Unfair Competition

Under unfair competition all activities are understood to contradict the principles of morality and are simply unfair and therefore prohibited. Everything you need to know about unfair competition, its forms and also the consequences, we summarize for you in this article.

Definition – Unfair Competition

Competition between companies is the basis of any functioning economy and a market economy basis. There are certain rules to ensure that this competition between companies is fair. These define which behavior is prohibited by law even between competitors. The Unfair Competition Law, or UCL for short via abbreviationfinder, is intended to ensure that all market participants behave fairly.

What exactly is unfair competition? Unfair competition is to be defined in such a way that it concerns all activities that offend against common decency and thus do not correspond to how a reasonable and just thinking trader would behave.

Unfair competition law

As mentioned, there is a separate law for the entire topic, the UCL (legal matter : competition law). It is particularly relevant that it specifies which behavior is contrary to good morals.
According to §4 UCL, this includes, for example:

  • Aggressive sales methods
  • Utilization of external performance results
  • Blackening of competitors
  • Imitation
  • Tempt to break the contract
  • Comparative advertising (see §6 UCL)
  • Misleading and untrue information on the goods

Apart from these points mentioned, which can be found again and again, other points are listed in the law. This also includes, for example, very general formulations, such as the hindrance to the sales of the competitor or business defamation, as well as the systematic poaching of workers.

Forms of unfair competition

So you can already see that the term “unfair” is quite broad and, above all, leaves room for interpretation. While some things seem obvious, such as bribery or the unreasonable harassment of potential customers, there are also other critical points.

The systematic poaching of people can be particularly significant in companies that operate in knowledge-driven industries.

Imitation, on the other hand, is conceivable across all industries. It is an equally relevant problem for those who may have developed a special product through long, hard work and then struggle with free riders. In precisely these situations, the UCL intervenes to ensure that competition does exist, but that it is also fair. Also dumping is prohibited by law.

Comparative advertising also treads in a similar notch. Put simply, it is not allowed to directly compare your own product with competing products in advertising – and then perhaps to convey incomplete information about the products in order to ensure that your own product shines in a better light.

When it comes to the issue of unreasonable nuisance to consumers, the General Data Protection Regulation has also recently come into play .

Legal situation – conclusion

The legal situation can be summarized simply as follows: As an entrepreneur, you should develop your own products and behave fairly towards everyone – your target group and also your competitors – when marketing them . Many of the behaviors described in the law are just plain common sense. Young companies in particular often want to do intensive and aggressive marketing in order to establish themselves quickly. This is understandable, but must always comply with the legal framework.

Unfair Competition – Claims and Penalties

Anyone who is affected by unfair competition can take action directly. On the one hand, this is possible to the extent that you can force the wrongly behaving company to cease and on the other hand you can also assert corresponding claims for damages if necessary. This also goes hand in hand with claims for removal, which, in simple terms, means that not only are unfair activities no longer allowed, but also existing ones must be eliminated as well as possible. This is the case, for example, when we think of the aforementioned example of comparative advertising.

Apart from this, there are also rights to information and, if necessary, even claims to skimming off profits. These levy claims have comparatively little relevance in practice. In extreme cases, however, it would be conceivable that profits generated through unfair measures – as the name suggests – can be skimmed off completely in order to reflect the fair market situation again.

If you as an entrepreneur are affected, you can assert your claims directly. If you want to make such allegations, you must of course be able to prove them. It cannot be the case that you want to entangle other competitors in legal proceedings simply by making accusations. You need clear evidence of why you suffered damage and how exactly the law was broken.
Before you take legal action, you should therefore precisely document the behavior and the resulting consequences in order to be able to substantiate your allegations accordingly.
Anyone who is affected as a customer can contact consumer advice centers. They can then also assert claims collectively so that, for example, a single private person does not have to take action against a group.

Report unfair competition – contact point

The number one contact point for private individuals are the consumer advice centers . This collects all cases and takes appropriate measures to correct companies. The big advantage for consumers is that they practically don’t have to worry about anything.

Anyone who makes a complaint to the competition headquarters should make sure that it cannot be processed anonymously. In addition, the written form is recommended. Again, it is pointed out that the allegations must be proven. Accordingly, you have to support your complaint as well as possible with verifiable facts.

If you, as an entrepreneur, are affected by unfair competition, you can of course also seek a direct conversation with your competitors who, in your opinion, are not behaving correctly before reporting. You can make them aware of the legal situation and make it clear which activities you will not tolerate and the consequences if the behavior is not adjusted accordingly. If this access is not fruitful, the legal path is still open to you to enforce your rights and protect your company.

Unfair Competition