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Competition Law / | Unfair Businesspractices

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Competition law is of essential significance for the work of Markenverband, because fair and free competition is the foundation for the business success of its member companies.  Brand-oriented businesses are innovation-driven to a great extent and committed to particular quality standards.  In this way, they build up competitive advantages which enable them to achieve success in fair and free markets.  However, distortions of competition, whatever their origin, are likely to alter these parameters of market success.  Quality, price and innovation are no longer decisive, but anti-competitive factors such as monopoly positions, state subsidies, state-ordained compartmentalisation or market dominance.  Effective competition legislation is therefore the pivot for functioning competition and accordingly also for law-based equality of opportunity for competitors and the best outcome for customers.

However, although the commentary below seeks to elucidate various issues linked to competition law, it is important to bear in mind that the term “competition law” is generally used as a broad concept.  It encompasses both the law against restraints on competition (embodied in Gesetz gegen Wettbewerbsbeschränkungen - GWB) and the law against unfair competition (Gesetz gegen den unlauteren Wettbewerb – UWG).  Both of these laws should protect fair and free competition, but each addresses different potential risks.

For instance, competition can be threatened by the fact that companies coordinate their prices, contracting partners, sales regions or similar.  This enables them, say, to charge higher prices because the customer has no possibility to buy products from a competitor under more advantageous conditions because goods are only available from particular suppliers in a given region.  For that reason, antitrust law proscribes concerted practices between competitors except in a few exceptional cases.  A similar effect can occur if competitors come together and create a business with monopoly position or at least market power through a merger or cooperation between several suppliers.  In this case, too, competition is disabled and customers are often confronted with a more restricted offer and higher prices.  Accordingly, the law against restraints on competition not only vetoes such agreements but also sets out the conditions under which mergers between competitors are admissible (merger control).

However, what is common to both cases is that they produce concerted action by businesses which are competitors in reality.  Expressed more simply, it can therefore be said that the law against restraints on competition (GWB) protects against distortions of competition generated by common and concerted behaviour of market participants.

The situation is different in the law against unfair competition (UWG).  This also protects competition, not against concerted practices by competitors but against unfair means in the battle for customers and market shares.  

Even if hard competition is essentially in the interest of the customer and the consumer, because it obliges the supplier to make particular efforts and offer more attractive prices, it can have negative consequences from a certain point and damage both customer and competitor.  Examples include misleading information and damage to reputation.  If two businesses offer a comparable product, they will highlight the advantages of their product in their persuasion of the customer as much as possible, and perhaps also point out the weaknesses of the competing product.  However, if a competitor moves outside the framework of competition law rules and makes untrue claims about the competing product and the producer, he is misleading the customer about both the quality and characteristics of the product and also damages the reputation of the other producer.  If the customer now purchases the product of the market participant acting in this way, both the competitor and the customer are damaged, since the latter might have purchased the former’s product if he had known the real situation.  In other words, competition is here distorted by the unfair practices of a market participant.

Insofar as the various forms of competition law are examined below, they refer primarily to the law against unfair practices (UWG).

UWG bans a whole range of unfair practices, with a view to protecting consumers and competitors.  In this regard, protection against imitations is of particular importance for the branded goods and services industry.

 


Ansprechpartner: RA Dr. jur. Alexander Dröge, Leiter Recht/Verbraucherpolitik

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