immediately."

The federally-mandated price paid to farmers for Class I fluid milk declined by more than 30 percent in early April. Despite this dramatic reduction, an investigation by the Attorney General's office found dozens of food markets continuing to sell milk at pre-reduction levels or at only slightly-reduced levels.

Under State's General Business Law, the threshold for price gouging is 200 percent above the Class I price of fluid milk. Investigators from the Attorney General's office found at least 27 food markets selling milk at prices far above that threshold, which is $2.25 per gallon in the upstate region and $2.37 per gallon in the downstate region. In fact, some stores were selling milk at prices that were inflated by more than a dollar per gallon. Inflated prices were found at a range of stores, including supermarkets, convenience stores and discount chains.

The Attorney General has sent a formal inquiry to the stores warning that their practices may be a violation of the law. Markets that continue to sell milk at excessive prices may be subject to enforcement action.

"Retailers can react with remarkable speed when producer prices rise, but when the producer price declines, as it has recently, stores set a leisurely pace for making changes that are mandated by law and benefit consumers," Spitzer said. "We will monitor retail milk pricing very carefully and we will not hesitate to take appropriate action to compel stores to do what is right."

The investigation was carried out by the Attorney General's Bureau of Consumer Frauds and Protection.