Unfair competition and economic parasitism

Q: What are the main acts of unfair competition under French law?

Acts of unfair competition include confusion, disparagement, parasitism, and disruption. They sanction conduct that goes beyond fair and honest commercial practices under French law, such as imitating a product, spreading demeaning statements, or diverting a competitor’s customers. French case law assesses such acts concretely, in light of honest business practices (“usages honnêtes du commerce”).

Q: How can a party obtain compensation for an act of unfair competition?

To obtain compensation, the claimant must prove a fault, damage, and a causal link between the two. The damage may be financial, commercial, or moral. French courts may sometimes presume the existence of damage, particularly in cases of disparagement or breach of mandatory regulations. Once these elements are established, the victim may seek damages proportionate to the loss suffered.

Q: What types of damage may be compensated?

Compensation covers both loss of profit, such as loss of clients or margin, and actual losses, such as additional costs, harm to reputation, or depreciation of assets. Moral damage may also be awarded where the company’s reputation or goodwill has been affected. The purpose of damages is to place the victim in the situation they would have been in had the unfair acts not occurred.

Victim of acts of unfair competition or accused by a competitor? Our firm can assist you in demand or in defence

Unfair competition or parasitic competition: definition, sanctions and compensation

Unfair competition or parasitic competition is a tortious act assessed under the lens of honest commercial practices in France. It sanctions conduct that goes beyond fair and lawful business competition — such as confusion, disparagement, parasitism, or disruption of a competitor. Under French civil law (Articles 1240 et seq. of the French Civil Code), the claimant must prove a fault, damage, and a causal link.

In practice, French case law does not always require the parties to be in direct or actual competition; what matters is the presence of wrongful conduct causing damage.

What are the different types of unfair competition recognised under French case law?

The main types of unfair competition include:

Confusion: Diverting customers by creating confusion about the origin of products or services (imitation of signs, packaging, advertising, commercial identity, etc.).
Disparagement: Casting doubt or discredit on a competitor, their products, or their services, particularly before clients or commercial partners (malicious comments or publications, negative communication…).
Parasitism: Taking advantage of the reputation, investments, or efforts of another economic operator by placing oneself in their slipstream (copying a business model, marketing concept, or commercial method…).
Disruption: Disorganising a competitor by interfering with their internal operations (client poaching, mass recruitment of staff, disclosure of confidential information…).

What conditions must be met to obtain compensation for unfair competition?

To obtain compensation, three elements must be demonstrated:

‍A fault: A clearly identifiable wrongful act
‍Damage: Financial loss, reputational harm, loss of clients, etc.
‍A causal link: The damage must result directly from the fault

Note: In some cases, French courts have inferred the existence of at least moral damage — for instance in matters of disparagement or breach of mandatory regulations by a competitor.

What are the main categories of compensable damages in cases of unfair competition?

The main types of recoverable damages include:

‍Lost profit: Loss of clients, reduced sales, loss of margin or market share, lost commissions, loss of opportunity…
‍Actual losses: Additional costs (marketing, HR), depreciation of assets, loss of company value, recruitment and training costs following poaching, reduction or loss of competitive advantage…
‍Moral damage: Harm to reputation or brand image, loss of trust, reduced attractiveness to prospective employees…

Why seek legal assistance promptly in cases of unfair competition?

Acts of unfair competition can seriously threaten the stability and long‑term viability of a business. The longer such acts continue, the greater the economic and reputational impact on the victim company. It is therefore essential to act swiftly to limit the damage.

For claimants

If you are the victim of unfair competition, our firm can assist you to:

‍urgently put an end to unfair practices, particularly in cases of imminent harm or manifestly unlawful interference
seek evidentiary measures to establish the existence of unfair acts
obtain an injunction to cease the unfair practices, together with a potential penalty payment (astreinte)
‍recover damages for all losses caused by acts of unfair competition
‍negotiate a settlement if this best serves your interests

For defendants

If you are accused of unfair competition by a competitor, our firm can assist you to:

‍prepare your defence against the allegations raised
respond to letters and formal notices with appropriate legal reasoning
‍seek a prompt amicable resolution with opposing counsel
‍represent you before French courts in the event of litigation

‍Contact us today for a personalised quote and to protect your business interests.

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Frequently Asked Questions

What are the main acts of unfair competition under French law?

Acts of unfair competition include confusion, disparagement, parasitism, and disruption. They sanction conduct that goes beyond fair and honest commercial practices under French law, such as imitating a product, spreading demeaning statements, or diverting a competitor’s customers. French case law assesses such acts concretely, in light of honest business practices (“usages honnêtes du commerce”).

How can a party obtain compensation for an act of unfair competition?

To obtain compensation, the claimant must prove a fault, damage, and a causal link between the two. The damage may be financial, commercial, or moral. French courts may sometimes presume the existence of damage, particularly in cases of disparagement or breach of mandatory regulations. Once these elements are established, the victim may seek damages proportionate to the loss suffered.

What types of damage may be compensated?

Compensation covers both loss of profit, such as loss of clients or margin, and actual losses, such as additional costs, harm to reputation, or depreciation of assets. Moral damage may also be awarded where the company’s reputation or goodwill has been affected. The purpose of damages is to place the victim in the situation they would have been in had the unfair acts not occurred.

Is it necessary to prove direct competition or an intention to cause harm to obtain compensation?

No.

A situation of direct competition is not always required, and intentional wrongdoing is not necessary.

What matters is the demonstration of conduct contrary to honest commercial practices that causes damage.