- What is unfair competition?
- Explain the need and the legal basis for protection .
- Highlight some examples of unfair competition.
You will get these three answers from this article.
Unfair competition
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.
What is unfair competition? Explain the Need & Legal basis for Protection Examples
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.
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 cooperation.
Need for protection
Unfair competition in commercial law 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:
• Matters pertaining to antitrust law, known in the European Union as competition law. 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 pricing or obtaining exclusive purchase rights to raw materials needed to make a competing product.
• Trademark infringement and passing off, 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 States, this form of unfair competition is prohibited under the common law and by state statutes, and governed at the federal level by the Lanham Act.
• Misappropriation of trade secrets, which occurs when one competitor uses espionage, bribery, or outright theft 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 Act and the Economic Espionage Act of 1996.
• Trade libel, the spreading of false information about the quality or characteristics of a competitor’s products, is prohibited at common law.
• Tortious interference, 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 such as fraud, misrepresentation, and unconscionable contracts 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
Examples
• Trademark infringement – such as using the Coca-Cola® trademark on a soda container manufactured by a competing beverage maker.
• False advertising – such as making false claims about a drug’s abilities to promote weight loss.
• Unauthorized substitution of one brand of goods for another – such as substituting a low-cost handbag for a designer handbag.
• Misappropriation of trade secrets – such as stealing a competitor’s soft drink formula.
• False representation of products or services – such as exaggerating a software program’s spellcheck capabilities.