Every entrepreneur strives to develop their business, increase revenue, reduce costs and thus achieve better and better results. This is perfectly reasonable and rational; after all, this is what running a business is all about, where the owner takes responsibility not only for the institution itself, but also for the people he or she employs.
At the same time, however, caring about profits must not mean complete freedom of conduct, adopting a development strategy and putting it into practice. The limit of discretionary behaviour is set by the principle of fair competition. The obligation to comply with this principle is imposed on entrepreneurs by special regulations. On the one hand, there is the Act on Competition and Consumer Protection (Journal of Laws 2007 No. 50 item 331 drafted on the basis of: i.e. Journal of Laws of 2021, item 275.). On the other hand, the Act on Counteracting Unfair Competition (Journal of Laws of 2020, item 1913, of 2021, item 1655), hereinafter the Act on Counteracting Unfair Market Practices (Journal of Laws of 2007 No 171 item 1206 developed on the basis of: i.e. Journal of Laws of 2017, item 2070), which specifies many solutions. The former is of a framework nature, referring to the general concept of protection of consumer rights and free, fair competition. It defines the conditions for the development and protection of competition and the principles of the protection of business and consumer interests undertaken in the public interest. The second regulates in detail the issues of preventing and combating unfair competition in economic activities, in particular industrial and agricultural production, construction, trade and services – in the interest of the public, entrepreneurs and customers. The latter law, in turn, defines unfair market practices in business and professional activities and the rules for counteracting such practices in the interests of consumers and the public interest.
It is useful to familiarise yourself with the meaning of some basic market terms:
Prohibited behaviour
The Competition and Consumer Protection Act prohibits competition-restricting agreements, abuse of a dominant position, concentrations (mergers of companies) in certain situations without the prior consent of the relevant institution and practices that infringe the collective interests of consumers. The manifestation of the latter may be unfair market practices or acts of unfair competition carried out by a company. Pursuant to Article 3 of the Act on Combating Unfair Competition, these are actions contrary to the law or good practice if they threaten or infringe the interest of another entrepreneur or customer. In particular, they include: a misleading designation of an enterprise, a false or fraudulent designation of the geographical origin of goods or services, misleading designations thereof, infringement of business secrets, inducing termination or non-performance of a contract, imitation of products, slander or unfair praise, bribery of a person holding a public function, as well as unfair or prohibited advertising, organising avalanche sales, conducting or organising activities in a consortium system and obstructing access to the market.
Freedom to operate
The act of unfair competition consisting in obstructing other entrepreneurs’ access to the market is described in Article 15 of the Act. According to it, such an infringement may consist in particular in:
- selling goods or services below the cost of producing or providing them or reselling them below the cost of purchase in order to eliminate other entrepreneurs,
- inducing third parties to refuse to sell to other traders or not to purchase goods or services from other traders,
- the materially unjustified differential treatment of certain customers,
- charging fees, other than the trade mark, for accepting goods for sale,
- acting to coerce customers to choose a particular trader as their counterparty or creating conditions which enable third parties to coerce them to purchase a good or service from a particular trader.
Discrimination
The third act given in the article involves discrimination. In this case, the perpetrator of the act and the subject discriminated against should be at different levels of trade. For example, a manufacturer discriminates against a wholesaler or a wholesaler discriminates against a retailer. The essence of the infringement lies in treating different entities differently without any (economic, business) justification. Therefore, if such a justification exists, we will not have an act of unfair competition. Therefore, the use of differentiated discounts depending on e.g. the scale of purchases made by counterparties will in principle be allowed. This is because it is economically justified, e.g. by lower costs of a single delivery of a larger batch of goods. An extreme case of discrimination may be the refusal to conclude a contract. However, also in such a situation, it must result in an impeded access to the market for the discriminated entity. In practice, this may mean not being able to purchase the goods in question within a reasonable distance. If, however, the discriminated trader has access to, for example, another wholesaler or shop within a short distance, it is difficult to speak of a restriction of market access, although each case may of course be different. Another of the prohibited acts is demanding any payment for the acceptance of goods for sale, i.e. making the sale conditional on the payment of fees. This is particularly the case when producers and suppliers are dealing with wholesalers or big-box stores. This type of prohibition should not be equated with remuneration paid by the supplier for additional services, such as conducting promotional and marketing campaigns or better positioning of the product. The charging of such fees is therefore only possible for specific, concrete activities of the seller. Finally, the last act in question, that of coercing customers into making a purchase, may in particular consist of: substantially limiting or excluding the customer’s ability to purchase from another trader, creating situations resulting in third parties directly or indirectly imposing on customers the need to purchase from a particular trader or a trader with whom the company in question has a business relationship, issuing, offering and redeeming vouchers exchangeable for goods or services offered by one trader or a group of traders with a business relationship. The latter law, in turn, defines unfair market practices in business and professional activities and rules against such practices in the interest of consumers and the public interest.