Title 13 Part 600

For the purposes of this Part:

The sale or offering for sale of a good or service by one party to another where both buyer and seller are under common ownership or control, or where the sale or offering for sale is not an arms-length transaction, does not constitute a sale or offering for sale.

the usual course of business means methods employed or prices charged as part of the seller’s normal routine. A method, practice, or price:

The price in a scrutinized sale is unconscionably excessive if there is sufficient evidence of any one of the following:

Section 600.4. Examples of Unfair Leverage or Unconscionable Means. (a) In General. A seller charges an unconscionably excessive price in a sale, pursuant to General Business Law § 396-r(3)(a), if, in the course of a scrutinized sale, the seller exercises either unfair leverage, unconscio- nable means, or both (whether or not accompanied by an amount of excess in price that is unconscionably extreme). The exercise of unfair leverage or unconscionable means includes, but is not limited to, the conduct described in subdivisions (b) through (f) of this rule. (b) Deceptive Pricing. A seller uses unfair leverage or unconscionable means if the seller engages in deceptive acts or practices that serve to mis- represent or obscure the total price of the essential product. (c) Conditioning the Sale of Essential Products on Agreement to Exces- sively Burdensome Payment Terms. A seller uses unfair leverage or un- conscionable means if, during an abnormal disruption of the market, the seller conditions the sale of the essential product on a consumer's agree- ment to excessively burdensome payment terms, including but not limited to a liquidated damages provision that is unenforceable as a penalty, the payment of usurious interest, or, if the essential product is to be paid for via loan or through a retail installment contract, providing as security for the loan assets whose value grossly exceeds the pre-disruption price of the essential product. (d) Refusal to Honor Contracted-For Prices. A seller is presumed to use unfair leverage or unconscionable means if the scrutinized sale is to be made pursuant to a contract agreed with the buyer prior to the onset of the abnormal disruption of the market, the buyer is a consumer, and the seller threatens to withhold, or withholds, performance lawfully due under the contract unless the buyer consents to pay more than the existing contract provides the buyer must pay. For purposes of this subdivision (d): (1) A contract is modified "so as to increase the price the contract provides the buyer must pay," if, at the time of the modification, it is more likely than not that the modified contract would cause the buyer to pay more for the essential product than the buyer would pay under the unmodi- fied contract. (2) The conduct specified in this subdivision (d) constitutes unfair leverage or unconscionable means even if the buyer acquiesces to the sell- er's threat to withhold performance, ratifies the change in price, agrees to waive subsequent remedies, could obtain the essential products from an- other source of supply, would not be irreparably harmed by the withhold- ing of performance, or any combination of the foregoing. (3) A seller may rebut the presumption established in this subdivision (d) with evidence that, as provided in 13 N.Y.C.R.R. § 600.9, the demanded increase in the amount charged (i) preserves the margin of profit that the seller received for the same goods and services prior to the abnormal disruption of the market or (ii) is necessary to recover additional costs not within the control of the seller that were imposed on the seller for the goods or services. (e) High Pressure Sales Tactics. A seller uses unfair leverage or uncon- scionable means if, during an abnormal disruption of the market, a seller sells an essential product to a consumer using high-pressure sales tactics, including but not limited to: (1) tactics that materially diminish the buyer's ability to comparison shop or adequately review the terms of the sale agreement, including but not limited to the use or threat of violence, the use of obscene or abusive language, or the physical confinement of the buyer; or, (2) demanding that the buyer not communicate with, or respond to lawful process issued by, the Attorney General or any other law enforce- ment agent or agency; or, (3) any act which would cause the resulting contract of sale to be void on the grounds of undue influence. (f) Unfair Leverage of Market Position. A seller uses unfair leverage or unconscionable means if, during an abnormal disruption of the market, the seller engages in unfair leverage of market position, as provided by 13 N.Y.C.R.R. § 600.5.

In addition to the definitions set forth in , in this rule:

relevant product market consists of products, including but not limited to essential products, that are reasonably interchangeable with the essential product in the scrutinized sale; and

relevant geographic market consists of the areas where buyers can practically turn for supply of the relevant essential product in the scrutinized sale.

Section 600.7. Gross Disparities Between Post-Disruption and Pre- Disruption Price. (a) Gross Disparities in Price from Pre-Disruption Price. During a disruption, the sale of an essential product at a price that is greater than 10% of that essential product's pre-disruption price represents a gross disparity in price for purposes of General Business Law § 396-r(3)(b)(i). (b) Effect of Gross Disparity Threshold on Rebuttal Pursuant to Gen- eral Business Law § 396-r(3)(c). If a gross disparity in price is established pursuant to subdivision (a) of this rule for a scrutinized sale, the seller may rebut the prima facie case with evidence, as provided in 13 N.Y.C.R.R. § 600.9, that the amount of increase in the price of the scrutinized sale necessary to preserve the margin of profit that the defendant seller received for the same essential product, or to recover additional costs not within the control of the seller imposed on the seller for the essential product, is an amount sufficient to cause the remaining disparity between the price of the scrutinized sale and the pre-disruption price to be less than 10%.

In addition to the definitions set forth in 13 NYCRR § 600.1, in this rule:

General Business Law § 396-r applies to all essential products, including new essential products.

During any abnormal disruption of the market for a new essential product, the amount charged for a new essential product (“the scrutinized price”) is presumptively unconscionably excessive pursuant to General Business Law § 396-r(3)(b)(ii), if the scrutinized price is more than 10% greater than the trade area price.

The presumption established in subdivision (c)(1) of this rule may be rebutted with evidence, as provided in 13 NYCRR § 600.9:

If a new essential product has no comparable essential product, a new essential product may have an unconscionably excessive price if the price of the new essential product is unconscionably extreme, or there was an exercise of unfair leverage or unconscionable means, or a combination of both.

Nothing in this rule shall be so construed as to foreclose the court’s determination that an unconscionably excessive price has been charged based on the amount of the excess in price being unconscionably extreme, or by reason of an exercise of unfair leverage or unconscionable means, or a combination of both factors, or to affect a prima facie case made under General Business Law § 396-r(3)(b)(ii) for any essential products other than new essential products.

Section 600.9. Cost and profit rebuttals on showing of gross disparities or excesses in price. (a) Definitions. In addition to the definitions set forth in 13 N.Y.C.R.R. § 600.1, in this rule: (1) The date on which a cost is "accrued or paid" means the first of either (i) the date on which the cost is paid; or, (ii) the date on which (A) all events have occurred that establish the fact of the liability, and (B) the amount of the liability can be determined with reasonable accuracy, and (C) economic performance has occurred; (2) "controller payments" means any transfer of anything of value from the seller or an entity under the seller's control to the seller's direc- tors, officers, partners, members, stockholders, or other persons who own or control the seller (either in whole or in part), other than payments the seller or seller-controlled entity was obliged to make pursuant to a contract made in the usual course of business prior to the onset of the abnormal market disruption; (3) "labor costs" means the cost of compensation, whether in the form of money or benefits, for labor necessary for the provision of the es- sential product, including compensation paid to a natural person or paid to the employer of a natural person but excluding controller payments; (4) "regulatory costs" means any costs necessary for the lawful pro- vision of the essential product, including but not limited to government taxes or fees; and; (5) "unit" means the smallest quantity of the good or service the seller sells in the usual course of business. (b) Statutory Costs. The phrase "additional costs not within the control of the defendant" (hereafter "statutory costs"), whether used in General Business Law § 396-r or any regulation promulgated thereunder, means costs, other than excluded costs, imposed on the seller for the scrutinized sale not imposed on the seller for the benchmark sale. For the purposes of this rule: (1) A cost is "imposed on the seller for the scrutinized sale" when the cost is directly attributable to the production, purchase, storage, transpor- tation, distribution, and sale (collectively, "provision") of the essential product sold in the scrutinized sale, (2) A cost is "directly attributable" to the provision of an essential product if it is necessary for the provision of the essential product and either: (i) exclusively identified with the provision of that essential prod- uct ("exclusive costs"); or, (ii) that essential product's proportionate share of a relevant overhead cost. (3) A "relevant overhead cost" is a cost, including but not limited to a capital cost, that is necessary for the provision of the essential product but is not exclusively identified with the provision of the essential product. (4) A "proportionate share" of a relevant overhead cost is the share of each relevant overhead cost the seller would attribute to the essential product when evaluating that cost in the usual course of business, or, if the seller did not perform such evaluations in the usual course of business, the share of each relevant overhead cost that would be attributed to the es- sential product under whichever of the below attribution methods the seller establishes would be the most fair, accurate, and practical for the seller to apply in the usual course of business (applying, in all cases, the same method of cost allocation for both benchmark and scrutinized sale): (i) the exclusive costs of the essential product as a percentage of the total exclusive costs of all of the seller's goods or services sharing that relevant overhead cost on the date of sale (whether or not such goods or services are sold on the date of the sale); (ii) the price of the essential product as a percentage of combined price of all the seller's goods or services sharing that relevant overhead cost on the date of sale (whether or not such goods or services are sold on the date of sale); or, (iii) some other method of attribution the seller shows is more fair, accurate, and practical than either (i) or (ii). (5) A cost is "necessary" to the provision of an essential product if (i) it is a labor or regulatory cost; or (ii) the provision of the essential product could not have lawfully and prudently occurred but for the cost; or (iii) the seller possessed a reasonable belief at the time the cost was incurred that the provision of the essential product could not have lawfully and prudently occurred but for the cost. (c) Excluded Costs. Statutory costs do not include the following ("excluded costs"): (1) any reported costs that do not reflect the transfer of assets in pos- session of the seller, or an entity the seller owns or controls, to a third party in an arms-length transaction, including: (i) a decline in sales of other goods or services, (ii) internal charges levied from one part of a seller to another part of a seller, or from one person owned or controlled by the seller to another person owned or controlled by the seller, (iii) opportunity costs, or expressions of costs as present replace- ment value not reflected by actual purchases of replacements pursuant to subdivision (d) of this rule; (2) controller payments; (3) projected, planned, or speculative future costs, prior to the mo- ment at which the cost is accrued or paid; or, (4) statutory costs already recovered via price increases, whether from the same essential product or other goods and services. (d) Costs Incurred in Acquiring Replacements for Essential Products in the Scrutinized Sale. Costs for a given unit of a good or service that otherwise qualify as statutory costs may include the additional per-unit 31 [] Rule Making Activities cost accrued or paid by the seller in the provision of a replacement for the essential product in the scrutinized sale. If the additional cost of the replacement of the essential product in the scrutinized sale is used to rebut a prima facie case with respect to another unit or provision of the same es- sential product, that amount of increase must not be applied to rebut the prima facie case for the price of any essential product other than the es- sential product the prima facie case of which was rebutted by the showing of that increased cost. (e) Index Prices. A seller's use of an index price to price their goods sold or value their inventory, or the existence of a customary or industry practice of employing an external index for pricing, shall not establish that an increase in the index price reflects an increase in seller's statutory costs absent sufficient evidence that the seller in fact paid index prices to purchase replacements pursuant to subdivision (d) of this rule. (f) Fungible Commodities. Where essential products are stored prior to sale in such a fashion that it is not feasible to determine the price at which any unit of the good was purchased, a seller may determine the price at which a given unit of the good was purchased for purposes of this rule by assuming that the goods produced or acquired first are the first to be sold ("first in, first out"). (g) Excluded Costs and Profit Margin Maintenance Defense. A seller's "profit" for an essential product for purposes of rebutting the prima facie case pursuant to General Business Law § 396-r(3)(c) shall mean the sell- er's gross income per unit minus statutory costs per unit. A seller's "margin of profit" is the proportion of income per unit that is profit.

The provisions of this Part shall be severable, and if any item, subclause, clause, sentence, subparagraph, paragraph, subdivision, section, or Subpart of this Part, or the applicability thereof to any person or circumstances, shall be adjudged by any court of competent jurisdiction to be invalid, such judgment shall not affect, impair or invalidate the remainder thereof, nor the application thereof, but shall be confined in its operation to the item, subclause, clause, sentence, subparagraph, paragraph, subdivision, section, or Subpart thereof, or to the person or circumstance directly involved in the controversy in which such judgment shall have been rendered.