Unfair Commercial Practices Directive, Chapter 2, Article 5, 1.

Mere acts carried out for competition purposes in the market, are not automatically considered to be unfair when they harm the business interests of a competitor.

The defendant was a former employee of the plaintiff in the real estate management and administration sector. The defendant quit his job in order to set up his own business in the same sector, and he started to compete with his former employer. Additionally, he won over the plaintiff's clients and contracted an employee of the plaintiff. Since this is a Court decision in appeal, the facts are not reviewed in detail.

The Court of First Instance of Cáceres decided that the defendant's conduct was against the general good faith principle, and therefore, against the fair competition principles as introduced by the UCP Directive into the Spanish law. As a consequence, the defendant was sentenced to pay compensation to the plaintiff in the amount of €134,906.19 and the amount equivalent to the severance compensation paid to the plaintiff's employee wrongfully dismissed as well as interests.

The Provincial Court of Cáceres was called to review the decision of the lower Court of Cáceres and decide whether the defendant's conduct was an unfair competition practice.  

Are mere acts carried out for competition purposes in the market, considered to be unfair when they harm the business interests of a competitor?

The court first stated that according to the principles of freedom of enterprise and freedom of competition, mere acts of competition such as contacting the clients of a competitor or winning them over cannot be considered per se a conduct contrary to good faith or fair competition principles.

In a well-functioning market, the court continued, companies need experienced employees in the sector, and making a better offer to the employees of a competitor is not considered an unfair practice. Under Spanish law, inducing into a normal termination of a contract, or unfairly benefiting from a contractual breach (especially if the goal is to disclose or make use of an industrial or trade secret, or to deceive or eliminate a competitor or similar) will be deemed to be an unfair competition practice.

In addition, the defendant's role in the plaintiff's company would have not allowed him to establish professional or personal relations with real estate owners and/ or to have influenced them in a significant manner for business purposes.

The Court decided that the conduct of the defendant was not anti-competitive, and ruled in favor of the appeal filed by the defendant, rejecting the conclusions and decision issued by the lower Court.

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The appeal is successful and the decision of the Court of First Instance was dismissed.