All You Need to Know About Unfair Competition in Business

Many companies encounter unfair competition, but only a few take legal action. Unfair competition occurs when a business gains a competitive advantage or attempts to use unfair, fraudulent, deceptive, and illegal business practices. Fraudulent rivalry in business is characterized by misleading customers. Unfair competition is a serious matter, and the perpetrator should be held liable in a law court.

How Unfair Competition Happens

Acts of unfair competition involve fraud, deception, bad faith, or oppression. The competition is so unhealthy that the victim is thwarted from successfully taking part in a trade.

Unfair competition is against public policy because it negatively affects the public’s greater good. There are several laws to protect businesses and consumers and help eradicate illegal merchandising. Once found guilty in a court of law, the perpetrator is forced to offer monetary damages.

A significant number of small business owners perceive that unfair competition laws are designed to protect large corporations. However, this is not the case. Individuals and small enterprise owners can be hurt, as well. Federal courts have handled numerous cases where consumers lost money due to false advertising.

Types of Unfair Competition

Unfair competition is a broader area that includes a variety of actions. Here are some of them:

False Advertising

False advertising is characterized by making claims that are untrue or misleading. For example, a company claiming that a drug can promote weight loss while such claims have not been proven results in false advertising.

Bait and Switch Tactics

This type of unfair advertising directly affects customers. For instance, an item in demand can be advertised at a competitive price. But when shoppers flock to a store to buy the item, they are told it has been sold out. The business person then purchases a similar model at a lower price and sells it to unsuspecting customers.

Bait and switch is a criminal offense in a couple of states, mostly if the advertised product was not in stock in the first place.

Unauthorized Substitution

This is when a seller replaces a brand with another without authorization. This could include substituting a cheap suit for a designer suit. Such a habit is a crime because shoppers are not getting value for their money.

Trademark Infringement

Trademark infringement involves one organization using another’s trademarked product without authorization. For example, imprinting a coca-cola trademark on a container manufactured by another company is a trademark infringement.


Dumping is the act of selling products abroad at a lower price than what they could cost in the local market. This happens when a greedy official of the importing government offers enticements.

Misappropriation of Trade Secrets

This is a common type of unfair competition in today’s business world. The unlawful act involves stealing a proprietary formula from a competitor. An employee in a reputable burger franchise can rent a store and start preparing burgers using their former employers’ recipe.

Do Unfair Competition Laws Exist?

Unfair competition laws do exist and are regulated by federal and state laws. The laws protect companies in copyrights, false advertising, and trademark areas.


Courts are guided by some laws to prevent the practice of unfair competition. In most cases, the remedy comprises paying property or monetary damages to the victim.

If you are a victim of unfair competition, you can sue for injunctive relief to prevent the unfair practice from continuing. Additionally, you could get monetary compensation for any losses caused by the unfair practice. The remedies can either be offered by a federal or state court depending on the circumstances surrounding the act.



Alex is the co-author of 100 Greatest Plays, 100 Greatest Cricketers, 100 Greatest Films and 100 Greatest Moments. He has written for a wide variety of publications including The Observer, The Sunday Times, The Daily Mail, The Guardian and The Telegraph.

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