Unfair competition by competitors

Years ago, the notion of unfair business competition was associated with the provisions of Trade Practices Act 1975 (Cth).  Nowadays similar provisions are contained in Schedule 2 to the Australian Consumer Act 2010 (Cth) (Australian Consumer Law) and generally thought to be associated with concepts such as price fixing, cartel conduct, exclusive dealings, retail price maintenance, third line forcing, anti-competitive mergers or other abuses of market power.

Whilst these concepts apply to the conduct of larger business, they are usually of little use to medium sized businesses that find themselves “under attack” by aggressive competitors. In some cases, the actions of the competitor are overly aggressive, and they seem to be cutting corners in gaining market share. If you can’t seem to put your finger on what’s wrong with the actions of the competitor but know something doesn’t seem right or if you need a law firm with Uncommon Nous^® to identify and collate admissible evidence for the purpose of pursuing or exposing the competitor then you need ILACC.  Information is power!

Does your business need an unfair competition review?

Identify Legally Actionable Competitor Conduct (ILACC)

• Legally Actionable or Reportable
• Shield
• Regulatory non-compliance
• Legally actionable
• Competition law
• False and misleading statements section 29(1)
• Misleading and deceptive conduct section 29
• Trademark infringement
• Domain name disputes

The aim of ILACC is to identify actions of the competitor that are ‘reportable’ and/or ‘legally actionable’. Generally, unless thousands of businesses or individuals are significantly affected attempts to report unfair competition to the likes to the Australian Competition and Consumer Commission (ACCC) or the Australian Securities and Investments Commission (ASIC) fall of deaf ears. That said depending on the circumstances, there is certain conduct that can be reported and be actioned by the applicable regulator. We refer to this as being reportable conduct (Reportable). An ILACC review is a unique service by Dundas Lawyers^® used to identify actions of a competitor to determine whether they “cross the line” between fair and being Reportable or legally actionable (Actionable).

What’s involved in an ILACC review?

An ILACC review aims to identify, document and preserve admissible evidence on the activities of a competitor and their related parties that may be Reportable or Actionable. In some cases, where the competitor is crossing the line may be obvious. In others it’s not clear and it becomes necessary to identify, collate and preserve admissible evidence for use in future legal proceedings.

Step 1 – Who?

Identify the competitor, their ultimate beneficial owners and their associates

Sometimes those behind the competitor may be unknown, if this is the case the first step is to identify the ultimate beneficial owners of the competitor. It’s critical in order to respond to unfair competition to have the required information at your fingertips. This involves, particularising and documenting:

• the competitors trading name, company name, the director(s), the ultimate beneficial owners, and their addresses (Corporate Information);
• all related entities of the competitor;
• all social media channels being used by the competitor;
• all registered trademarks being used by the competitor or its related companies;
• all domain names registered in the competitors name or those of its directors; and
• all websites that the competitor promotes its good or services on (Promotional Channels).

Insiders

It’s uncommon (however it does happen) that the competitor is obtaining and exploiting information from one or more employees or director for the sole purpose of competing unfairly.  If this is suspected, we work with a variety of leading private investigators to identify and collate admissible evidence of the activities of any insiders.  See our article on preventing data loss from internal threats.

Step 2 – What?

Compare goods and or services and intellectual property rights

After the competitor’s Corporate Information and Promotional Channels have been particularised, a comparison with the competitor’s goods and or services is undertaken.  On some occasions unfair competition manifests itself in the form of applications for registration of intellectual property rights that attempt to circumvent those of others.  Depending on the competitor and those that are behind it, this involves a review of:

• trademarks;
• domain name registrations;
• patents;
• passing off; and
• other relevant intellectual property.

Step 3 – Why?

Compliance – industry specific legislative compliance

Because each business is different so is the legislation and regulations that govern its operation. For example, if your business manufactures therapeutic goods then there is specific legislation that must be complied with when advertising. If a competitor says that it is ‘Certified Organic showing a particular registration number’ then it is subject to the certification rules of the particular organic certifier. The legislative environment that the competitor operates in, the permits, approvals or certifications that are required are also reviewed. Any non-compliance could be actionable or reportable.

Step 4 – Where?

Outlandish sales claims – “it’s a world’s first” or “the only supplier in the world”

If it looks like a duck and quacks like one – it’s a duck.  If the competitor is making statements about its goods or services that seem unrealistic then it’s worth confirming whether they are in fact true or not.  Unrealistic statements used to promote goods and services can be ‘false and misleading’ in breach of section 29(1)(a) to (n) of Schedule 2 of the Australian Consumer Law (ACL) and amount to misleading and deceptive conduct in breach of section 18.  The line between sales puffery and false and misleading statements can be quite blurred.  Read about false and misleading statements here.

See the recent case involving false and misleading statements and misleading and deceptive conduct, Native Extracts Pty Ltd v Plant Extracts Pty Ltd [2023] FCA 1265, where Dundas Lawyers acted for the applicants and obtained numerous orders for corrective advertising.

Step 5 – When?

The unfair competition – attack vectors – review competitor’s promotional activities

The way that the competitor promotes itself can readily be seen by their actions online.  The rise of anonymity and social media has had the effect of pouring petrol on a fire for those involved in sharp practice and unfair competition.

Trap purchase from the competitor

Depending on the circumstances a purchase of the goods or services from the competitor (Trap Purchase) may assist to identify information about the competitors goods and services that could provide evidence that is legally actionable. Trap Purchases are usual in any sort of intellectual property infringement matter to provide evidence of sales of particular goods or services.

Review of all websites

The websites that the competitor uses to promote its goods and services can be fertile ground for unfair competition and online passing off activities. This is because many of the tags used to index a webpage by Google are hidden and not visible to the browser of the page. It can therefore be easy to mimic what your company has done to gain market share quickly.

Meta tags

Whilst not definitive or (generally legally actionable) an analysis of the competitors meta keywords may provide an indication if they have copied those of others and what they are doing to promote their goods or services.

Domain names registrations

Competitors registering domain names that are closely associated with yours that they have no right to register is also considered and documented.

Google Adwords

We maintain subscriptions to software that allows us to show the words that are being used by the competitor in Google adwords to attract customers.  It is rare but possible that the competitor is using Google adwords in a way that is illegal or reportable.

Negative SEO

One of the most vile things that a competitor can do is to engage in anonymous negative SEO (Negative SEO). We have noticed the phenomenon of competitors (or unknown actors) somehow arranging for their opposition to be added to link farms that are perceived by Google to be toxic, with the result being an attenuation in your businesses search engine rankings. Those engaged in Negative SEO are cowards, hiding anonymously behind VPN’s and the likes of Cloudflare.

What is a toxic backlink?

According to SEM Rush:

“Toxic backlinks (or bad backlinks) are incoming links that negatively affect your website’s visibility in search engine results pages or have the potential to. The term usually refers to links that violate Google’s link spam guidelines because they were placed on external sites for SEO purposes, rather than for users’ benefit”.

Negative SEO is a thing and can on review be easily detected and defended.

Fake Google reviews

Another cowardly attack is for a competitor to create fake Google Reviews that Google refuses to take down without a Court order. The fact that Google allows an anonymous person using a Gmail account to write a review about a business that they have never patronised is beyond appalling in our view.

There are many services which purport to be able to remove fake reviews, however care needs to be taken in engaging them. Perhaps it’s those very services that create the fake reviews in the first place! If fake reviews are causing excessive pain, action can be taken in the Federal Court of Australia to unmark fake reviewers in certain circumstances. See our article on this topic here – Aussie Court orders Google to unmask reviewer.

What happens after an ILACC review is completed?

There is no guarantee (of course) that an ILACC review will identify a legal cause of action against the competitor. However, it may identify gaps in a business’s defences that need to be addressed to protect its future growth.

Knowledge is power

If in the alternative of an ILACC review identifies unfair competitive conduct, then the documented admissible evidence is collated and preserved for later use in considering a legal remedy. A particular focus of the ILACC review is identifying any individual that can be held to be personally liable for the competitor’s conduct. We then provide options to seek a legal remedy against the competitor and to holding the individuals behind it accountable.

Disclaimer
This page contains general commentary only about unfair competition reviews.  You should not rely on the commentary as legal advice.  Specific legal advice should be obtained to ascertain how the law applies to your particular circumstances.

Why choose Dundas Lawyers^® to identify unfair competition?

Having exerted Blood Sweat and Years^® since April 2010 we are the team you want on your side for the long term to act as the ‘bodyguard’ for your business to complete legal forensic investigations and case preparation.  Some of the reasons clients choose Dundas Lawyers^® include:

• our Uncommon business acumen;
• our Uncommon expertise in transactional, compliance and litigious matters;
• our Uncommon expertise in forensic case preparation;
• our Uncommon customer focus;
• the fact that we don’t just know law, we know business!
• how we leverage our Uncommon Nous^® to provide client solutions.

Need help to identify and stamp out unfair competition?

For a confidential, no obligation initial telephone call to find out how we can help your business gain an uncommon advantage by having an ILACC review completed please phone our team on either 1300 386 529 or 07 3221 0013

Malcolm Burrows B.Bus.,MBA.,LL.B.,LL.M.,MQLS.
Legal Practice Director
T: +61 7 3221 0013 (preferred)
M: +61 419 726 535
E: mburrows@dundaslawyers.com.au

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