Unfair competition: misappropriation of customers

Some time ago, you noticed that many of your company’s customers had stopped doing business with you overnight, for no particular reason. Everything leads you to believe that you are the victim of customer fraud. Your suspicions turn to your direct competitors, your current or former employees, your subcontractors or even one of your partners. What can you do about this haemorrhaging of customers?

From entrepreneurial freedom … to unfair competition

Entrepreneurial freedom allows any economic player to set up or run an economic activity in the sector of their choice on their own behalf or on behalf of others. This means that anyone can set up a business in competition with yours.

As a matter of principle, you do not have exclusive rights to your customers. Your main competitor or one of your former employees can therefore approach, canvass and exploit your customer base.

But this freedom cannot be total!

Customer acquisition should not be ” without faith or law “. Economic players must respect commercial practices and not use unfair methods to attract competitors’ customers.

There are many ways in which a competitor can useunfair practices to divert your customers:

• methodically and systematically approaching your customers;
• making disparaging remarks about you to your customers;
• creating a feeling of confusion in the minds of your customers, in particular by reproducing or imitating your services or products and your graphic charter;
• causing the disorganisation of your departments and operations, in particular by poaching some of your employees in key positions in order to gain access to your customer files…

All of these actions are liable to be punished by a judge.

Given the wide range of unfair competition manoeuvres that can be deployed, our team of lawyers will be able to analyse your situation accurately. They will work with you to devise the best strategy for putting an end to the practices you are suffering as a result.

The difficulty of proving

When your competitor steals customers from you, you have to prove that his actions are unfair, which is sometimes difficult to do. Your competitor will act discreetly and try to erase all suspicion.

GOLDWIN will use its network to call on private detectives, bailiffs and audit firms to assess your loss. Our team will assess the appropriateness of a court order procedure, before the competent courts, to request all legally admissible investigative measures (a formidable and effective procedure).

Obtaining such evidence will then make it easier to prove the causal link between your loss, which will then be precisely quantified by our experts, and the faults committed by your competitor who is seeking to divert your customers through unfair practices.

The specific case of misappropriation of customer files

All too often, employees who have built up a customer file wrongly believe that they own it. However, when they leave, they must return it to their former employer, who is the true owner.

Case lawis unequivocal on this subject: misappropriation of a customer file is characteristic of an act of unfair competition. It makes little difference whether the canvassing of customers via misappropriated files is massive or concentrated on a single customer, and even less whether it is scattered or systematic.

Remedies and penalties

Don’t let such behaviour go unpunished – you can take action!

A competitor cannot use unfair competition to take advantage of all the investment you have made to win and retain your customers.

The legal action that can be taken depends on the perpetrator of the unfair customer manoeuvres, the methods used and the extent of the damage.

Compensation for the loss and the cessation of the competing activity may be obtained:

• By taking direct action against the company responsible for the acts of unfair competition, based on the levers of the action in tort(articles 1240 and 1241 of the Civil Code);
• By taking action against a current employee (commenting on a fault by failing in his duty of loyalty to his employer) or a former employee (breaching his non-competition clause) who has unfairly diverted customers, in particular by making illegal use of the customer file.

It is also essential to hold the new employer of a former employee liable for complicity in the breach of the non-competition clause.

PLEASE NOTE: These acts are punishable under criminal law: an employee who uses information relating to his former employer’s customer base in order to place it at the service of a competing company is committing the offence of breach of trust (art. 314-1 of the French Criminal Code).

Our multi-disciplinary team of lawyers has extensive experience in this field and will be happy to assist you before all the courts: commercial, labour and criminal.

Preventing the consequences of such situations in advance

There are a number of legal tools available to help you avoid a repeat of such a situation. For example, our lawyers can advise you by proposing appropriate solutions such as :

• non-competition and confidentiality clauses in your employees’ contracts of employment;
• a non-competition clause in your partnership or shareholder agreement.

The lawyers in GOLDWIN ‘s various practice areas will be able to support you and put their experience to work for you at every stage of the procedure.