Unfair Competition

One of the most significant issues in the field of protection against unfair competition is the one related to the liability of business entities for spreading misleading information. The majority of cases considered by the Antimonopoly Committee of Ukraine usually refer to such violations. As a rule, consideration of these cases results in the largest fines imposed due to violations of legislation on protection against unfair competition.

The reasons for such a situation are as follows. First of all, this field is the largest one to regulate. Secondly, the majority of business entities still do not understand in a clear way the requirements of legislation related to advertising and promotional activity.  

According to Article 15-1 of the On Protection against Unfair Competition Act of Ukraine the spreading of misleading information means giving information by a business entity directly or through another person to one, or several, or an indefinite number of persons, including in advertising, incomplete, inaccurate or false statements, in particular, at the result of chosen method of their presentation, certain facts concealment, or indistinct formulations that have affected or shall affect these persons to purchase, to order, or to realize (to sell, to deliver, to execute, to supply) products, works, services of such a business entity.

Misleading information includes statements that:

1) contain incomplete, inaccurate or false data related to the origin of the product, manufacturer, seller, manufacture method, source and method of purchasing, realization, quantity, consumer values, quality, package contents, validity, standards, specifications, features of products’ realization, operations, services, price and promotional events on them, as well as the essential terms of agreement;

1) contain incomplete, inaccurate or false data related to financial standing of the entity or its economic activity;

3) refer to authorities and rights that are not enjoyed, or relationships that are not involved in;

4) refer to production output, purchase, sale or supply of products, works and services that were not performed on the day of spreading of information.

Unfortunately, the provisions contained in Artic- le 15-1 of the On Protection against Unfair Competition Act of Ukraine are fairly subjective and that is why usually in practice, especially while creating promotional material, the question related to whether the advertising video, announcement or other types of advertisements correspond to the legislation on protection against unfair competition.

It should be noted that the Antimonopoly Committee of Ukraine takes a strict position related to the interpretation of the provisions of the stated Article. In particular, the Committee assumes that any promotional information shall be absolutely true (the specifications of good listed on it shall correspond to reality), accurate (exaggeration, or using other artistic device are allowed in the advertising only if the consumers do not experience misunderstandings related to the characteristics of the good or terms for provision of the services) and full (advertising shall not generate misunderstandings related to the specification of goods or terms for provision of the services through concealment of information, or failing to provide the consumer with important information).    

Taking into account the court practice based on the results of appealing decisions of the Antimonopoly Committee of Ukraine in cases related to violation of Article 15-1 of the On Protection against Unfair Competition Act of Ukraine, it is possible to define a number of key principles that the advertising or information message of the business entity should comply with in order to avoid risks of bringing to responsibility:    

1) using clearly defined statements in the advertisement shall be proved by the respective documents or information (research, expert opinions, technical specifications of production of goods, etc);

2) the advertisement should not hide certain essential characteristics of a good, potential for its use and/or purchase terms as well as other information about the good that will obviously have an influence on a consumer’s choice of such a good;

3) clarifying information, remarks should be placed in the advertisement in a way that will not make it difficult for the customers to read or to perceive such information (it is forbidden to use consciously small print, to increase the speed while reading and giving the information aloud, etc);  

4) the markings of a product should contain all information stipulated by legislation; during the promotional event for the product its main conditions, particularly its term of use should be placed on the product’s packaging;

5) general impression about the advertisement should not provoke a customer’s misunderstanding about the product or its characteristics (for instance, placing the image of fruits on the package of the food product (juice, yogurt) that were not used for making this product may create an impression for the customer that they were but this will not correspond to reality; moreover, the fact that the producer does not refer to the existence of such fruits in the product does not release this person from liability).

Despite certain principles to comply with all regulations and requirements of the legislation as well as to follow all informational and promotion materials of enough subjective position of the Antimonopoly Committee of Ukraine, this issue is still very important and complicated for all business entities.

In order to avoid any risks of bringing to liability the business entity may address to the Antimonopoly Committee of Ukraine in order to obtain its conclusion with recommendations related to its actions compliance to the provisions of Article 15-1 of the On Protection against Unfair Competition Act of Ukraine.

The conclusions are imolemented by the Antimonopoly Committee of Ukraine or its administrative board.

In order to obtain such a conclusion it is necessary to file an application to the Antimonopoly Committee of Ukraine. Such an application shall include the following information:

— the name of the authority to which the application is filed;

— the naming (for legal entities), or name (first name, second name, patronymic for individuals) of the business entity (applicant) its place of residence (for individuals), as well as other information;

— the description of the action related to which the applicant addressed to the authority;

— document to prove the payment of charges for application to be filed (transfer order marked by the bank, or receipt)

— the list of documents and records that are enclosed to the application.

While drafting the application, documents and other materials to prove described in the application circumstances it is necessary to take into account that the recommendations are provided only on the basis of the information contained in the application and documents enclosed to it without conducting additional research with attraction of third persons. The Committee’s conclusion depends on reasonable evidence contained in the documents enclosed to the application to prove that the disseminated information is true, full and accurate and is based on real, documented circumstances.

So, it is necessary to enclose all documents and other materials available for the applicant to prove the circumstances described in the application, particularly documentary confirmation of the information to be true, complete and accurate.

Documents and information in a foreign language shall be supported by their translations into Ukrainian, which in their turn shall be certified in accordance with the established procedure.

The term for the Antimonopoly Committee of Ukraine or its administrative board to consider the application is 30 calendar days starting from the day when the application was filed.

In order to file each application it is necessary to pay a charge in the amount of 80 untaxed minimum citizens’ incomes.

The following conclusions are drawn during the result given by the Antimonopoly Committee of Ukraine’s case consideration:

— the actions of the business enti- ty described in the application include, or may include, features of violation of legislation provided by Article 15-1 of the On Protection against Unfair Competition Act of Ukraine;

— the actions of the business entity described in the application do not include, or may not include, features of violation of legislation provided by Article 15-1 of the On Protection against Unfair Competition Act of Ukraine;

— the applicant did not provide sufficient information to draw a clear conclusion related to the existence/lack of features of violation of legislation provided by Article 15-1 of the On Protection against Unfair Competition Act of Ukraine described in the application.

A conclusion related to lack of information is provided in case of lack of the following information in the application:

— on the method of giving certain information (in particular, publication in mass media, on television, etc.);

— that prove certain records to be complete, accurate and true (in particular, opinions of experts, scientists, results of conducted researches, marketing research, etc.);

— that allow a conclusion to be drawn on the possible influence of certain records on consumers’ intentions to buy, or to realize certain goods, works, services of the business entity (in particular, quality characteristics, price, etc.).

The obtaining of a conclusion on the lack of information provided by the applicant to make a conclusion related to the existence/lack of features in a business entity’s actions described in the application of violation of legislation provided by Article 15-1 of the On Protection against Unfair Competition Act of Ukraine does not deny the right of the applicant to address the Antimonopoly Committee of Ukraine again.