Topic 2: Unfair Competition

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What was one main consequence of the French Revolution on economic activities?

Establishment of strict competition regulations

Implementation of government-controlled pricing

Restriction of enterprise to guild members

Freedom for any citizen to start an economic activity (correct)

What type of conduct is regulated under unfair competition law?

Fair pricing strategies

Competitors meeting incorrect supply standards

Competitive behaviors endorsed by industry leaders

Commercial practices failing to meet correctness standards (correct)

Which of the following directives pertains specifically to unfair commercial practices in the European Union?

Directive 34/1988

Directive 2005/29/CE (correct)

Directive 2019/2161

Directive 2006/114/CE

What was enacted by France and Germany in relation to unfair competition?

Regulation requiring correctness in competition Signup and view all the answers

What is the purpose of Ley 3/1991 de competencia desleal in Spain?

To address unfair commercial practices Signup and view all the answers

Which of the following practices is NOT considered unfair according to Art. 17.2?

Offering lower acquisition prices without misleading clients Signup and view all the answers

What type of practices are categorized as aggressive under arts. 28-31?

Forceful sales techniques Signup and view all the answers

Which article outlines actions for infringement of Ley 3/1991?

Art. 32 Signup and view all the answers

Under the General Advertising Act, which type of advertising is deemed unlawful?

Advertising that uses deceptive techniques Signup and view all the answers

What is the primary focus of Art. 3 in Ley 34/1988?

Definition and examples of illegal advertising Signup and view all the answers

Which of the following is NOT classified as a misleading practice under the regulations?

Providing accurate descriptions of products Signup and view all the answers

Which action is aimed at correcting misleading or incorrect information according to Art. 32?

Acción de rectificación Signup and view all the answers

What is required for a plaintiff's legal standing under Art. 33?

Establishment of direct harm from unfair competition Signup and view all the answers

What is one of the specific prohibited conducts under Article 5-18 of the Ley 3/1991 de competencia desleal?

B2B unfair acts Signup and view all the answers

Which of the following standards does NOT fall under the General Clause of the Ley 3/1991 de competencia desleal?

Injury to competitors Signup and view all the answers

What enforcement actions are specified for Ley 3/1991 de competencia desleal?

By commercial courts and judicial review Signup and view all the answers

Which article addresses actions related to prohibited conducts under the Ley 3/1991 de competencia desleal?

Articles 32-36 Signup and view all the answers

The standard of 'professional diligence' added in the 2009 reform requires what from entrepreneurs?

To exercise special skill and care Signup and view all the answers

Which article of the Ley 3/1991 de competencia desleal outlines the general clause regarding good faith?

Article 4 Signup and view all the answers

What is direct confusion in the context of acts of confusion?

Consumer believes products are the same Signup and view all the answers

What is a key aspect of the newly included standard from the 2009 reform concerning consumer behavior?

It must significantly distort economic behavior Signup and view all the answers

The Ley 3/1991 de competencia desleal includes regulations for which types of commercial acts?

Acts with a focus on B2B and B2C markets Signup and view all the answers

Which of the following best describes indirect confusion?

Consumer thinks products come from the same producer. Signup and view all the answers

What is a key aspect of aggressive practices under article 8.1?

Intimidating or coercing a target Signup and view all the answers

In the context of acts of confusion, what does the term 'risk of association' refer to?

Recognizing products come from different producers but thinking they are related Signup and view all the answers

How does article 6 relate to the imitation of products?

It encompasses any behaviour that causes confusion when imitating. Signup and view all the answers

What defines undue influence in the context of aggressive practices?

Exerting pressure due to a position of authority Signup and view all the answers

What type of relationship does article 20 LDC focus on specifically?

Consumer protection in B2C interactions Signup and view all the answers

Which of the following actions would not be classified as harassment under article 8.1?

Offering free samples to consumers Signup and view all the answers

What is considered a misleading omission according to the defined regulations?

Concealing essential information needed for informed decision-making Signup and view all the answers

Which action is linked to unfair commercial practices based on adherence to a code of conduct?

Adhering to firm and verifiable commitments of the code Signup and view all the answers

What may result in altering a consumer's economic behavior as per the specified regulations?

Offering misleading information about the characteristics of a good Signup and view all the answers

Which of the following statements about misleading omissions is true?

Information not offered at the correct time can be misleading Signup and view all the answers

What does the regulation state about marketing goods as identical across member states?

Goods marketed as identical must be exactly the same in composition Signup and view all the answers

What must be considered when assessing misleading omissions according to the regulation?

The limitations of the media used and the factual context Signup and view all the answers

Which of the following practices is not considered unfair under the regulations?

Ensuring all marketing claims are transparent and clear Signup and view all the answers

Which aspect is not part of the conduct that leads to economic behavior alteration?

The exact geographical location of production Signup and view all the answers

What is defined as a transactional decision?

A consumer's decision regarding the purchase, payment, or disposal of a product. Signup and view all the answers

How is the 'average consumer' characterized?

A reasonably well-informed and observant consumer considering various factors. Signup and view all the answers

Which of the following best describes misleading actions according to regulation?

Any actions that may confuse the average consumer regarding products. Signup and view all the answers

What key requirement is associated with misleading actions as per art. 6?

The action must likely cause consumers to take an unintended transactional decision. Signup and view all the answers

Which of the following can contribute to misleading actions?

Creating confusion with another company's trademarks. Signup and view all the answers

Under art. 7, misleading omissions are considered unfair when they:

Fail to provide essential information that affects consumer decisions. Signup and view all the answers

What could be considered a misleading marketing practice under art. 6.2?

Marketing a distinct product as identical to one in another market with different characteristics. Signup and view all the answers

How is unfair competition related to transactional decisions?

It can lead consumers to make decisions they otherwise would not. Signup and view all the answers

Study Notes

Lesson 2: Unfair Competition

Unfair competition is a topic with historical and conceptual background involving regulation and antitrust violations.
Early competition contexts, like the French Revolution, lacked rules, allowing aggressive and potentially unethical business practices.
Regulation arose to address those issues, standardizing conduct and establishing consequences for unfair competition.
European Union Directives (2005/29/CE and 2006/114/CE) govern unfair commercial practices and advertising across the EU.
Specific Spanish Acts (Ley 3/1991 de competencia desleal (LCD) and Ley 34/1988 General de publicidad (LGP)) mirror and augment EU regulations.
These laws define and prohibit misleading, aggressive, and unfair commercial practices, setting benchmarks and standards for consumer protection.
These laws aim to create a fair and consistent market environment to protect consumers and maintain honest competition.

Historical and Conceptual Background

Historical background starts with the French Revolution, showing the lack of regulation for competition.
Competitors were very aggressive using imitation, false information, and impeding competitors concerning supplies.
Rules requiring competitors to meet certain correctness standards while competing were needed. France and Germany were among the first countries to regulate competition
Rules on extra-contractual liability and court-developed theories demonstrate historical development of rules concerning unfair competition.
Specific rules were enacted in some countries.
Conceptual background deals with competitive conducts that do not meet appropriateness standards, limiting economic agents in competition.
Unfair competition is regulated with general rules on unfair commercial practices and rules on unfair advertising.

Regulation of Unfair Competition and Advertising

Directive 2005/29/CE addresses unfair business-to-consumer commercial practices in the internal market.
Directive 2019/2161 amended the earlier directive, harmonizing national laws for unfair commercial practices.
Directive 2006/114/CE regulates advertising.
Spanish legislation (Ley 29/2009) harmonizes the EU Directives on unfair commercial practices and advertising within Spain.
These directives and acts are to protect consumers and create a level playing field for businesses.
The directives/acts are structured with general clauses, misleading and aggressive practices and blacklists.

General Clause

General Clause (art. 5.2) aims to catch unfair practices not covered by "misleading" or "aggressive" criteria.
Criteria defined include professional diligence, (art. 5.2.a.) and material distortion of average consumer behavior (art. 5.2.b.).
Professional diligence refers to skills, care, and market practices demonstrated in good faith.
Material distortion of consumer behavior means using an action to noticeably hinder consumer ability to make well-informed decisions.

Misleading Practices

Considered unfair according to art. 5.1.
Can be either actions (regulated in art. 6) or omissions (regulated in art. 7).
Actions and omissions are considered unfair if they cause or are likely to cause the average consumer to make a different transactional decision than they would have otherwise made.
Misleading actions (art. 6.1) include false information which is untruthful or deceives or is likely to deceive the average consumer.
Misleading actions (art. 6.2) include marketing related to a product that creates confusion with a competitor's product (or brands).

Misleading Omissions

A commercial practice is misleading (art. 7.1) if it omits material information that the average consumer needs, from the context to make an informed decision.
Misleading practices can also occur if information is hidden, unclear or delivered in a negative manner (art. 7.2)
This would include hiding or presenting the information carelessly so that it is opaque or not understandable.

Aggressive Practices

Considered unfair according to art. 5.4.b)
A commercial practice is aggressive (art. 8) if it involves harassment, coercion, undue influence, or use of physical force.
The conduct should significantly impair the average consumer's freedom of choice and lead them to make decisions they otherwise wouldn't have made
Criteria for determining harassment, coercion, or undue influence are by timing, location, persistence, language used or behaviors (art.9).

Acts of Denigration (art. 9)

Making or spreading statements about another party's business that is untrue, relating to facts, not opinions and must be true. If it is unfair but true, it is irrelevant.
Statements about personal beliefs, circumstances, nationality etc are not relevant.

Acts of Comparison (art. 10)

Public comparisons are permitted, including comparative advertising.
The goods/services compared must be fit for the same purpose or meet the similar needs.
The comparison should be objective, using explicit or implicit references to the competitor.

Acts of Imitation (art. 11)

Imitation of a competitor's business or professional service is generally permitted unless the imitated item is protected by law.
Imitation that leads the consumer to associate it with the original service or exploits the original service's reputation or effort is considered unfair under certain conditions.

Exploitation of Other Parties' Reputation (art. 12)

Unduly profiting from another competitors reputation is a prohibited practice.
Using another's reputation to gain business unfairly, such as falsely identifying your product as that of a competitor, is a violation.

Breach of Secrets (art. 13)

This relates to confidential information of an organization which is not generally known and includes knowhow, financial data, technological know-how etc
Breaching confidentiality or stealing trade secrets constitutes an unfair business practice.

Inducement to Breach of Contract (art. 14)

Inducing a breach of contract is an unfair practice. This includes actions such as using tricks, bribery, or malicious lies.
Intentionally trying to cause a competitor to breach contract (or benefit from the breach) can be unlawful.

Breach of Legal Rules (art. 15)

-Breaching legal rules to gain an unfair competitive advantage is a violation.

Discrimination and Economic Dependence (art. 16)

Discrimination in setting prices or terms for different customer groups (or not providing equal terms), and abusing economic dependence, is considered unlawful.

Sales at a Loss (art. 17)

Setting prices below costs, just to harm or discourage a competitor, is a prohibited practice.
If the actions lead to misleading consumers about prices or the purpose of these prices or to eliminating a competitor, the action is considered unlawful.

Illegal Advertising (art. 18)

Advertising that violates the General Advertising Act, is also considered unfair under the broader terms of unfair commercial practices.

Prohibited Commercial Practices with Consumers (art. 19-31)

Unfair commercial practices directed towards consumers are prohibited (in these articles)
These practices are similar to those already addressed in the previous articles, but they're focused specifically on consumer-facing activities.

Actions for Infringement (art. 32)

These are the actions that can be taken to counteract the above breaches. Including injunctions, compensations etc.

General Advertising Act (Ley 34/1988)

This act defines illegal advertising (publicidad ilícita) with multiple different possible manifestations.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.