Unfair Competition

Definition

Unfair competition refers to the unethical or illegal practices used by businesses to gain an advantage over their competitors in the marketplace. This term is closely connected to the concepts of 12.1 Unfair Trade Practices and 12.2 The Federal Trade Commission, which aim to promote fair and honest competition among businesses.

5 Must Know Facts For Your Next Test

1. Unfair competition can take many forms, including price discrimination, predatory pricing, and the misappropriation of trade secrets.
2. The Federal Trade Commission (FTC) is the primary federal agency responsible for enforcing laws against unfair competition and deceptive trade practices.
3. The Lanham Act is a federal law that prohibits false or misleading statements about a competitor's product or service.
4. Businesses that engage in unfair competition can face civil and criminal penalties, including fines and injunctions.
5. Consumers can also file private lawsuits against businesses that engage in unfair competition, seeking damages and other remedies.

Review Questions

• Explain how the concept of unfair competition relates to the topic of Unfair Trade Practices.
  • Unfair competition is a key aspect of Unfair Trade Practices, as it involves the use of unethical or illegal tactics by businesses to gain an advantage over their competitors. This can include practices such as price discrimination, predatory pricing, and the misappropriation of trade secrets. The goal of Unfair Trade Practices laws and regulations is to promote fair and honest competition in the marketplace, which helps to protect consumers and ensure a level playing field for all businesses.
• Describe the role of the Federal Trade Commission (FTC) in addressing issues of unfair competition.
  • The Federal Trade Commission (FTC) is the primary federal agency responsible for enforcing laws against unfair competition and deceptive trade practices. The FTC has the authority to investigate and take enforcement action against businesses that engage in unfair competition, such as through the use of false or misleading advertising, price-fixing, or the misappropriation of trade secrets. The FTC's efforts to promote fair competition in the marketplace help to protect consumers and ensure a healthy, competitive business environment.
• Analyze the potential consequences for businesses that engage in unfair competition, and explain how these consequences help to deter such practices.
  • Businesses that engage in unfair competition can face significant consequences, both civil and criminal. These can include fines, injunctions, and in some cases, criminal penalties. Additionally, consumers who are harmed by unfair competition practices may be able to file private lawsuits against the offending businesses, seeking damages and other remedies. The threat of these consequences, as well as the potential reputational damage that can result from being found to engage in unfair competition, serve as strong deterrents for businesses. By discouraging unfair competition, these consequences help to promote a more fair and equitable business environment that benefits both consumers and ethical competitors.

Related terms

Antitrust Laws:

Legislation designed to promote fair competition by prohibiting monopolistic practices, price-fixing, and other anticompetitive behaviors.

Deceptive Advertising: Misleading or false advertising that misrepresents the nature, characteristics, or qualities of a product or service.

Trade Disparagement: The act of making false or disparaging statements about a competitor's product or service in order to undermine its reputation and sales.