IP LAW & PRACTICE Articles Unfair competition law

Unfair competition law

What is the aim of prohibiting unfair competition?

A: In a free open market like the one of Greece being a part of the EU Internal Market and for the sake of its functionality, it is vital that limits are set to the practices of manufacturers and merchants so that competition among them remains fair. The primary legislative aim is guided by the principle of qualitative competition in terms of best possible offer. In other words, the preference of consumers must be the result of quality goods offered and services rendered in combination with an optimal price level. Competitors should be prohibited to use unfair practices such as misleading behavior, defamatory advertising, breach of statutory or contractual obligations and the like in their eager attempt to maximize their profit at all costs.

Which act of competition is considered unfair according to the general clause of art. 1 Law 146/1914?

A: Market behavior in all commercial, industrial and agricultural transactions, practiced for competition purposes and violating prevailing business ethics (bonos mores) is illegal and therefore is prohibited by virtue of art. 1 Law 146/1914.

What are the substantial requirements for a market behavior to be considered unfair competition under the general clause of art. 1 Law 146/1914?

Law against unfair competition provides for the following requirements:

a) the market behavior is practiced in the course of commercial, manufacturing and/or agricultural transactions;

b) the enterprise suffering under unfair competition from another enterprise, must be in a competitive relationship to the latter. Operating in the same relevant market under illicit competitive conditions is interpreted broadly by the courts. Furthermore, competitive relationship may be either present or even potential; 

c) the market behavior of an enterprise must be purported to function in a competitive manner vis-à-vis the competitor, without necessarily intending to cause direct harm to the latter but rather to enhance profits and/or market share of the former;

d) the market behavior will be qualified as unfair competition provided that it violates market ethics. It is always a matter of interpretation by the court taking into account all circumstances of a specific case in order to determine which market behavior at a certain point of time trespasses the admissible line of honest commercial practices in the relevant market. In this context the court will have to assess the act(s), the intensity, the length and the methods used against competitors in order to conclude as to whether such a behavior may negatively affect the proper functioning - under fair conditions - of the relevant market.

Which specific market behaviors may be considered as acts of unfair competition under Law 146/1914?

Case law has interpreted art 1 of Law 146/1914 in a connection with a variety of market practices, the most important categories of which are the following:

a) illicit solicitation of customers; attracting customers may constitute unfair competition when, for example, prizes or gifts are offered to the consumers who buy products the value of which is obviously disproportionate to the value of the accompanying or announced gifts or prizes; unsolicited e-mails or phone calls without explicit prior consent of the consumer; indirect promotional activities or practices that could be interpreted as indirect but effective product placement could also fall into the scope of application of the general prohibition clause as above;

b) exploitation of competitor’s labor, fame and organizational structure. All these practices can only be found illicit on a case by case examination of their circumstances.

For instance, it is usual and legal in a competitive market to produce and circulate goods which are similar to those of the competitors, like fashion clothing or jewelry or software. Slavish imitation of these assets, though, which may be unprotected through a patent or a design or a trademark, constitutes an act of unfair competition.

Engaging an employee who previously worked for a competitor, is legal. If, however, the new employer offered irresistible incentives to this employee in order to acquire him, and through this engagement obtained illicit access to valuable information as to the organization, internal structure and ideas of the competitor, this act is considered unfair competition that is illegal and therefore prohibited;

c) hindrance of competitors to operate in the market is another form of unfair competition and includes behaviors like boycotting or offering unreasonably low price levels aiming at commercially exhausting the competitor and pushing him out of the relevant market;

d) violation of statutory and/or contractual obligations are, under circumstances, acts of unfair competition. For instance, it was found illicit for a merchant selling bicycles to operate opposite a competitor’s shop and offer same prices but without possessing the necessary administrative permit and without paying the legal contributions to the competent social security funds, thus obtaining a competitive advantage over the claimant.

How are commercial and industrial secrets protected by unfair competition law?

A: Commercial and industrial secrets are usually of utmost importance for the prosperity or even the survival of a business entity. Such secrets concern for instance technical know-how, chemical formulas that are not protected by a patent, lists of customers and service providers, pricing policies, promotional practicalities, niche market observations concerning key products that enhance drastically the business profitability, and the like.

The unfair competition law provides for criminal sanctions against an employee who, during his employment contract, without the necessary authorization and with the intent to act in an illicitly competitive manner against his employer, discloses invaluable commercial and/or industrial secrets to a competitor or urges a third person to do so. This behavior is usually not illegal if the employer no longer engages the employee and his previous employment contract did not provide for post-contractual confidentiality with respect to delicate information of the enterprise obtained by him during the term of his employment. Contrary to that, it is considered an act of prohibited unfair competition if the employee has deliberately caused the termination of his employment contract for him to exploit the collected commercial and/or industrial secrets for his own profit.

What are the claims that an enterprise may judicially raise against a competitor for unfair competition?

In the frame of an ordinary civil action, the court may order the illicitly operating competitor cumulatively or alternatively to:

a) stop his commercial practice;

b) refrain from repeating such practice in the future;

c) remunerate the plaintiff for material and/or moral damages suffered due to the unfair competitive behavior;

d) have a summary of the judicial order be published in the press at the expenses of the defendant.

What measures can be taken against unfair market behavior of a competitor in case of urgency?

A petition for interlocutory injunction proceeding may be filed in order for the court to issue a preliminary decision ordering measures as above (ordinary civil action), with the exception of compensation claims. Such proceeding may in case of judicial workload take several weeks or even a few months to be adjudicated and be decided upon. In extremely urgent cases however, a petition for an interim order may be filed before the reference judge together with a petition for interlocutory injunction proceeding. Such an interim order is granted within 1-2 days only if upon an oral hearing there seems to be an imminent danger for deterioration of the plaintiff’s legal interests due to an obviously illicit behavior of the defendant.

Are there prescription terms to be attended by the enterprise suffering under unfair competition?

A civil action against unfair competition acts must be filed within 18 months as of the plaintiff’s obtaining knowledge of the infringer’s identity and the infringing act(s).

In any case, such civil action must be filed within a term of 5 years as of the first act of infringement. Otherwise, raising cease and desist claims will be rejected as prescribed due to late filing or as abusive claims due to elapsing of a longer period of time that may have reasonably evoked the impression to the defendant that the claimant does not consider the behavior of the former as infringing his legal interests.

 

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