Which is the applicable law in cross-border unfair competition cases?
Unfair competition practices constitute a special category of torts; according to sec.26 of the Greek Civil Code, the applicable law in cases of cross-border torts is the law of the State where the tort took place. Consequently, unfair competition practices that take place within the Greek territory are governed by the Greek law of unfair competition. As far as the EU Member States are concerned, Regulation 864/2007 (Rome II) includes a specific provision regarding the applicable law in unfair competition cases, according to which: “The law applicable to a non-contractual obligation arising out of an act of unfair competition shall be the law of the country where competitive relations or the collective interests of consumers are, or are likely to be, affected”.
Whom may a competition practice possibly concern?
Law 146/1914 applies to all businesses of any type (sole traders, partnerships, incorporated companies) providing products and/or services, active in the fields of commerce and/or industry and/or agriculture, which either engage in unfair competition practices or are affected by such; besides, an unfair competition practice may be targeted against specific competitor(s) and/or have a general jeopardizing impact on the relevant market.
When does a business practice constitute an unfair competition act according to the general clause (sec. 1)?
When it meets the following criteria:
- It is undertaken by a competitor in the course of commercial and/or industrial and/or agricultural transactions.
- It enhances (or is capable of enhancing) the position of the business entity in the relevant market vis a vis its competitors, either present or potential. A competitive relationship is also required, it is however perceived in a very broad sense, even covering cases of indirect or potential competition.
- It is undertaken for competition purposes, but not necessarily with the intention to harm the competitors’ interests.
- It is contrary to honest practices, the content of which is formulated and interpreted in light of the current business morals and ethics.
It is important to note that there are no per se unfair practices under Law 146/1914 and each case is dealt with ad hoc. Factors such as the means, strength and duration of the business practice and the jeopardizing of the proper functioning of the relevant market are seriously taken into account for the characterization of such practice as unfair.
Which are the most common business practices which fall into the scope of the general clause (Sec.1)?
The following case groups have been formed by Greek case law and legal theory:
- Improper solicitation of customers: The competitors’ clientele is not protected as such; after all, the battle to gain new customers is the quintessence of competition. There are, however, certain means that, when manipulated by a competitor, render the customers’ solicitation unfair. Typical relevant cases are: surreptitious advertising (mainly through sponsoring and product placement when not recognizable and indicated as such), offering gifts/prizes with the product or service when the value of the former is much higher than that of the latter or the gifts/prizes are of completely different nature, direct marketing through unsolicited phone calls (cold calling) and emails without the express consent of the recipient and emotive advertising causing strong feelings of sympathy, horror, disgust etc. which are capable of influencing the consumers’ purchasing behavior.
- Exploitation of third parties’ goodwill, organization and labor: All practices in this category, i.e. the appropriation of competitors’ reputation and goodwill (image transfer), the imitation of intangible assets forming the business entity’s goodwill (unless they are registered trademarks, patents or designs) and the disorganization of a business entity (mainly through solicitation of personnel) are not considered to be per se unfair, unless there are additional circumstances justifying the unfair character of such practices. For example, according to Greek case law, the slavish imitation of product designs and design packaging as well as of advertisements or advertising concepts constitutes an unfair competition practice. Furthermore, the solicitation of personnel is unfair, primarily when there is an incitement to breach of employment contract and/ or the competitor aims at the disorganization of the competitive business entity by means of depriving it of its key employees and/or when the solicitation is used as a method to acquire the competitors’ trade secrets.
- Impediment of competitors: These practices are considered to be unfair when they result in preventing a player from entering the market and/or offering his products/services. Such a result is mainly achieved by means of boycotting (apart from cases in which a competitor is bound by contractual exclusivity clauses or the boycott is defensive) or predatory pricing (depending on the existence of the purpose to squeeze the competitor out of the market; according to Greek case law, a strong indication of such intent is the continuous and systematic predatory pricing for a long period of time without any plausible commercial justification). Discrimination between competitors by the supplier may also, under specific circumstances, constitute an unfair competition practice, although such cases mainly fall under the scope of antitrust legislation (Law 3959/2011).
- Breach of legal/contractual provisions: These practices may also, under certain circumstances, be considered to be unfair: examples of such legal provisions are the prohibition of supplying illicitly acquired products in the market and the obligation to comply with the legislation regulating the functioning of the market (specifically: Law 4177/2013 and the Rules for the Supply and Distribution of Products and the Provision of Services –in Greek: ΔΙΕΠΠΥ–, as in force, concerning, among others, the limitation of the profit margin for specific products and the implementation of discounts, rebates and promotional campaigns). The breach, also, of contractual obligations (non-competition or exclusivity clauses) may constitute an unfair competition practice.
Are there specific provisions in Law 146/1914 concerning advertising campaigns?
The Greek legislation complies with the EC Directive 2006/114/EC concerning misleading and comparative advertising. More specifically:
Misleading advertising is prohibited under sec.3 of Law 146/1914 and sec.9d, 9e and 9f of Law 2251/1994 (consumer protection), as amended by Law 4512/2018 and codified by Ministerial Decision No. 5338/2018. Advertising has to comply with the principle of truthfulness, although a degree of exaggeration is allowed, as long as the consumers are used to such exaggerations and thus the truthfulness principle is not violated. A critical factor for the characterization of an advertisement as misleading is that the statement communicated is deceptive or misleading for the average consumer of the specific group to which the advertisement is targeted. Sec.3 of Law 146/1914 indicatively refers to deceptive statements regarding the origin, method of production, quality, quantity, pricing, alleged awards of the product/service etc.
Comparative advertising, governed by sec. 9§§2-4 of Law 2251/1994 is considered to be consumer friendly, informative and is in principle permitted. However, the comparison has to meet the following conditions: it must not be misleading, it must refer to goods or services meeting the same needs or purposes, it must objectively compare material, relevant, verifiable and representative features, it must not create confusion, it must neither tarnish the reputation of a competitor nor blur his trademarks, distinguishing marks etc. and it must not present goods or services as imitations or replicas of goods or services bearing a protected trademark or trade name.
Are there any specific provisions in Law 146/1914 concerning harmful allegations against the reputation/goodwill of a competitor?
Disparagement constitutes an unfair competition practice and is prohibited by sec.11 and 12 of Law 146/1914. Plain defamation (sec.11) is considered unfair provided that it is undertaken with a competition purpose and the allegations are untrue; liability in such cases is objective, meaning that knowledge of such untruthfulness is not necessary on the part of the offender. Libelous defamation (sec.12), on the other hand, constitutes an unfair competition practice, subject to the condition that the offender is aware of the untruthfulness of the allegations, regardless of whether or not there is a competition purpose; libelous defamation can, under certain circumstances, also constitute a criminal offense.
How can a business entity’s IP portfolio (marks, brands, trade names etc.) be protected under Law 146/1914?
Sec. 13-15 of Law 146/1914 provide protection for unregistered marks, such as brands, trade names, distinctive titles, distinctive marks, packaging designs etc., subject to the condition that they have acquired distinctiveness through use in the relevant market. In addition, sec. 13-15 can provide supplementary protection to registered IP rights (trademarks, patents etc.) in cases of infringement, which are not covered by the relevant specific legislation. The standard required to prove such infringement is the existence of likelihood of confusion to the average consumer, deriving from the identity/similarity of both marks and products/services. Cases of conflict between unregistered IP rights (or between a registered and an unregistered right), are resolved through the application of territoriality and time priority principles. Sec. 13-15 provide both civil law and criminal law protection against such infringements.
Which is the protection provided in cases of leak of trade secrets/know-how?
The value of enterprises lies increasingly in intangible IP rights and associated trade secrets and know-how. It is therefore of vital importance to appreciate their vulnerability, especially where technology facilitates the infringement by either staff members or competitors. According to sec. 16-18 of Law 146/1914 the defense against trade secret infringements provides for both civil law claims and criminal law procedures. Furthermore, Directive (EU) 2016/943 provides for the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure. The transposition deadline for said Directive is 9 June 2018.
Has Greece transposed Directive 2005/29/EC concerning unfair business-toconsumer commercial practices?
Directive 2005/29/EC was transposed through Law 3587/2007, which added sec. 9a-9i to Law 2251/1994 (the latter being in force, as amended by Law 4512/2018 and codified by Ministerial Decision No. 5338/2018). Sec. 9c consists of a general clause prohibiting unfair commercial practices, while sec. 9d,e,g specifically prohibits misleading and aggressive practices and sec. 9f,h provide a “black list” of such practices prohibited per se. Sec. 9i provides for additional legal remedies and sanctions, specifically for violations of the above sections.
Internet and unfair competition: New challenges for an old legal regime?
The field of internet offers a wide spectrum of opportunities for competitors to enhance their market position. Practices like domain grabbing and cyber-squatting may constitute impediment of other competitors as well as exploitation of their goodwill and thus be prohibited under sec.1 of Law 146/1914. Furthermore, the utilization of a third party’s distinctive marks as meta-tags or Google ad-words for the search engine optimization of a business’ website may also be considered as an infringement of such third party’s distinctive marks, which are protected under sec. 13-15 or even constitute an impediment and exploitation of its goodwill (sec.1).
Which are the legal means of defense? What can be claimed and how fast should the reaction be?
Any business entity, including consumer associations – but not a consumer individually – offended by an unfair competition practice is entitled to legal protection under Law 146/1914. The offended party, regardless of whether an extrajudicial statement has been sent to the offender, can file an application for the initiation of interim measure procedures (sec.20), claiming the cessation of the unfair competition practice and the abstention from such practices in the future. The court ruling upon said application is of provisional nature and it must be followed by the filing of a lawsuit usually within one month from its issue date. Said lawsuit may include the following claims: cessation of the unfair competition practice and abstention from such practices in the future, as well as, a claim for damages, when there is intent or negligence on the part of the offender. The time limit for the filing of such action is 18 months from the time that the plaintiff became aware of the practice and the offender and, in any event, 5 years from the time that the practice took place. Law 146/1914 also includes criminal law sanctions for certain practices, although most of them are only prosecuted after the filing of a complaint by the offended. Relevant administrative law measures are also provided in other specific laws (for example sec.11 of Law 3377/2005, as in force following its amendment by sec.39 of Law 4155/2013), concerning the seizure and destruction of unlawful imitation merchandise).
Is there a quicker and more efficient way of protection against improper/illegal advertising/communication?
As in most EU countries, advertising self regulation is recognized in Greece. The Greek Advertising Self-Regulation Council (SEE, www.see.gr) is an independent, non-profit making civil law company, which is competent for the monitoring and implementation of the provisions of the Greek Code of Advertising and Communications Practice. Complaints against any type of advertisement/communication (TV, radio, press, internet, product packaging etc.) are addressed in writing to the First Degree Committee. The case is brought before the First Degree Committee within 5 days from the day following the communication of the complaint to the other party. The relevant decision is issued within 3 working days and is immediately enforceable. A right of appeal before the Second Degree Committee is also provided; the appeal has to be filed within 15 days following the communication of the First Degree Committee decision. The Second Degree Committee’s decision is also issued within 3 working days.
Unfair competition law and antitrust law: incompatible or interconnected?
Despite their different purposes, unfair competition law and antitrust law complement one another, since they both aim at protecting the economic independence of the “players” concerned and the proper functioning of all relevant markets. The example of predatory pricing, which may fall under the scope of both legal regimes, eloquently highlights the interconnection of unfair competition and antitrust law. In fact, the abuse of economic dependence was transferred in 2009 from antitrust legislation to sec.18a Law 146/1914 of unfair competition. Such practice can be prohibited, especially in cases involving the imposition of unjustified contractual terms, terms resulting in discrimination and the sudden and unjustified interruption of long-term business relations.
