The conditions of unfair competition

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The conditions of unfair competition

The conditions of unfair competition

The discipline of competition, at least in the modern era, was born with economic liberalism, according to which freedom of access to the market and competition are the two fundamental elements for obtaining fair prices, better quality of products or services and therefore, at least in the theory, economic well-being.

The main and most realistic aim was always – and still is – on the one hand to reward more virtuous subjects; on the other hand, to guarantee consumers the possibility to choose with knowledge and safety among the best products or services on the market.

The reference legislation

Without going too far into the jungle of rules and judgements that have contributed to regulating the matter of competition in our legal system, it is important to know that the most frequent cases in the field of unfair competition between companies have been identified by the jurisprudence in article 2598 of the Code civil, which in turn finds the “source of inspiration” in art. 10 bis of the Hague Convention of 6/11/1925.

Here we will not dwell on the relationship between these two rules – both in force, although many jurists believe there is an antinomy – or on the most important cases provided for by art. 2598 of the Italian Civil Code – subject of the next article – but on the conditions that determine unfair competition between two or more market players.

The product and territorial profiles of the competition relationship

For the existence of unfair competition, it is necessary that the two subjects are – effectively – in competition with each other, that they offer goods or services suitable for satisfying identical or similar needs on the same market.

This case is easily identifiable when two companies offer identical goods/services and operate in the same territory.

On the other hand, it is more complicated to ascertain the competitive relationship when different products are offered and two companies (or entrepreneurs) do not operate in the same territory: think of the extreme case of two companies, one in Italy and the other in New Zealand, which produce one fizzy drinks and the other fruit juices.

In these cases, according to the majority doctrine, since both products belong to the same product category (soft drinks), a competitive relationship would exist if it is, in practice (i.e.: obtainable from rules of experience), merely potential, therefore considered probable in a given future.

Therefore, taking the example of the two companies located one in Italy and the other in New Zealand, if both are small, with customers located in their own region, there will be no competitive relationship, even if one of the two begins to supply the same products as the other. Conversely, if one of them is known internationally, a potential competitive relationship will be created with the other.

Companies operating at different levels

The most controversial cases, however, are those that see two companies dealing with similar products, but at different economic levels (for example, a manufacturer and a distributor: the first is aimed at wholesalers, the second at consumers).

In this case, recent jurisprudence believes that a competitive relationship exists, as the (unfair) activity of one company could mislead customers who would have turned to the other’s products. Think of a trader who acts in the interest of another producer, as opposed to the one who suffers the unfair act.

The (unfair) acts of third parties

Finally, it is important to understand whether the acts put in place by persons connected to the company or the entrepreneur by an employment, collaboration or other relationship, are directly attributable to them and, therefore, constitute an alleged liability for unfair competition.

If, on the one hand, the traceability to the entrepreneur of the acts put in place by his employees in the performance of their duties is undoubted, the same cannot be affirmed with regard to those of his auxiliaries or independent collaborators.

The dominant jurisprudence believes that, in these cases, in order for the company to be liable, the (unfair) act must have been carried out by anyone who is in a relationship with it such as to qualify the conduct as if to give her an advantage, to the detriment of another entrepreneur.

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