Three types of unfair competition

In this article we want to give you a comprehensive overview of unfair competition in the Italian law.

Unfair competition in the italian law

The article 2598 of the Italian Civil Code provides that:

“Subject to the provisions that concern the protection of distinctive signs and patent rights, anyone who engages in acts of unfair competition:

1. Uses names or distinctive signs capable of producing confusion with names or distinctive signs legitimately used by others, or slavishly imitates a competitor’s product, or fulfills by any other means acts likely to cause confusion with the products and the activities of a competitor;
2. Broadcasts information and evaluation about the products and the activities of a competitor, which may determine its disrepute, or steals the merits of the products or the company of a competitor;
3. Directly or indirectly uses any other mean not comply with the principles of professional fairness and able to damage other people’s company”.

The subjective condition of applicability of the rule in question is that both parties are entrepreneurs (the law also included in this category the public law entities, provided that they exercise a business under the competition rules) and that there is a competitive relationship between them.

There is a presumption iuris tantum of liability for the entrepreneur (valid until opposite proof) for the acts of unfair competition carried out by its employees or assistants, as it is believed that, since the entrepreneur is the beneficiary of these acts, he should be held liable.

There is a competitive relationship when there is commonality of customers between the two businessmen involved, i.e. when the products/services offered by the two competitors are destined to meet the same needs; typically, this occurs in the case of identical, related or substitute goods or services.

Potential unfair competition

The competitive relationship, relevant under Article 2598, may be merely potential and occurs when two companies offer different products and/or services but have as a natural expansion of their business the offering of identical or similar products/services.

It is important to note that the law punishes acts of unfair competition irrespective of the fact that a breach has actually occurred. It punishes the mere possibility that an injury will occur.

Unfair competition which concerns the possibility of confusion

Article 2598, n.1) provide for the case of unfair competition which concerns the possibility of confusion of goods/services. The law wants to prevent that improper use of other party’s distinctive signs creates a situation of confusion in the market, which could generate misuse of customers in favor of imitator enterprise.

Unfair competition: the slavish imitation

The other case of the article 2598 number 1, the slavish imitation, instead, occurs when the imitation of competitor’s products concerns the external elements of the imitated products.

The slavish imitation can cause two different situations: the confusion of those who buy the imitation believing they are purchasing the original, or the awareness of those who buy an imitation making others believe that it is the original; therefore, ultimately, always confusion is created in the market.

Unfair competition: denigration of the competitor

The number 2 of the article 2598 provides for the case of the denigration of the competitor and the appropriation of the merits of the products of the company of a competitor.

The denigration may relate to both the competitor’s person as the object of its activity.

The appropriation of the merits occurs, for example, when an entrepreneur attributes its products quality and features they do not have, whilst such qualities and features are instead of the competitor’s products.

Typical cases of unfair competition for the appropriation of other’s merits are made by the use of the name of the product accompanied by the words “like” or “similar” to the competitor’s products. In such way the public thinks to find in the imitator’s products the same features found in the original products.

Unfair competition: breach of the principles of professional integrity

The number 3) of article 2598 includes all the remaining untyped actions breaking the principles of professional integrity and that are able of damaging each other company. The breach of the principles of professional integrity does not necessarily require the violation of rules of law, but it can be simply a breach of ethical standards, generally accepted in the field of reference.

In the course of time the case-law has developed a records of behaviors which fall under the prohibition of number 3) of Article 2598: among these, for example,

• misleading communications,
• sales below costs
• theft and violation of secrets
• boycott.

If you are victims of unfair competition, Eva Troiani law firm can advise you on the subject and indicate which actions you should take.