Unfair and parasitic competition
If any professional can harm his competitor, it is provided that he does not use unfair processes, that is to say, contrary to professional practices, in order to divert customers from his competitor. Fault in the exercise of competition obliges its author to pay damages if damage has been suffered.
For example, acts of unfair competition
include denigrating the products of a competitor, being complicit in the violation of non-competition clauses or pre-emption rights, trying to disrupt a competitor by massively poaching its employees or key employees, or by misappropriating a customer file.
Parasitic competition; a form of unfair competition
Parasitism is a form of unfair competition. Parasitic competition is defined as the set of behaviors by which one economic agent interferes in the wake of another in order to take advantage, without spending anything, of its efforts, its know-how as well as its notoriety.
It is an act of parasitism for a trader not belonging to the network to reproduce the essential characteristics of a franchise network, such as the packaging, the products sold, the practice of the call price, the storefront (CA Paris, 5th ch. 3 Oct. 2002: JurisDataNo.2002-191447). Case law frequently requires the demonstration of a likelihood of confusion.
GOUACHE Avocats assists companies in unfair competition litigation, in order to ensure their defense when they are victims of unfair acts.
GOUACHE Avocats also supports companies that wish to act against competitors when the offers offered by the latter result from unfair behaviour.
Unfair competition: a strategic tool against your competitors
Unfair competition litigation
is also a strategic tool that must be considered by the company as a tool to limit the development of its competitors in their market.
Suffice it to note that following a decision of the Commercial Court of Paris at the end of December 2014, the OPTIC 2000 network had to take a safeguard position following its conviction for unfair competition to pay its competitors 30 million Euros in damages: an appeal was filed, but it is certain that such a decision could only have had an impact on the 2015 development plan of the condemned brand;
In the same way, it is a tool for preserving the distinctiveness of its concept and delaying the emergence of competition: information circulates so quickly that most concepts are copied as soon as they are launched. Most often, the first followers commit acts of parasitism that are sometimes crude: accumulation of copy of product or service positioning, pricing and promotional alignment, resumption of content, GTCs, copy of the architectural and visual concept. Assigning them to parasitic competition most often forces them to invest in modifying their concept, which sometimes significantly delays their development, in addition to preserving your distinctiveness and your competitive advantages.
GOUACHE Avocats has a significant practice in this area.
Practice: the elements of definition and qualification of unfair competition
The action for unfair or parasitic competition is exercised on the basis of tort liability governed by Article 1382 et seq. of the Civil Code.
Three cumulative conditions are required for your competitor’s tort liability to be retained:
- he must have been at fault.
- you have been harmed.
- this damage results from the fault.
Misconduct Constituting Unfair Competition
It is a competitive behavior contrary to a law, a regulation or even customs. It does not have to be intentional and, moreover, simple negligence is at fault.
Faults constituting unfair competition are classified into three categories in the current state of case law: denigration, confusion and disorganization.
Denigration, which is the act of discrediting the person with the products or services of a competitor. This notion is implemented whenever there is either direct or indirect criticism. In the latter case, advertising formulas that induce a comparison are often targeted. In this regard, presenting oneself as the cheapest or the first, etc. are facts that may constitute acts of denigration.
Confusion is the behavior of a competitor who seeks to create confusion in the mind of the consumer with your company. It involves implementing processes that mislead customers into believing that your competitor is the producer of your product or service. For example, copying the map and prices of a competing beauty salon, using the same customer loyalty system.
Disorganization is most often aimed at the organization of the company’s resources: for example, by the poaching of many employees or key employees (e.g., in a brand, network manager, development manager, marketing director, etc.), or by the misappropriation of files or other specific production tools.
It can also aim at market disruption. This category includes non-compliance with the legislative and regulatory provisions of public order applicable to a company or a professional sector.
Market disruption
involves a company using illegal sales or work methods, which gives it an unlawful advantage over its competitors operating on a regular basis.
This type of behaviour may cover situations such as the exercise of a professional activity requiring administrative approval without obtaining this approval, the marketing of products without complying with the regulatory provisions applicable to them, non-compliance with labour law and social security.
The harm suffered in the event of unfair competition
It is characterized in particular by a loss of clientele: this is measured by the decline in turnover. The proof that the loss of clientele benefited the author of the act of unfair competition is irrelevant. The damage may also result from the loss of customers or employees, either by a missed gain (non-renewal of contract for example), or possibly by moral damage (damage to the image of the company).
However, increasingly, in judicial practice, harm is deduced from fault.
The causal link is always deduced from the fault and therefore does not have to be proven.
The judge has, of course, a power of injunction to stop the misconduct of the unfair competitor and prevent such misconduct from occurring again. The judge may thus impose on the unfair competitor the measures he deems necessary. These measures may be accompanied by periodic penalty payments to ensure the proper execution of the measures imposed. The judge may also decide to publish the court decision, or order the confiscation or destruction of the material used in the wrongdoing.
Guillaume Gouachon
Avocat associé
Responsable "Consommation, produits et conformité"
Martine Behar Touchais
Professeur de droit Of counsel
Responsable "Distribution & Concurrence"
Jérôme Guillé
Avocat associé
Responsable "Distribution & Concurrence"
