Compensation for damage suffered in unfair competition through the assessment of loss of profits

In a judgment of 2 April 2025, the Paris Court of Appeal ruled on the assessment of the economic damage resulting from acts of unfair competition by taking into account the loss of income.

In the context of this case between two major players in the bedding market, TEDIBER criticizes EMMA for having set up a deceptive and unfair trade policy based on promotions presented as temporary but which, being systematically renewed, are in fact permanent promotions.

While the Paris Court of Appeal recognized the materiality of the alleged facts, this judgment raises the issue of quantifying the damage resulting acts of unfair competition as a result of deceptive marketing practices.

TEDIBER maintains that it necessarily underwent a economic harm due to unfair commercial practices since they aim, by altering the consumer’s economic behaviour, to unduly capture customers, which results in the faulty operator achieving a turnover that it would not have achieved if it had been loyal. It argues that full compensation for the damage is calculated by the difference between the “counterfactual” situation of the victim (which would have been in the absence of fault) and his “real” or “factual” situation (following the fault).

Traditionally, the Court of Cassation makes a distinction according to the acts of unfair competition by parasitism or by disruption of the company, the damage of which can be, in both cases easily demonstrated by translating into losses directly suffered by the competing company, and acts of unfair competition by breach of law, whose manifestation is materialized by the granting of a “undue competitive advantage, the effects of which, in terms of economic turmoil, are difficult to quantify with the available evidence, except to incur expenses disproportionate to the interests at stake ». In presence acts of unfair competition by breach of law, the Court of Cassation in its commercial chamber, considered that”  it must be admitted that compensation for the damage suffered can be assessed taking into account the undue advantage granted to the author of the Acts of Unfair Competition, to the detriment of its competitors, modulated to proportion of the respective business volumes of the parties affected by these acts ”(Cass. com., February 12, 2020, No. 17-31,614).

In this case, in order to facilitate the quantification of the economic disturbance, the compensation for the damage is assessed by the Court of Cassation, taking into account the undue advantage granted to the author Acts of Unfair Competition, to the detriment of its competitors, modulated in proportion to the respective volumes of business of the parties affected by these acts.

However, in the context of the case between EMMA and TEDIBER, the Paris Court of Appeal proposed a separate method of quantifying the damage and heard TEDIBER’s argument, according to which ” the growth in the number of its visitors would have been much greater in the absence of the practices noted, while the “bed in box” market was growing and it had an excellent reputation ».

In doing so, the Paris Court of Appeal admits that ” the damage resulting from EMMA’s practices for TEDIBER amounts to a loss of profit and not a loss of opportunity. The consumer is led to think, wrongly, that EMMA offers better offers than those of its competitors, which substantially alters its purchasing behavior in an exclusively online market very sensitive to price, his choice will be EMMA products rather than those offered by competitors, which necessarily has an impact on sales, and therefore the margin, made by them, among which TEDIBER ».

Therefore, to quantify the damage suffered, the Paris Court of Appeal will take into account the study conducted by TEDIBER to highlight that over the period considered, on the one hand, the growth of visitors to the TEDIBER site was much less than it should have been, because Internet users are attracted by EMMA’s false promotions and that, on the other hand, the conversion rate of visitors to the TEDIBER site fell drastically over the period considered, which caused TEDIBER a loss of earnings damage.

In this case, the PARIS Court of Appeal recalls that the compensation for economic damage resulting from acts ofunfair competition
must restore, as accurately as possible, the competitive equilibrium destroyed by the wrongful behaviour and put the victim back in the situation they would have been in if the harmful act had not taken place. To determine this repair, it is “ available to the victim of Acts of Unfair Competition to propose a counterfactual method consisting in trying to reconstruct the economic situation that would have been in the absence of the disputed practices ”, and draws the consequence that it has the necessary elements allowing it to assess the missed gain suffered by TEDIBER resulting from Misleading practices implemented by Emma.

Thus, by not applying the method of quantifying the damage established by the case law of the Court of Cassation of 12 February 2020, based on the consideration of the undue advantage, the Paris Court of Appeal, proposes an innovative method of quantifying the economic damage, by taking into account a counterfactual scenario based on the loss of profit.