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 implemented from 2018 a misleading and unfair commercial 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 from acts of unfair competition due to misleading commercial practices.  

TEDIBER maintains that it has necessarily suffered economic damage as a result of unfair commercial practices since they aim, by altering the economic behaviour of the consumer, to unduly capture customers, which results in the realization by the offending operator of 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 acts of unfair competition by parasitism or by disorganization 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 the law, the manifestation of which is materialized by the granting of an “undue competitive advantage whose effects, in terms of economic turmoil, are difficult to quantify with the available evidence, except to incur disproportionate expenses with regard to the interests at stake“. In the presence of acts of unfair competition by breach of the law, the Court of Cassation in its Commercial Chamber, considered that”it must be accepted that the compensation for the damage suffered can be evaluated taking into account the undue advantage that the author of the acts of unfair competition has granted himself, to the detriment of his competitors, modulated in proportion to the respective volumes of business of the parties affected by these acts” (Cass. com., 12 February 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 consideration the undue advantage granted to the author of the acts of unfair competition, to the detriment of his 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 the practices of EMMA for TEDIBER is a loss of profit and not a loss of opportunity. As the consumer is led to believe, wrongly, that EMMA offers better offers than those of its competitors, which substantially alters its purchasing behaviour in an exclusively online market very sensitive to price, its choice will be based on EMMA products rather than those offered by competitors, which necessarily has an impact on sales, and therefore the margin, made by them, including 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 compensation for economic damage resulting from acts of unfair competition must restore, as exactly as possible, the competitive balance destroyed by the wrongful conduct and put the victim back in the situation he would have been in if the harmful act had not taken place. To determine this remedy, it is ”open to the victim of acts of unfair competition to propose a counterfactual method consisting in attempting 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 lost gain suffered by TEDIBER resulting from the deceptive 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.