Unfair competition action: a strategic tool at the service of brands (Argus de l 'ensign, April 2015)

1. Applying a classic solution

The OPTIC 2000 group was criticized by  the OPTICAL CENTER company for the usual use of the practice of “invoiceoptimization“, according to which the optician artificially inflates the price of the lenses and reduces the price of the frame in the invoice given to the customer in order to reach the maximum reimbursement, the lenses being subject to a greater reimbursement by the mutuals than the frames. This process made it possible to have the bulk of the bill borne by the mutuals, so that these unscrupulous opticians offered the consumer minimal prices, the bulk of the bill being borne by the mutuals.
By comparing the quote proposed by the optician, which shows the actual price of the lenses and frames, and the invoice, which shows the artificially modified prices, fraud could be established.
First of all,  the court recalled a constant principle in case law according to which the violation of a legal or regulatory obligation by a company is likely to constitute an act of unfair competition towards its competitors. Thus, in a judgment of 31 January 2013, the Court of Appeal of Pau ruled that”it is common ground that a breach of a legal obligation by a company, as well as non-compliance with a regulation, may constitute a fault justifying a conviction for unfair competition, in that this behavior disrupts the market by the more favorable situation in which this company is compared to those who comply with the regulations” (CA Pau, 31 January 2013, No. 11/03787).
Thanks to “many pieces, even if some would be imperfect“, the court then found that the company OPTICAL CENTER, through the testimony of customers and the decline in turnover of some of its stores, was able to realize  that its competitors attracted customers by adopting this practice of invoice optimization.
The court considered that these acts constituted, on the one hand, fraud against mutuals that pay benefits for products that do not qualify for them, and on the other hand, a breach of trust. These practices are also considered acts of unfair competition, sincethey “inevitablylead to the diversion of customers from OPTICAL CENTER stores“.
Consequently,  the court ordered the cessation of the practices under penalty of 10,000 euros per day per infringement found.
Although the company GADOL OPTIC 2000 initiated actions of scope, information and sanction with its franchisees to stop such practices, noted by the court,  it nevertheless condemned the companies GADOL OPTIC 2000 and the company LES FRERES LISSAC to the payment of a sum of 29.5 million euros under the terms of the request of the company OPTICAL CENTER This sum corresponded to the amount of loss of turnover that the company OPTICAL CENTER would have suffered in one year as a result of these actions.
LISSAC ENSENE was exonerated, on the grounds that it could not be held responsible for the acts of which its franchisees were accused, and that no grievance was made against it. AUDIOPTIC TRADE services was also exonerated, on the grounds that it did not carry out any activity of selling optical and eyewear products to consumers.
While it was expressly called upon to rule on the validity of the evidence provided by the company OPTICAL CENTER, the court did not respond.

2. The absence of a response from the court on the fairness of the evidence

Pursuant to Article 9 of the Code of Civil Procedure relating to the principle of lawfulness of evidence, it is for each party to prove in accordance with the law the facts necessary for the success of its claim, the case law excludes from the proceedings any evidence obtained unfairly, in civil matters.
Thus,  the Court of Appeal  of Douai, ruling on referral, in the context of a proceeding also relating to the system of invoice optimization at opticians, brought by the company OPTICAL CENTER against the company ATOL, ruled that it was appropriate, on the basis of the fairness of the evidence, to retract an order having appointed a bailiff for the realization of a finding. The bailiff’s mission was to visit opticians of various brands, including the OPTIC 2000 and ATOL brands, and to accompany a person who had to pretend to be a customer, choose branded frames, and report, if necessary, the significant reimbursement on corrective lenses by his mutual.
The Court ruled that, in the event that the seller did not spontaneously propose a fraudulent arrangement, the mission given to the bailiff was intended to put him on the path to the expected result, that is to say to obtain the optimization of the invoice, and thus constituted a staging contrary to the principle of fairness of evidence (CA Douai, 19 September 2012, No.11/02579).
In the present case,  the court relied, in particular, on the testimony of clients to base its decision, which the defendants expressly requested to be rejected on the basis of the fairness of the evidence, as is apparent from the presentation of the parties’ pleas.
However, by holding the fault of the defendants, “even if some [documents] are imperfect”, and by affirming that “the few formal criticisms that are made to some [testimonies] do not remove their formal character”, without specifying the exact nature of the criticisms made, the court did not seem to respond to this plea,.
The question of the fairness of the evidence could constitute a ground for review of the judgment on appeal Although the terms of the judgment do not allow us to define the scope of the documents covered by this application for dismissal, and the nature of the other documents produced, . Indeed, proof of false invoices would be based solely on evidence obtained unfairly.
The use of unfair competition as a network protection tool

The company OPTICAL CENTER had already summoned the companies KRYS, ATOL or AFFLELOU in unfair competition. This action against the OPTIC 2000 group is part of a global legal strategy targeting all its competitors.
As soon as the fault is characterized,  this strategy allows an economic operator to condemn a competing brand, and, while obtaining the cessation of prohibited practices, to harm it, thus hoping for an increase in its own turnover through the acquisition of new market shares.
By the magnitude of the conviction,  the decision of the Commercial Court of Paris demonstrates that the introduction of an action for unfair competition is a major tool to disrupt a competitor who does not comply with the applicable regulations.
Although it has its own funds to face the sentence imposed,  the OPTIC 2000 group was forced to file a safeguard procedure in order to be able to stagger the payment of its sentence.
Unfair competition action, when systematically applied against any competitor who does not comply with the legal and regulatory provisions,  protects the market share of a brand and constitutes a real legal strategy, in support of the commercial strategy.
Such a strategy may  also be of particular interest to a nascent brand with innovative know-how, which it wishes to protect to maintain its market share.
Thus, the introduction of an action for unfair competition will considerably slow down the possibilities of developing this brand franchise, concession or otherwise. against any company adopting a similar concept or not complying with the applicable legislation.
As the procedure can take several years, and can be particularly expensive for an emerging brand,   the defence before the courts will first require human and financial investments on the part of the assigned brand.
In addition,  it will be likely to scare away potential candidates wishing to join this brand as independent distributors.
More than ever, the law appears as a strategic tool at the disposal of brands.