International Report
Regulatory authority
Competitor
Class action
Consumer/Consumer associations
Supplier
Purchaser
Austria
Yesa
Yesb
Debatedc
Yes
Yesd
Yesf
Belgium
Yese
Yes (provided it has an interest)
Nof
Yes (provided he has a direct and personal interest)
Yes
Yes
Brazil
Yesg
Yes
NK
Yes/Consumer associations can enforce
Yes
Yes
France
Yesh
Yes
NK
Noi/Consumer associations can enforce
Yes
Yes
Germany
Noj
Yes
No
Nok/Consumer associations can enforcel
No
No
Hungarym
Yesn
Yes
Yeso
Yes/Nop
Yes
Yes
Italy
Yesq
Debatedr
Yes
Yes/Consumer associations can enforce
Yess
Yest
Ukraine
Yesu
Yes
NK
Yes
Yes
Yes
United Kingdomv
Yesw
No
No
No
No
No
It can be seen from the above that there is considerable variety as to who can enforce unfair competition laws. In some countries (e.g., Ukraine and Hungary), the only requirement for locus standi is that the suing party is aggrieved, i.e., affected adversely by the practice complained of. In contrast, the United Kingdom does not permit the enforcement of unfair competition laws other than by regulatory or statutory authorities.30 This UK provision has had some strange consequences. For instance, in the context of comparative advertisements (potentially a form of unfair competition), aggrieved competitors have brought actions for trademark infringement where their registered mark is used, and in such circumstances, the CJEU has held that European unfair competition laws concerning comparative advertising are a complete defence if the conduct falls within such laws.31 This depends arbitrarily on whether the defendant has used a registered trademark in the advertisement. In contrast, in Germany, there is no regulatory authority to enforce the German unfair competition law, but instead its enforcement is left to powerful consumer associations or other associations such as the Wettbewerbszentrale (which is an independent institution of German industry whose aim is to ensure that companies compete fairly in the marketplace).
Many countries report that it would be unusual for consumers to bring an action even though they have locus standi because of the cost and uncertainty of such actions. However, as a counterbalance, consumer associations play an important role in protecting the consumer against unfair competition. However, because consumer associations are not themselves injured by the actions, certain countries, e.g. Hungary, do not permit them to bring actions to enforce unfair competition laws. In such circumstances, the non-CSR-compliant undertaking does not have to fear the award of damages against it.
Art. 11 UCPD requires Member States to ensure that persons or organisations regarded under national law as having a legitimate interest in combating unfair commercial practices, including competitors, may take legal action against such unfair commercial practices and/or bring proceedings before an administrative authority competent to decide on complaints or to initiate legal proceedings.32 There is an interesting issue whether such gives Member States complete discretion as to which persons or organisations have locus standi to enforce domestic legislation implementing the UCPD in a private action. The German reporter considers that such gives significant discretion to Member States with regard to who can bring enforcement proceedings. This may indeed be a correct analysis. On the other hand, the wording of Art. 11 UCPD suggests that if under national laws on unfair competition laws that existed prior to the implementation of the UCPD permitted, an undertaking was entitled to bring an action against an other undertaking for unfair commercial practices, then Member States must ensure that the same undertaking also has an equivalent right of action under the UCPD. Apart from the United Kingdom, where no private action can be brought at all for breach of domestic legislation implementing the UCPD, in the other Reporting Countries, private actions can be brought, and in general, such includes both competitors and consumers where such have a legitimate interest. In the case of the United Kingdom, neither competitors nor consumers have locus standi. Either may inform administrative authorities and encourage them to initiate appropriate legal proceedings, but neither can compel them to bring such actions (and indeed such authorities will prioritise according to their limited resources). It is highly arguable that the United Kingdom’s enforcement of the UCPD in this regard is deficient. However, there is considerable discretion given to Member States under the UCPD as to how to implement the directive.
21.5 The Courts and Tribunals that Can Enforce Unfair Competition Laws and the Available Remedies
In general, unfair competition laws concerning CSR policies can be enforced in the courts of Member States. However, in certain countries, unfair competition laws can be enforced in administrative proceedings before an administrative tribunal, which may itself also have the ability to enforce unfair competition laws in civil courts. In this sense, such organisations are similar, in the field of competition law, to the European Commission, which acts as both enforcer and a first instance administration tribunal.
It is useful to set out the differences in the Reporting Countries regarding the existence of administrative tribunals for enforcing unfair competition laws and the remedies available to them (the position regarding competition laws, i.e., abuse of dominant position/anti-competitive conduct is not considered; see Table 21.2).
Table 21.2
Enforcement by regulatory authorities in Reporting Countries
Austria | Public administrative authorities such as BWB and those responsible for enforcement of standards may issue cease and desist orders, but their jurisdiction is limited.a |
Belgium | The Minister of Economic Affairs may conduct an investigation and issue a warning requiring that the undertaking cease practice. However, it has no right to levy fines (although non-compliance with an injunctive order is punishable by fines). If the warning is not complied with, the matter may be referred to the Public Prosecutor. If pursued through the criminal courts, then available fines range from €250 to €10,000. |
Brazil | Enforcement only through courts. |
France | The AARP can bring proceedings before the Jury de Déontologique Publicitaire (JDP): such cannot order fines or imprisonment but may request the withdrawal of the disputed advertisements.b |
Germany | No regulatory or administrative tribunal for enforcement of unfair competition laws. Enforcement is through the courts. |
Hungary | The National Consumer Protection Authority (“NCPA”) and Hungarian Competition Authority (“HCA”) may injunct the offending practices and/or issue fines (between €50 and €6.5 million or 10 % of the net turnover of the undertaking in the previous business year). |
Italy | The AGCM can enforce unfair competition and issue prohibitory orders and issue fines (€5,000 to €500,000). The AGCM can act ex officio or at requests of any subject or organisation having an interest (e.g., competitors, consumers). |
Ukraine | The AMC may issue cease and desist orders and fines (up to 5 % of annual turnover of undertaking in the previous financial year). The consumer protection authority may also impose fines (up to 30 % of the relevant sales revenue). |
United Kingdom | There is no administrative authority that can issue cease and desist orders or fines for breach of unfair competition. Enforcement by regulatory authorities is through the courts. |
21.6 Enforcement Through Courts
As discussed above, there is considerable variety as to whether private undertakings (e.g., competitors) can bring civil proceedings under the laws of the Reporting Countries for breaches of CSR policies. The UCPD specifically envisages that competitors be able to bring proceedings.
However, as with any civil proceedings where the proceedings are brought not by a body tasked with enforcement of particular legislation but rather by a private individual, a claimant will usually need to show that it has sufficient interest in the subject matter of the proceedings and that it has suffered damages.
In general, where there is a breach of a CSR policy, it will not be difficult for a consumer who has purchased products where there has been an overt breach of the policy to show that he was misled and that he is entitled to compensation. However, aside from “class” actions by consumers, such proceedings are rare. In general, the interests of the consumers are protected by consumer associations or regulatory organisations.
In the case of competitors, an undertaking that breaches its well-publicised CSR policy may indeed be harmful to a competitor. For instance, an undertaking that misleads the public by saying that teak (tropical wood) furniture has been sourced from forests where sustainable forestry is practised when in fact such is not the case will have a competitive advantage over those undertakings that do source from sustainable forestry as wood sourced from the latter will invariably be more expensive.
In the case of CSR policies, Reporting Countries were asked to consider three different scenarios in the context of a competitor being able to obtain relief against an undertaking that has not complied with its CSR policy:
coffee marketed with a Fair Trade label that was not sourced from Fair Trade coffee farmers (Scenario 1);
coffee marketed by a business that has imported coffee using ships that emit excessive carbon dioxide that do not comply with a business’s “green” CSR policy (Scenario 2); and
coffee marketed by a business that advertises its CSR policy of providing 2 % of all sales revenue to educating children in the third world but, upon audit, is found not to have complied with that policy (Scenario 3).
Whilst it might be thought that, within the European Union, the ability to recover is harmonised, such is not the case. The UCPD does not harmonise the procedural aspects of enforcing the UCPD other than to require that Member States “shall ensure that adequate and effective means exist to combat unfair commercial practices”. The modality of enforcement is very much left to the Member States.
These three scenarios were chosen because they differ widely in the degree of nexus between the products being bought (coffee) and the offending practice. Plainly, the first scenario has the closest nexus, although it should be emphasised that a failure to comply with the first scenario does not mean necessarily that the coffee’s physical characteristics are any different. This is because Fair Trade conditions relate to social as well as environmental conditions.
In Table 21.3, the responses of the Reporting Countries are set out in tabular form as to whether a competitor could obtain injunctive or financial relief where another undertaking breaches its CSR policy.
Table 21.3
Remedies in civil courts in Reporting Countries