Law on competition

Austrian law on competition, which is regulated by the Federal law on unfair competition (UWG) serves to ensure fair and correct competition. It is intended to allow fair competition between businesses in an atmosphere free of deceit and guile.

Section 1 of the UWG must be interpreted very widely; all actions are penalised that are taken in business dealings for the purpose of competition and that are contra bonos mores.

In practice, the following groups of cases are distinguished when Section 1 UWG is applied:

Violation of the law

An example: someone carries out an activity without a proper licence to trade. This affords him advantages over his competitors who have to bear the costs for obtaining the proper preconditions under trade law.

Breach of contract

An example: someone works in a field that lies outside of his contractually stipulated field of distribution. He thus disregards his own contractual obligations, which creates a disadvantage for the other participants in the market who abide by their contract. Persons who encourage the breach of others’ contracts also act contra bonos mores and thus in contravention of the UWG.

Deceptive act

An example: a door-to-door salesman asks whether the owner of the flat would like to test a new telephone provider. Instead of the trial month the salesman offered, the customer signs a contract with the provider for an indefinite period of time.

Coercion

An example: in day trips just across the border that are offered especially cheaply, bus passengers have to submit to a promotional sales event that lasts hours and during which they are coerced to acquire overpriced cheap goods.

Exploitation of others’ achievements

An example: imitations of watches or other articles

Reference to a competitor

This can be by analogy (a driver of a Porsche is associated with a certain brand of cigarette) or critical (a competitor’s offer is disparaged in comparison with one’s own product).

Restraint

Examples: calls for boycotts of competitors, abuse of a monopoly position (e.g. during the time of the post monopoly, telephone sets were significantly more expensive in Austria than abroad), or compulsory ties (a certain PC program requires the purchase of other products by this software producer and is not compatible with the products of other manufacturers).

Enticement of employees

Under certain conditions, enticing the employees of competitors away can be contra bonos mores, in particular if these employees are induced to “bring along” the regular customers of their former employers that they served.

Section 2 of the UWG deals with fraudulent representation in business dealings. This includes:

• misleading price indications, e.g. discount price if prices are regular
• false indication of origin (e.g. Made in Austria, although the product is from Taiwan)
• false indication of the type of manufacture (e.g. hand-made)
• false indication of the place or source of supply (e.g. factory sale)
• false indication of the possession of awards
• false indication of the purpose of the sale (e.g. clearance sale because of closing of the business).

The comments given above are not exhaustive. They merely indicate some of the fields of application of the UWG.

Besides a knowledge of the law, knowledge of current court decisions is of considerable importance when advising on a current case, especially in the field of the law of competition..

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