Competition Law
Businesses must comply with numerous laws and regulations in commercial dealings. Nevertheless, particularly when operating an online shop or selling through platforms such as eBay or Amazon, inadvertent errors can occur and may result in cease-and-desist letters from competitors alleging violations of competition law.
For businesses that comply with the rules, it can be particularly frustrating to discover sellers on eBay or Amazon presenting themselves as private sellers while in fact conducting commercial sales. The advantage of such conduct is apparent: rights of withdrawal that apply to consumer contracts with businesses do not generally apply in the same way to genuine private sales, and consumers may be misled about the status of the seller.
Likewise, businesses may be affected by competitors advertising leading market positions or superior products without being entitled to make those claims. Superlatives such as “lowest price” or “market leader”, the linking of offers with prize draws in order to promote sales and disadvantage competitors, inappropriate limitations of liability or reductions of warranty periods in general terms and conditions, and the omission of additional shipping or packaging charges may all raise competition-law issues depending on the circumstances.
Rights of a business
Commercial conduct is governed in particular by the German Civil Code (BGB) and the Act Against Unfair Competition (UWG). These rules indicate both which contractual provisions a business may use in dealings with consumers and which conduct is prohibited. The UWG also provides a legal framework for taking action against unfair conduct by competitors.
Where a competitor commits a competition-law infringement, a business may have claims for (i) injunctive relief, (ii) information about the extent of the unlawful conduct, (iii) damages and (iv) reimbursement of the legal fees incurred in pursuing the matter.
The most important claim is often the claim to stop the competitor’s unlawful conduct. Following a prompt pre-litigation cease-and-desist letter, this can in suitable cases be pursued within a short period through a preliminary injunction rather than only through lengthy main proceedings. Timeliness is important; according to the practice described on the German page, no more than approximately one month should elapse between becoming aware of the competitor’s infringement and applying for a preliminary injunction. This mechanism can also be used against advertising campaigns that run for only a few days.
A damages claim can generally be asserted in main proceedings. In practice, however, it may be difficult to quantify the amount of damage because it must be shown to what extent the specific anti-competitive conduct gave the competitor an economic advantage.
Preliminary injunction proceedings provide a rapid but provisional determination of an injunctive claim. In our experience, the injunction is generally issued on the day of application. If the competitor accepts it by means of a final declaration, the injunctive claim is resolved. Separate main proceedings are then unnecessary for that claim if the remaining claims for information, damages and reimbursement of legal fees are also settled out of court. Otherwise, main proceedings may still be required to enforce those claims.
Because competition-law court proceedings often involve high amounts in dispute, we strongly recommend obtaining legal advice before taking action. In many cases, the amount in dispute also results in the jurisdiction of the regional courts and thus a requirement for representation by counsel. Particularly where a cease-and-desist letter has been received, the risks and the likely costs and benefits can be assessed in advance.
Our services
We advise businesses before an online shop is opened or advertising measures are launched in order to reduce the risk of cease-and-desist letters alleging competition-law infringements. We review the legality of proposed general terms and conditions, either on the basis of a draft supplied by the client or on the basis of the client’s requirements. This can significantly reduce the risk of pre-litigation disputes, which may generate considerably higher legal and court costs than a prior review or preparation of the terms and conditions. Similar risks arise if a business simply copies another business’s terms and conditions, because it is often impossible to tell whether they were prepared or reviewed by a lawyer.
If you identify sellers on eBay or Amazon offering goods in your field of business while presenting themselves as private sellers, we can also assist in enforcing your rights. Where a cease-and-desist letter is justified, the infringing competitor may be required to reimburse the legal fees, subject in practice to that competitor’s ability to pay.
We can issue pre-litigation cease-and-desist letters concerning competition-law infringements and, where appropriate, enforce claims through preliminary injunction proceedings and/or subsequent main proceedings against third parties.
We have conducted numerous competition-law proceedings before regional and higher regional courts throughout Germany. Decisions obtained before regional courts have in individual matters subsequently been confirmed by higher regional courts and by the Federal Court of Justice. At the final level of appeal, representation before the Federal Court of Justice was provided by counsel admitted to that court, while we continued to assist with the civil proceedings.
We have also defended clients against cease-and-desist letters that were unfounded or inadmissible because of abuse of rights. In this context, we have pursued claims involving lawyers whose conduct, in conjunction with the business concerned and mass cease-and-desist activity, resulted in liability for legal and court costs.
If you would like your contractual provisions or online presence reviewed, or require assistance in issuing or responding to a competition-law cease-and-desist letter, please contact us by telephone or e-mail. We will be pleased to assist you.
