Unfair Competition: General Clause and Specific Acts
A) Concept of Unfair Competition: The General Clause
The Unfair Competition Directive (UCD) employs a general clause to define unfair acts (Art. 5) and then outlines specific examples. Jurisdictions typically establish a general clause prohibiting unfair competition followed by specific prohibited conducts. The UCD adopts this approach, deeming behavior objectively contrary to good faith as unfair. To strengthen this general clause, Law 3/91 considers any market conduct promoting one’s own or a third party’s services as unfair competition if it objectively contravenes good faith (Art. 2-5).
Two conditions define unfair competition:
- The act occurred in the market.
- The act had competitive purposes.
Key points to note:
- The law prohibits unfair competition to protect market participants’ interests (Art. 1).
- Market operators, including artisans, farmers, and professionals, are subject to the law (Art. 3.1).
- A competitive relationship between the active and passive subjects of unfair competition is not required (Art. 3.2).
- Unfairness is assessed objectively against good faith, expecting proper conduct from all market participants (Art. 5).
B) Specific Acts of Unfair Competition
The law provides specific examples of unfair competition, although not an exhaustive list. These acts can be categorized as follows:
Acts Against a Specific Competitor
- Denigration: Making and disseminating false statements about a competitor’s activity, benefits, or business relationships, unless accurate, true, and relevant (Art. 9).
- Public Comparison: Comparing one’s own or another’s occupation, benefits, or establishment with a third party for non-similar or irrelevant purposes (Art. 10.1).
- Imitation of Benefits and Initiatives: Imitating a third party’s benefits or initiatives, leading consumers to associate them with the imitator or abusing the third party’s reputation or efforts (Art. 11).
- Unfair Advantage: Benefiting from the reputation acquired by another in the market (Art. 12).
- Violation of Trade Secrets: Illegally obtaining another person’s industrial or professional secrets (Art. 13).
- Inducement: Inducing workers, suppliers, or customers to breach contracts involving trade secrets or business exploitation.
Acts Contrary to Good Market Performance
- Creating confusion with the activity, benefits, or establishment of others (Art. 6).
- Deceiving or misleading through incorrect or false information (Art. 7).
- Offering gifts to induce consumers into contracts (Art. 8).
- Gaining competitive advantage through illegal means (Art. 15).
- Unjustified discrimination against consumers (Art. 16).
- Consistently selling below purchase price to mislead consumers about other product prices in the same establishment.
Repression of Unfair Competition (Art. 18)
- Declaration of Unfairness: Recognizing an act as unfair and unlawful.
- Injunction: Prohibiting the continuation or implementation of an unfair act.
- Removal of Effects: Eliminating the effects of an unfair act.
- Corrective Action: Rectifying misleading information or denigrating statements.
- Damages: Compensating for damages caused by unfair competition with proven intent.
- Unjust Enrichment: Applicable only if the act infringes an exclusive right or similar economic content (Art. 18.6).
Any person whose economic interests are directly harmed or threatened by unfair competition is entitled to the actions described in Art. 18, points 1-5.
Prescription
- One year from when the act could have been exercised and the person performing the act was known.
- Three years from the date of the act.