Liability for unfair competition: what do you need to know?
Competition is the foundation of a market economy, but its rules must be fair. In today’s business environment, where everyone is striving to gain a competitive advantage, unfair practices pose a serious threat. They harm not only other companies, but also consumers, causing economic damage and undermining trust in the market. Let’s take a look …
Competition is the foundation of a market economy, but its rules must be fair. In today’s business environment, where everyone is striving to gain a competitive advantage, unfair practices pose a serious threat. They harm not only other companies, but also consumers, causing economic damage and undermining trust in the market. Let’s take a look at what unfair competition is, what its manifestations are, and what liability is provided for by law.
What is unfair competition?
Unfair competition is an action that contradicts fair rules of market behavior and is aimed at gaining advantages through deception, manipulation or other means that harm competitors or consumers. The Law of Ukraine “On Protection Against Unfair Competition” defines this as actions that contradict trade and other fair business practices.
The main forms of unfair competition include:
- Spreading false information about a competitor. For example, when a company falsely claims that a competitor’s products are of poor quality, harmful or dangerous.
- Imitation of a product or brand. Using design elements, packaging or trademarks of another company to mislead consumers.
- Discrediting competitors. The purposeful dissemination of information that undermines the business reputation of another company, even if it is done covertly.
- Unethical advertising. Advertising that disparages competitors, contains false statements or misleads consumers.
- Illegal use of trade secrets. This may include stealing business plans, customer lists, technology, or other confidential data.
What is competition law?
Competition law is a set of rules and regulations aimed at protecting economic competition and ensuring fair behavior of market participants. It regulates relations between business entities, protects consumer rights and ensures the efficient functioning of markets.
The main competition law in Ukraine is the Law of Ukraine “On Protection of Economic Competition”. Along with it, there are:
- The Law of Ukraine “On Protection against Unfair Competition”;
- The Commercial Code of Ukraine;
- Code of Ukraine on Administrative Offenses (articles related to economic competition);
- The Criminal Code of Ukraine, if the violators’ actions caused significant damage.
Liability for unfair competition
In Ukraine, several types of liability for unfair competition are provided for:
- Financial penalties.
According to Article 21 of the Law on Protection against Unfair Competition, fines can reach significant amounts. For example, a company may be fined up to 5% of its revenue for the last financial year for disseminating false information.
- Court sanctions.
Injured parties have the right to go to court to seek compensation for damages. The court may also prohibit the violator from continuing its actions.
- Administrative measures.
In particular, revocation of permits to conduct certain types of activities or a ban on the sale of products.
- Criminal liability.
If the infringer’s actions caused significant damage, criminal proceedings may be initiated.
Key legislative acts regulating competition in Ukraine:
- The Law of Ukraine “On Protection against Unfair Competition”
- Law of Ukraine “On Protection of Economic Competition”
To familiarize yourself with the text of the law.
- Commercial Code of Ukraine
Section on economic competition, Chapter 3.
Unfair competition violates the law, undermines consumer confidence and damages the reputation of the offender. Fair rules of the game contribute to market development, improve the quality of goods and services, and maintain trust between businesses and customers.
