In the field of commercial law, the unfair competition is one of the most recurrent problems between businesses. It involves conduct that distorts the level playing field in the market and violates the principles of good faith, affecting both competitors and consumers.

From Martínez Sanz Lawyers, as specialists in commercial and corporate law, In this article, we offer a clear explanation of what is meant by unfair competition, what are its main manifestations and what legal action can be taken against these practices.

Applicable regulatory framework

The Law 3/1991 of 10 January 1991 on Unfair Competition, is the main rule in this area. Its purpose is to ensure the proper functioning of the market and to protect the various operators from actions that unlawfully distort free competition.

In addition, account should be taken of other provisions such as the General Advertising Law or the regulations of consumer and user protection, where the conduct directly affects consumers.

What acts are considered unfair competition?

The Law establishes a catalogue of conducts that can be qualified as unfair. The most relevant of these include:

  • Acts of deceptionmisrepresentation: dissemination of false information or omission of relevant information which misleads the consumer in order to obtain an economic benefit.
  • Generation of confusionpractices that may lead to the belief that there is a business, commercial or brand link between two operators that are in fact independent.
  • Taking unfair advantage of another's reputationThe use of the reputation, track record or trademarks of a third party for the purpose of benefiting from its position in the market.
  • Aggressive practicescoercion, harassment or psychological pressure to limit the consumer's freedom of choice.
  • Imitation and denigrationsystematic reproduction of confusingly similar products or services of competitors, as well as disqualifying comparisons without any objective basis.
  • Disclosure of business secretsobtaining and misuse of confidential information, even if the access was initially lawful.
  • Inducement of contractual infringementpressure on suppliers, distributors or other stakeholders to breach their obligations to a third party.
  • Unlawful advertisingAdvertising messages which are contrary to the rules or which are misleading for the consumer.
  • Selling at a loss with unfair intent: to offer products below their purchase price when the objective is to exclude competitors from the market.

Practical example

Such practices can occur in any economic sector. An example is found in specialised areas, such as the growshops, In this area, businesses that strictly comply with the applicable regulations on advertising, labelling and online sales coexist with others that may resort to strategies that generate confusion or constitute unfair comparisons.

What action is taken against those who engage in unfair competition?

In the event of disloyal actions, the employer concerned may take the following actions:

  1. Declaratory action for disloyalty, The Commission has not yet adopted a decision on the existence of the unlawful conduct.
  2. Injunctions and prohibition of repetition, to immediately stop the practice and prevent its recurrence.
  3. Action to remove effects, which may include the public rectification of false information or the removal of unlawful advertising materials.
  4. Action for damages, where there is quantifiable economic loss arising from the conduct.
  5. Action to publish the judgment, with the aim of restoring the reputation of the affected party.

Early collection of all available evidence (advertising material, commercial communications, expert reports, trademark registrations, etc.) is essential to ensure the effectiveness of the claim.

When does unfair competition become time-barred?

Unfair competition actions are time-barred within one year from the time the person concerned became aware of the conduct and the identity of the perpetrator.

In any event, actions are time-barred at the age of three from the termination of the conduct, even if the injured party had no prior knowledge of the conduct.