How to defend oneself from unfair competition.
Unfair competition includes any kind of behaviour that is not necessarily illegal and is adopted by a person or a company, usually a competitor, to acquire unfair advantage over competitors.
The increasing competitiveness of markets, the rationale of assigning contracts based on lower prices and the difficult situation in Italy all prompt some companies to adopt unfair practices, affecting competition and, in some cases, even practices that are harmful to consumers.
The regulations on the detection of unfair competition are contained in articles 2598-2061 of the Civil Code. Company investigations for the offence of unfair competition are aimed at proving incidents of unfair competition and obtaining evidence lawfully that is useful to assert one’s right, in compliance with Italian legislation, but also as regards European Union regulations.
The ultimate goal is to ascertain incidents of unfair competition and to inhibit their continuation through appropriate measures designed to eliminate their effects.
Company investigations within the area of unfair competition are essential to provide documentary evidence that is valid in court and which prominently contribute to winning the lawsuit.
Unfair competition occurs in different ways. Here are some examples:
- “Customer diversion” through false information.
- Former employees contacting the company’s customers.
- Dumping practices.
- Professional infidelity of partners or employees.
The framework outlined by the Civil Code, above all prohibits two different types of unfair competition: acts of typical unfair competition (acts leading to confusion, denigration and bragging) and acts of atypical unfair competition. Let us further investigate “typical” unfair competition.
- Acts of denigration, performed by disseminating news and/or malicious remarks on a competitor’s products and activities, the so-called damages to one’s professional reputation.
- Acts of bragging, which consist in misappropriating the merits and quality related to the activities and products of others.
An example of “typical” unfair competition is exaggerated or superlative advertising, aimed at conveying the idea that one’s own product is the only one that has the biased qualities or strengths, which are implicitly denied to others.
The “atypical” category of acts of unfair competition includes “any other means that do not comply with the principles of fairness and which are suitable to damage someone else’s company”. Consequently, there is a uniform classification of atypical acts of unfair competition, although, over the years, jurisprudence has allowed the outlining of certain essential traits and more common behaviour.
Examples of “atypical” unfair competition:
- parasitic competition, i.e. the systematic, continuous and prolonged competition over time by an entrepreneur to a competitor’s market initiatives;
- industrial espionage i.e. the behaviour of an entrepreneur who illicitly (e.g. by corrupting an official) obtains secret or confidential information concerning a competitor’s company;
- abuse of monopoly power, such as boycotting, carried out by the company in a dominant position or by several firms which have agreed among themselves to carry out this action;
- transfer of employees by offering a higher salary or more suitable working conditions to the best workers in the company which one wants to damage;
- stealing the target audience and customers by using inappropriate means.
These acts are examples of unfair competition and are forbidden and punished, even if they are performed without intent or fault and without them causing real damage to competitors: the potential damage is sufficient. If these acts are performed, sanctions are imposed to prevent the continuation of these acts and the misbehaving company is obliged to remove the effects that have been caused. In the presence of intent or guilt and a current pecuniary damage, one is entitled to compensation from the person who has caused the damage.
A thorough investigation at every level of the company is needed, especially of the people who are involved in the decision-making process: shareholders, managers, external consultants, suppliers, any company collaborators or affiliated companies.
Unfair Competition by a former employee. Inappropriate behaviour and laws.
Companies should pay particular attention to “transitional” situations.
The movement of “qualified” former employees from one company to the competitor of the former employer, or setting up one’s own business in the sector of the former employer, working independently “by having VAT identification number” (perhaps in the name of one’s spouse or relatives) or as partners (sleeping partners and real partners) of companies in which they have a holding and which are sometimes established specifically for this purpose.
Telejnform’s investigation activity in cases of unfair competition and professional infidelity must be considered as a strong deterrent and way of countering the phenomenon that prevents or at least complicates all the activities which may damage the company and consequently the market.CONTAct us