Supreme Court Ruling: Violating Competition Rules Will Hurt

Anyone who has done business will surely recognize unfair competition. For example, an ad claims that a competitor’s product is dangerous or hazardous to health or a newcomer on the market puts a symbol on its trainers that is strikingly similar to the one used on famous running shoes that the world has known for years.

Although the law has provided aggrieved parties with a whole range of remedies, engaging in unfair competition can still pay off for the offender. All the aggrieved party manages to win after an arduous court battle is damages or compensation for unjust enrichment, which are often ridiculously inadequate. On the other hand, compared to what they have to pay, the offender typically benefits a great deal from unfair advertising or parasitic copying.

This may all change, however, following an important recent ruling by the Supreme Court, which affirmed the Prague High Court’s decision in a six-year-old case concerning the famous “reindeer ad” run by a mobile communications operator. In the case, the High Court in Prague imposed a fine of CZK 5 million (approx. EUR 200,000) as cash satisfaction for guerrilla advertising: the defendant stuck its own campaign message (in this case, reindeer antlers) onto the complainant’s billboard ads and telephone booths.

However, the underlying message for businesses in any industry, not just the telecoms market, is this: the Supreme Court has stated in black and white that satisfaction must “hurt” the offender financially and must have a preventative effect, enough (hopefully) to make the offender think twice next time.

By upholding the High Court’s ruling, the Supreme Court reaffirmed the point that businesses should not prosper from unfair competition and that sound business ethics should be respected. Let us hope that the trend established by both rulings continues for many years to come.