In a business law context, unfair competition describes the area of antitrust and trade regulation dealing, which addresses dishonest or fraudulent rivalry in trade and commerce; or, deceptive trade practices.
Whenever a business or person engages in activity that is likely to mislead the public, it may be considered as a deceptive trade practice. Deceptive trade practices are prohibited because of the negative effects that they have on consumers and the general public, which will be further discussed below.
Federal and state laws both prohibit the use of deceptive trade practices. An example of this would be how The Uniform Deceptive Trade Practices Act (“UDTPA”) is federal legislation that regulates deceptive trade practices. All states have adopted some form of the Act in their own statutes. Additionally, the Federal Trade Commission Act governs deceptive trade practices, which will be further discussed later on.
Deceptive trade practice laws address a wide range of business aspects, including:
- Trade & commerce;
- Consumer transactions; and
- Goods & services.
In determining what constitutes deceptive trade practice, the defining factor is that the activity results in misleading or misinforming the recipient of goods or services. The most common examples of deceptive trade practices would be false advertising and tampering with odometers or other measuring devices.
Some other examples of activities that would be considered deceptive trade practices may include:
- Passing off goods or services as those of another;
- Causing a likelihood of misunderstanding or confusion regarding the source, certification, or approval of goods or services;
- Using deceptive designations or representations of the geographic origin of the product or service;
- Representing that the goods or services as having ingredients, characteristics, uses, qualities, or benefits that they do not actually have;
- Claiming that goods are new or original when they are used, second-hand, altered, or deteriorated;
- Representing that certain goods or services are of a certain quality, grade, standard, model, or style, when they are of another;
- Misrepresenting the goods, services, or business of another entity through the use of misleading facts; and
- Advertising products with the intent to sell them at a different price or quantity than advertised, such as price reductions.
In addition to the provisions contained in federal and state laws, deceptive trade practices are also monitored and regulated by the Federal Trade Commission (“FTC”). These focus more on the activities of business, rather than the goods and services. Examples include:
- Using unfair or unconscionable provisions in contracts;
- Using coercive or high-pressure sales and collections tactics;
- Engaging in illegal conduct; and
- Taking advantage of factual circumstances, such as emergency situations or the vulnerability of a particular marketing demographic.
Antitrust laws are designed to ensure free competition in the U.S. marketplace by regulating how companies conduct their business. Antitrust law prohibits practices that stifle free competition, such as:
Antitrust laws are enforced through the government, as well as the people, and there are both criminal and civil penalties for any violation of antitrust laws. Violators of antitrust laws can face penalties such as fines, damage awards, and prison time. The government encourages private individuals to report and take action when they see an antitrust violation, which is why they allow individuals and companies to bring suit. Additionally, federal and state antitrust laws provide for triple (or treble) damages.
What Is Intentional Interference With Prospective Business Advantage?
A person can bring a suit of intentional interference with prospective business advantage against a third party, when they can prove that the third party disrupted their profitable business relationships. Under these circumstances, the law attempts to protect business relationships from outside disruption by a third party.
While state laws vary, intentional interference with prospective business advantage generally considers the following five issues:
- Was there an economic relationship between two parties containing a reasonably probable future economic benefit that would have been recognized if the outside party had not interfered?
- Did the disrupting party have knowledge of the business relationship?
- Were the acts committed actually designed to disrupt the business relationship?
- Was there actual disruption of the business relationship?
- Under the circumstances, should the disrupting party be held liable to the injured party?
It is important to note that the economic relationship between the two parties must contain a reasonably probable future economic benefit. This means that the injured party does not need to show an actual economic benefit in the business relationship; rather, they need only show that the economic advantage to their business relationship was reasonably probable.
Knowledge is an especially important element of intentional interference with prospective business advantage. As such, an outside party who has no knowledge of the existence of a business relationship cannot be held liable when the relationship dissolves, provided their acts are lawful.
Additionally, if the outside actor’s purpose was not to interfere with the party’s business relations, they cannot be liable even if their actions have the unintended effect of discouraging one party from doing business with the other. Simply put, the outside actor must intend to cause the fallout in business relations.
Are There Any Legal Remedies For Deceptive Trade Practices?
Consumers and individuals who have been victimized through deceptive trade practices may have a variety of remedies available for them in court. The most common remedies would be monetary compensation and equitable relief.
A plaintiff who has proven actual damages may be entitled to statutory damages in order to reimburse them for losses. Some states enforce treble or triple damages in especially severe cases, which require the offender to pay triple the amount of the losses. Punitive damages, as well as criminal prosecution, may be available in some jurisdictions.
The court may also order an injunction, which requires the offender to take certain measures or abstain from specified activities. Cease and desist orders are also commonly issued for deceptive trade practices.
Some state statutes allow for “private enforcement,” which means that individual citizens may directly sue the business for deceptive trade practice violations. However, not all states allow private enforcement or individual lawsuits; rather, the state or the federal government itself will bring suit against the business organization.
What Else Should I Know About The Federal Trade Commission Act?
The Federal Trade Commission Act is the statute that established the Federal Trade Commission (“FTC”). The FTC is an independent, five-member commission that administers laws which regulate businesses and prevent deceptive trade practices, unfair restraints on trade, and the establishment of business monopolies.
- False advertising and false business claims;
- Consumer fraud and scams;
- Breaches of consumer contracts;
- Breaches of warranty;
- Dangerous or defective products; and
- Health and safety code violations.
The Federal Trade Commission Act grants the FTC authority to issue an order against a violator on behalf of the general public, which requires the violator to stop the illegal practice. If the violator does not comply with the order, the FTC can impose significant fines. However, the violator can appeal the FTC’s order in Federal court.
Do I Need A Lawyer For Help With Intentional Interference With Prospective Business Advantage?
If someone has intentionally interfered with a prospective business advantage, you should consult with an experienced business lawyer. An experienced business attorney can ensure that you understand unfair competition laws, and will also be able to represent you in court as needed.