Unfair competition in contextual advertising

03/22/2016 18,646 1 Reading time: 7 min. Rating:

Author

: Konstantin Bely

In the previous article, I talked about what competitiveness in the market is, and now I want to separately consider such concepts as fair and unfair competition . Surely everyone has heard about them, but not everyone can answer right away what this means. In this article, I will explain in clear and accessible language what fair competition is and what unfair competition is, and what the differences are between them.

Fair and unfair competition: what is it?

So, it is common knowledge that competition is one of the key drivers of a country’s economy globally and one of the main principles for developing one’s business locally. It is largely thanks to competition that economic growth occurs, goods and services are developed and improved, service quality improves, and new forms of business are created and developed.

But not everything is so wonderful. Since free market niches now practically do not exist, it is becoming increasingly difficult to compete. After all, there are more and more business participants, but the number of their clients remains the same, therefore, the level of competition is growing more and more, and not every businessman has the abilities and resources that would allow him to honestly win this competition.

Against this background, so-called unfair competition began to appear more and more often. What is it and how does it differ from conscientious - let's figure it out.

Fair competition, examples

Fair competition is the conduct of competition using fair and legal methods that do not violate generally accepted business norms.

The following examples of fair competition can be identified:

Improving the quality of goods and services produced;
Reduction of trade margins;
Carrying out promotions and sales;
Providing various types of discounts;
Conducting advertising campaigns;
Improving the quality of service;
Warranty and post-warranty service of products;
Gifts for customers;
Free delivery, assembly, connection;
Etc.

Unfair competition, examples

Unfair competition is the conduct of competition using methods that are contrary to the law, as well as generally accepted business norms.

Let's look at common examples of unfair competition of varying degrees of severity:

T.N. “industrial espionage” - obtaining secrets of competitors in a dishonest manner;
Counterfeiting competitors' products;
Creation of brands that are in tune with popular ones (for example, ABIBAS, etc.);
Any other actions that are aimed at evoking associations among buyers with competitors’ products (similar packaging, similar logo, etc.);
Blackmail of competitors;
Deliberate dissemination of negative information about competitors and their products;
Damage to competitors' property;
Taking possession of competitors' trade secrets and its illegal use;
Deceiving consumers, providing them with false information about products;
False information in advertising of goods and services;
Etc.

In many countries, the concept of unfair competition is spelled out in legislation. As a rule, unfair competition is interpreted there as any illegal actions carried out with the aim of obtaining advantages in business, which may entail causing losses to other business entities.

Also in many countries, dumping (deliberately inadequate price reduction) and violation of antitrust laws are considered unfair competition.

In Russia, Ukraine and other post-Soviet countries, unfair competition is often very closely related to corruption: businessmen with connections to corrupt officials, through regulatory authorities, force their competitors out of the market through numerous checks and pressure.

Forms of unfair competition

Unfair competition is understood as competition using methods prohibited by law. of unfair competition include the following actions:

Espionage in production

Involves the introduction of a person into the production or office of competitors with the task of dishonestly obtaining secret information. The main goal of industrial espionage is to save the organization time and money, which are required to catch up and in the future keep up with the competitor.

An example of industrial espionage

A good example is the case of training employee Valery Oleinikov, who transferred information about the repair technology of Mi-8 helicopters for sale to Iran. The Moskovsky District Court of St. Petersburg sentenced him to 6 months in prison.

How to deal with unfair competition?

In conclusion, a few words about what to do if you are faced with unfair competition and how to deal with it. In this case, the main thing is not to be like your competitors; try to protect your interests exclusively in the legal field. Namely:

Review current competition laws;
Find the rules of the law that your unscrupulous competitors are violating towards you;
Write a statement about this to law enforcement agencies or file a lawsuit against your competitors (you can first try to negotiate with competitors, if that doesn’t work, proceed to these measures);
If necessary, use the services of experienced lawyers and attorneys.

Now you have some idea of what fair and unfair competition is. I wish you to conduct business only through honest, fair competition and never encounter unscrupulous competitors. Well, if you come across something, don’t give free rein to your emotions and think carefully about your response. This is the only way you can adequately resist unfair competition, which, unfortunately, is far from uncommon in our time.

That's all. I wish you development and good profits. See you again on Financial Genius!

Estimate:

Bringing to responsibility for several offenses

The Code of Administrative Offenses states that a person cannot be held accountable for the same act twice. Thus, if one contextual advertisement falls under several offenses, the violator will not be able to prosecute them. In addition, prosecution for unfair competition is possible only if the Law “On Advertising” has not been violated. This is regulated by Part 1 of Article 14.33 of the Code of Administrative Offenses of the Russian Federation.

However, in practice there are also opposite situations. A supermarket chain was held accountable for advertising chocolate products on the Internet. The court noted that this does not exclude the possibility of being held accountable for unfair competition, since according to Part 1 of Article 4.4, when several illegal acts are committed, punishment is imposed for each of them. In relation to the situation with the supermarket chain, the fact of violation of competition law was established by the antimonopoly authority.

What does fair and unfair competition mean?

The concept of unfair competition refers to a struggle between companies organized in circumvention of current legislation. It is believed that it is carried out using prohibited methods, when human rights, the interests of other organizations, and established business relationships are violated. The law on unfair competition is reflected in the acts “On the Protection of Consumer Rights” and “On the Protection of Competition”. It regulates relations between opposing companies.

The following features of unfair competition are distinguished:

one company seizes all the privileges in the field of activity;
the laws of the Russian Federation, the rules of ethics and business relations are violated;
organizations are damaged and there is a negative impact on business.

If a company uses fair and legal methods of struggle, then no damage is caused to another enterprise.

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You can distinguish fair competition from dishonest confrontation by a number of signs. Fair struggles include:

small markups on the product;
offering a product of higher quality than others;
use of incentive programs and promotions;
raising standards of work with customers;
warranty and post-warranty service;
gifts for consumers;
free related services (delivery, setup, connection, etc.).

That is, a fair fight between companies is one that is conducted in accordance with the law.

All actions that are carried out in non-compliance with the law are unfair competition in the market. These include:

use of illegal methods to disclose trade secrets;
copying the goods of another company, but with obviously low quality of workmanship, which ultimately harms the reputation of the original;
the name of the organization contains prohibited words; it is similar visually and in sound to the name of a well-known company, which is why buyers confuse the company with the latter;
methods that mislead the client regarding the origin of the goods;
deliberately caused damage to opponents' products;
illegal methods of obtaining information about a competitor’s business and their unfair use;
extortion and slander of an opposing company;
exaggerating or lying about the characteristics or quality of a product in order to gain an advantage in the market;
advertising of a product that discredits the name of the opponent, or contains incorrect information.

In modern Russia on the territory of the former CIS countries, the manifestation of unfair competition is most often carried out in the form of bribery. Dishonest businessmen use bribery to direct inspections to enemy companies.

Article 34 of the Constitution of the Russian Federation is the main legislative act establishing the inadmissibility of monopolization and the right to entrepreneurial activity.

Federal Law No. 135-FZ contains provisions that define the concept of unfair competition, its characteristics and methods of manifestation.

Definition of competition, its types

Definition 1
Competition is the struggle of business entities for access to factors of production and sales markets, that is, for more favorable conditions of existence.

The emergence of competition is a continuation of the formation of market relations, characterized by the following features:

Independence of actions of business entities.
A variety of forms of ownership.
Free pricing.
Limited role of the state.

Under these conditions, economic agents strive to realize their own commercial interests. However, the conditions for their functioning are such that factors of production are limited. Buyers are also picky and follow their desires, which affects the ability of entities to sell the volume of finished products necessary for their functioning. Competition between economic agents can be price or non-price. The first involves setting a price that will allow the seller to attract the largest number of buyers. However, a low price can scare off consumers and reduce sales volumes. Now enterprises and other business entities are resorting to non-price competition. It may include marketing activities, elaboration of the current and fixed costs of the enterprise, and reduction of production costs. Each enterprise strives to maintain competitiveness over a long period, which means it takes a set of measures to reduce production costs and increase sales markets.

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Note 1

According to its form, competition is divided into perfect and imperfect.

Perfect competition is a form of an ideal market situation when none of the participants in economic relations is able to change the current state of affairs. This type of competition is usually considered in theoretical studies, where models are formed that must be strived for when carrying out economic activities.

In practical life, one of the types of imperfect competition usually operates. Among them are monopoly, oligopoly, and monopolistic competition market.

A monopoly presupposes that one business entity is a producer of unique products. It can determine both the volume of output and the selling price. Consumers have no choice, they can only buy from one seller. A monopolist has no competitors.

Oligopolies involve the presence of two to twenty sellers of homogeneous products. Oligopolists may enter into an unspoken conspiracy to maintain a certain price level. Oligopolies are typical for mechanical engineering industries that involve complex technical processes.

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Monopolistic competition is inherent in the consumer market. There are a large number of business entities operating here, each of them strives to monopolize its market share. Information within monopolistic competition is incomplete. Entities can easily enter and exit the market, but will always face a high level of competition.

Methods of unfair competition

In business, unfair competition is not uncommon. However, the goal is always the same: causing losses to other business entities to weaken their positions in the market. Here, a variety of forms of unfair competition can come into play:

dissemination of false information that is deliberately distorted;
incorrect comparison with similar products, the purpose of which is to discredit the manufacturer, seller, etc.;
use of someone else's trademark and other means of individualization;
receipt, use and disclosure of information constituting a trade secret, as well as the results of intellectual activity.

All of the above methods are actively used on the Internet - usually these are bad reviews, custom articles, “exposing” videos on YouTube, etc. This way, it’s even easier to discredit a company, because it can be held accountable for a false post. for example, on a social network it is very difficult. However, it is possible and even necessary to resist unfair competition.