What is unfair competition?

by | Jul 13, 2021 | Business Disputes, Business Litigation |

It is a fact of life that some businesses perform better than others. While it is good to be the top brand with the accompany fiscal success, less successful business owners may feel like they cannot get a break or the competition inexplicably always seems one step ahead of them. Maybe the competition is just better, but it could be a matter of unfair competition. Unfair competition occurs when a business employs business practices that either harm the consumer or fellow businesses.

While consumer protection law can remedy issues where the business takes advantage of the customer somehow, companies can use a business tort designed to prevent or stop unfair practices. These involve state and federal laws that protect economic, creative and intellectual investments in products and services that enable a company to stand apart from the competition. There may be practices by one business that intentionally, recklessly or negligently injure the other business or prevent it from operating.

Typical examples

Businesses will often lean on trademark infringement or intellectual property law to protect their bottom line. But unfair competition can also apply to:

  • Bait and switch: This involves the unauthorized substitution of one brand with another one.
  • False representation: This involves misleading products or services, including guarantees or warranties.
  • False advertising: Exaggerated claims about the product effectiveness, such as claiming specific benefits over competitors’ products rather than saying something general like “the best” or “customer favorite.”
  • Restraint of trade: Unfair actions may hinder another company from conducting business as it usually would in other circumstances.

Taking legal action

The state and federal courts have several tools at their discretion to prevent unfair competition. The results can involve restoring money lost due to unfair competition. Several states provide them with the ability to issue an injunction to stop future harmful behavior. A violation of the injunction leads to contempt of court.