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3 practices that fall under the unfair competition umbrella

On Behalf of | Aug 24, 2021 | Business Litigation |

Unfair competition practices are wrong or deceptive actions perpetrated by a company to derive an advantage over competing businesses. California’s unfair competition law forbids the usage of them.

While this regulation broadly covers any “unlawful, unfair or fraudulent business act or practice,” there are certain actions already acknowledged as falling under its purview.

1. Unfair pricing

Intentionally setting prices below the average in order to undercut competing businesses and cost them clients or sales, also known as predatory pricing, is an unfair competition practice. Another illegal activity is selling at different prices in separate localities within the state, or geographical discrimination.

2. False advertising

Making unproven or misleading statements about products or services may be the first form of this to come to mind, but it is not the only kind of false advertising. Bait-and-switch, where companies market a highly desirable product only for eager customers to arrive at a store and find the item sold out than receive an offer to purchase a similar one for a higher price also falls into this category.

3. Tortious interference

It is unlawful for competitors to interfere with another enterprise’s business relationships. The law also does not allow them to encourage or coerce others into breaching contracts. Examples include persuading individuals to end informal business relations or to back out of negotiations right before the legal formalization of a sale or contract.

Businesses suffering losses as a result of alleged unfair competition practices may take actions such as filing a lawsuit in court. As of 2020, the California Supreme Court holds that those companies facing allegations of unfair business practices or false advertising have no right to a jury trial.