Act in parasitic or 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.

Fault constituting unfair competition is classified into three categories in the current state of case law: denigration, confusion and disorganization.

The denigration that is the act of discrediting the person 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 business. 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 most often targets 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 is when a company uses illegal sales or labor methods, which gives it an unlawful advantage over its competitors operating on a regular basis.

This type of behaviour can 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.

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.

Parasitic competition, or economic parasitism, is defined as the set of behaviors by which an economic agent interferes in the wake of another in order to take advantage of his efforts and know-how, without spending anything or exposing much less costs than those he would normally have had to face to achieve the same result if he had not benefited from the efforts of the other.

This concept has been developed by case law and doctrine, in particular by the Court of Cassation and the French courts of appeal, on the basis of the common law rules of tort. For example, the Court of Cassation ruled that parasitism consists of taking advantage of the reputation of a rival, capturing its know-how, its advertising efforts, its intellectual investments, etc. Similarly, the Paris Court of Appeal specified that parasitism can be manifested by the reproduction of the essential characteristics of a franchise network, such as the packaging, the products sold, the practice of the call price, and the storefront.

Parasitism can exist even between non-competitor companies, or without there being any search for confusion.

The legal implications of parasitism are significant. It makes it possible to sanction the usurpation of the intellectual efforts and investments of others, and can justify restitution, destruction or prohibitions to use elements of the concept at the end of a franchise agreement. Parasitic competition actions may be rejected if the concept used is deemed trivial.