Competition Law (Unfair Competition Act)

Consult the following pages, if you want to know more about the fundamentals of competition law:

[icon name=”caret-right” class=”” unprefixed_class=””] Where is the German Competition Law regulated?

[icon name=”caret-right” class=”” unprefixed_class=””] Violations against the Act on Competition?

[icon name=”caret-right” class=”” unprefixed_class=””] What can the Competitor do against Unfair Advertising ?

[icon name=”caret-right” class=”” unprefixed_class=””] Chease-and-Desist Declaration with Penalty Clause – What does it mean?

[icon name=”caret-right” class=”” unprefixed_class=””] What can happen, if the Parties do not agree on the Chease-and-Desist Declaration?

[icon name=”caret-right” class=”” unprefixed_class=””] What happens after an injunction?

[icon name=”caret-right” class=”” unprefixed_class=””] What do we need to help you with your questions in German Competition Law?

Where is the German Competition Law regulated?

The German UWG – Act against Unfair Competition- regulates all those interactions between the German Law and possible unfortunate infringements of the german (and non) regulations on competition.

The most important Claim concerning the Act on Competition is the so-called injunctive relief (Unterlassungsanspruch). Other kinds of Claims are for instance the so-called in German Schadensersatz- und Auskunftsansprüche : Claims for Damages or for Information.

In German Law, Claims for Injunctive Relief (Unterlassungsanspruch) do not involve the culpability of the accused. Consequently, the “infringer” is not able to exculpate himself by claiming the not awareness of the illegality of his actions.

It could happen that through a breaching of the Act on Competition also another kind of infringement could take place; this could be the case of an infringemente against the German Teleservice Act (Teledienstegesetz), Foodstuffs Act (Lebensmittelgesetz) or the Quotation of Prices Act (Preisangabenverordnung). These kinds of breaches are part of the case group of the “Vorsprung durch Rechtsbruch” (advantage through breach of law).

Violations against the Act on Competition

Similar to the Anglo-Saxon legal System, the German Act on Competition is strongly influenced by individual-case decisions. Marketing measures shall, of course, not mislead the targeted public. Comparative advertising is generally permissible, but numerous requirements shall be respected. Furthermore, the exercise of direct or indirect coercion on customers may be also considered anti-competitive; the customer could acquire or buy the products not on the basis of a free decision but because of the pressure exerted on him/her. The targeted “harmful obstruction” of other competitors, the poaching of customers or employees directly from competitors, or calls for boycotts are generally prohibited. It is also considered unfair to exploit the inexperience of other competitors. Since the abolition of the Law on Discount (Rabattgesetz) and the Ordinance on Bonuses (Zugabeverordnung), numerous discount systems, bonuses and other customer loyalty systems have been tendencially judged by the courts as basically permissible advertising measures. A special case of Unfair Competition Law is for instance the exploitation of third-party services. The mere imitation of unprotected services as such is not considered unlawful. Only the slavish imitation, the exploitation of foreign advertising measures or the exploitation of the foreign reputation becomes anti-competitive.

What can the Competitor do against Unfair Advertising?

The first step is generally a written letter of warning (Abmahnung) together with a request of submission of a cease-and-desist declaration (Abgabe einer strafbewehrten Unterlassungserklärung).  A competitive relationship and action for the purposes of competition are considered prerequisites for an injunction.

Cease-and-Desist Declaration with Penalty Clause – What does it mean?

By submitting a Cease-and-Desist Declaration Penalty Clause, the infringer undertakes to refrain from anti-competitive conduct in the future by avoiding a contractual penalty. The amount of the contractual penalty depends on the severity of the infringement. It often amounts to more than 5 200 Euros. The submission of a cease-and-desist declaration without an appropriate contractual penalty is not sufficient to satisfy the legal protection requirements of the competition (no serious elimination of the risk of repetition takes place).

After the submission of a cease-and-desist declaration, all necessary and reasonable measures must be taken to immediately cease the unlawful conduct.

The submission of the cease-and-desist declaration and its acceptance regulates the competitive relationship within a contractual limitation period, whereas a 6-month limitation period generally applies to all claims concerning the German Competition Act. For this reason, too, its submission and content should be carefully considered and examined: it is no wonder that the cease-and-desist declaration demanded by the competitor often goes to far.

What can happen, if the Parties do not agree on a Cease-and-Desist Declaration?

If the content of the Cease-and-Desist Declaration is not sufficient, the competitor may seek legal assistance. After the expiring of the deadline set in the previously issued notice of warning (which is often a short period of time) interim injunction proceedings could already start taking place. Since an application for an injunction is only admissible if the matter has not been dealt as “urgent” by the applicant, only a few weeks may elapse between the acknowledgement of the infringement and the application. The court can decide in a few days without a tribunal hearing and order the infringer to “cease and desist”. The additional costs incurred as a result must then be borne by the infringer.

What happens after an injunction?

The temporary injunction is, as express by the name itself, “temporary”:  in particular, it is neither to consider final nor subject to time-barring.

Moreover, an appeal against the interim injunction (or its related costs)  may also be issued.

What do we need to help you with your questions in German Competition Law?

It generally depends on what your needs are: if you are willing to have your advertising measures checked, we will need to see your advertisement materials, correspondence, distribution etc.

In case you have received a notice of warning (Abmahnung), it would be necessary for us to analize the letter you have received.

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