Unfair competition
Encyclopedia
Unfair competition in a sense means that the competitors compete on unequal terms, because favourable or disadvantageous conditions are applied to some competitors but not to others; or that the actions of some competitors actively harm the position of others with respect to their ability to compete on equal and fair terms. It contrasts with fair competition
, in which the same rules and conditions are applied to all participants, and the competitive action of some does not harm the ability of others to compete. Often, unfair competition means that the gains of some participants are conditional on the losses of others, when the gains are made in ways which are illegitimate or unjust.
if a participant in some way deviates from the rules of the game, or has privileged access to important information or resources that should in principle be available to all participants in the game, or none of them. Participation in the game normally assumes that participants have an equal ability to compete in relevant respects, or are able to acquire it during the game. In sports, for example, a heavyweight boxer is not usually played against a lightweight boxer, and the secret use of drugs to enhance sports performance is usually prohibited in competitions.
.
refers to a number of areas of law involving acts by one competitor or group of competitors which harm another in the field, and which may give rise to criminal offenses
and civil causes of action
. The most common actions falling under the banner of unfair competition include:
Various unfair business practices
such as fraud
, misrepresentation
, and unconscionable
contract
s may be considered unfair competition, if they give one competitor an advantage over others. In the European Union
, each member state must regulate unfair business practices in accordance with the principles laid down in the Unfair Commercial Practices Directive, subject to transitional periods. (See also trade regulation
law.)
Competition
Competition is a contest between individuals, groups, animals, etc. for territory, a niche, or a location of resources. It arises whenever two and only two strive for a goal which cannot be shared. Competition occurs naturally between living organisms which co-exist in the same environment. For...
, in which the same rules and conditions are applied to all participants, and the competitive action of some does not harm the ability of others to compete. Often, unfair competition means that the gains of some participants are conditional on the losses of others, when the gains are made in ways which are illegitimate or unjust.
Principles of fair competition
To an important extent, the principles of fair competition in the business world are defined by law, and therefore unfair competition may well be unlawful or criminal. But because the forms of competition can change continually and new forms of competition may arise, competition may be unfair, but not illegal, at least not until a legal rule is explicitly made to prohibit it. The exact meaning of unfair advantage or harm caused in business competition may be vague or in dispute, in particular if different competitors promote different interpretations which suit their own interests. It may be difficult to define what it would mean to compete on equal terms, and the operative terms of competition that exist in reality may be challenged only when a participant is seriously disadvantaged by them. Often "equal terms" is defined as an "equal opportunity" or "equal chance" to compete.Sport
Unfair competition may occur in gamesGame
A game is structured playing, usually undertaken for enjoyment and sometimes used as an educational tool. Games are distinct from work, which is usually carried out for remuneration, and from art, which is more often an expression of aesthetic or ideological elements...
if a participant in some way deviates from the rules of the game, or has privileged access to important information or resources that should in principle be available to all participants in the game, or none of them. Participation in the game normally assumes that participants have an equal ability to compete in relevant respects, or are able to acquire it during the game. In sports, for example, a heavyweight boxer is not usually played against a lightweight boxer, and the secret use of drugs to enhance sports performance is usually prohibited in competitions.
Cooperation
Sometimes unfair competition is also interpreted to mean that the existence of competition as such is unfair or unjust. The argument is then that there should not be any competition. In this case, the alternative to unfair competition is not fair competition, but no competition or cooperationCooperation
Cooperation or co-operation is the process of working or acting together. In its simplest form it involves things working in harmony, side by side, while in its more complicated forms, it can involve something as complex as the inner workings of a human being or even the social patterns of a...
.
Commercial law
Unfair competition in commercial lawCommercial law
Commercial law is the body of law that governs business and commercial transactions...
refers to a number of areas of law involving acts by one competitor or group of competitors which harm another in the field, and which may give rise to criminal offenses
Crime
Crime is the breach of rules or laws for which some governing authority can ultimately prescribe a conviction...
and civil causes of action
Cause of action
In the law, a cause of action is a set of facts sufficient to justify a right to sue to obtain money, property, or the enforcement of a right against another party. The term also refers to the legal theory upon which a plaintiff brings suit...
. The most common actions falling under the banner of unfair competition include:
- Matters pertaining to antitrustAntitrustThe United States antitrust law is a body of laws that prohibits anti-competitive behavior and unfair business practices. Antitrust laws are intended to encourage competition in the marketplace. These competition laws make illegal certain practices deemed to hurt businesses or consumers or both,...
law, known in the European UnionEuropean UnionThe European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
as competition lawCompetition lawCompetition law, known in the United States as antitrust law, is law that promotes or maintains market competition by regulating anti-competitive conduct by companies....
. Antitrust violations constituting unfair competition occur when one competitor attempts to force others out of the market (or prevent others from entering the market) through tactics such as predatory pricingPredatory pricingIn business and economics, predatory pricing is the practice of selling a product or service at a very low price, intending to drive competitors out of the market, or create barriers to entry for potential new competitors. If competitors or potential competitors cannot sustain equal or lower prices...
or obtaining exclusive purchase rights to raw materials needed to make a competing product. - Trademark infringementTrademark infringementTrademark infringement is a violation of the exclusive rights attaching to a trademark without the authorization of the trademark owner or any licensees...
and passing offPassing offPassing off is a common law tort which can be used to enforce unregistered trademark rights. The tort of passing off protects the goodwill of a trader from a misrepresentation that causes damage to goodwill....
, which occur when the maker of a product uses a name, logo, or other identifying characteristics to deceive consumers into thinking that they are buying the product of a competitor. In the United StatesUnited StatesThe United States of America is a federal constitutional republic comprising fifty states and a federal district...
, this form of unfair competition is prohibited under the common lawCommon lawCommon law is law developed by judges through decisions of courts and similar tribunals rather than through legislative statutes or executive branch action...
and by state statutes, and governed at the federal level by the Lanham ActLanham ActThe Lanham Act is a piece of legislation that contains the federal statutes of trademark law in the United States. The Act prohibits a number of activities, including trademark infringement, trademark dilution, and false advertising.-History:Named for Representative Fritz G...
. - MisappropriationMisappropriationIn law, misappropriation is the intentional, illegal use of the property or funds of another person for one's own use or other unauthorized purpose, particularly by a public official, a trustee of a trust, an executor or administrator of a dead person's estate or by any person with a responsibility...
of trade secretTrade secretA trade secret is a formula, practice, process, design, instrument, pattern, or compilation of information which is not generally known or reasonably ascertainable, by which a business can obtain an economic advantage over competitors or customers...
s, which occurs when one competitor uses espionageEspionageEspionage or spying involves an individual obtaining information that is considered secret or confidential without the permission of the holder of the information. Espionage is inherently clandestine, lest the legitimate holder of the information change plans or take other countermeasures once it...
, briberyBriberyBribery, a form of corruption, is an act implying money or gift giving that alters the behavior of the recipient. Bribery constitutes a crime and is defined by Black's Law Dictionary as the offering, giving, receiving, or soliciting of any item of value to influence the actions of an official or...
, or outright theftTheftIn common usage, theft is the illegal taking of another person's property without that person's permission or consent. The word is also used as an informal shorthand term for some crimes against property, such as burglary, embezzlement, larceny, looting, robbery, shoplifting and fraud...
to obtain economically advantageous information in the possession of another. In the United States, this type of activity is forbidden by the Uniform Trade Secrets ActUniform Trade Secrets ActThe Uniform Trade Secrets Act , published by the Uniform Law Commission 1979 and amended in 1985, was a uniform act promulgated in an effort to provide legal framework for improved trade secret protection for industry in all 50 states within the United States of America. The U.T.S.A...
and the Economic Espionage Act of 1996Economic Espionage Act of 1996The Economic Espionage Act of 1996 was a 6 title Act of Congress dealing with a wide range of issues, including not only industrial espionage , but the insanity defense, the Boys & Girls Clubs of America, requirements for presentence investigation reports, and the United...
. - Trade libel, the spreading of false information about the quality or characteristics of a competitor's products, is prohibited at common law.
- Tortious interferenceTortious interferenceTortious interference, also known as intentional interference with contractual relations, in the common law of tort, occurs when a person intentionally damages the plaintiff's contractual or other business relationships...
, which occurs when one competitor convinces a party having a relationship with another competitor to breach a contract with, or duty to, the other competitor is also prohibited at common law.
Various unfair business practices
Unfair business practices
Unfair business practices encompass fraud, misrepresentation, and oppressive or unconscionable acts or practices by business, often against consumers and are prohibited by law in many countries. For instance, in the European Union, each member state must regulate unfair business practices in...
such as fraud
Fraud
In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation...
, misrepresentation
Misrepresentation
Misrepresentation is a contract law concept. It means a false statement of fact made by one party to another party, which has the effect of inducing that party into the contract. For example, under certain circumstances, false statements or promises made by a seller of goods regarding the quality...
, and unconscionable
Unconscionability
Unconscionability is a term used in contract law to describe a defense against the enforcement of a contract based on the presence of terms that are excessively unfair to one party...
contract
Contract
A contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...
s may be considered unfair competition, if they give one competitor an advantage over others. In the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
, each member state must regulate unfair business practices in accordance with the principles laid down in the Unfair Commercial Practices Directive, subject to transitional periods. (See also trade regulation
Trade regulation
Trade regulation is a field of law, often bracketed with antitrust , including government regulation of unfair methods of competition and unfair or deceptive business acts or practices. Antitrust law is often considered a subset of trade regulation law...
law.)