Unfair competition and parasitic conduct: how to act

Creating confusion, disparagement, disruption, free-riding on investments… Faced with these practices, you can act quickly to stop them and obtain compensation. Under French law, unfair competition and parasitic conduct are sanctioned through tort liability, which requires compensation for any damage caused by one’s fault (Article 1240 of the Code civil; see also the tort liability section on Légifrance).

Unfair competition vs parasitic conduct: practical definitions

Unfair competition encompasses conduct contrary to honest commercial practices, including:

• Confusion (imitation of a trademark, name, get-up, website or slogans creating a risk of customers being misled);
• Disparagement (unfair statements or comparisons discrediting a competitor);
• Disruption (misappropriation of files, disruptive mass poaching of staff, interference with the distribution network);
• Parasitic conduct, which consists of riding on another party’s economic coattails to gain an undue benefit from its reputation, investments or know-how, even without direct competition.

These wrongs are assessed case by case, in light of fair dealing and evidence of the three elements: fault, loss and causation (art. 1240 C. civ.). For compensation specifically for parasitic conduct (taking account of the free rider’s profits and cost savings), see the Court of Appeal factsheet (Oct. 2023).

Legal bases and interaction with competition law

An unfair competition or parasitic conduct claim falls under tort liability (art. 1240 C. civ.). Depending on the facts, it may be combined with an anticompetitive practices claim (cartels, abuse of dominance) based on Articles L.420-1 et seq. of the Code de commerce and/or Articles 101 and 102 TFEU. Combining claims is possible provided there is no double recovery for the same loss.

How to act effectively: a 5-step method

1) Map the facts and secure evidence

• Compile a chronological file: screenshots, web archives, advertising materials, catalogs, quotations, posts and sponsored campaigns, keyword purchasing records, technical logs and official findings by a commissaire de justice.
• Measure the impact: declining traffic, diverted leads, loss of market share, feedback from misled customers, changes in revenue and margins.
• Have key evidence formally recorded (websites, packaging, shelving, search visibility) by a professional. For practical procedural guidance, consult Justice.fr.

2) Send a well-supported formal demand

Before litigation, send a formal letter detailing the wrongful acts, demanding immediate cessation (with deadlines and a proposed contractual penalty) and compensation. Our guide to an effective formal demand helps you structure your request, supporting documents and timetable.

3) Consider urgent interim measures

If the interference is manifest, the interim-relief judge can urgently order the conduct to stop, the withdrawal of materials, a prohibition backed by a periodic penalty, or even an interim damages payment if the obligation is not seriously disputable. For the procedures and evidence of urgency, see our article on obtaining rapid interim measures.

4) Bring proceedings on the merits under Article 1240

Before the competent court (often the commercial court between business professionals), you may seek:

• Cessation of the conduct and a prohibition on recurrence (with a periodic penalty);
• Full compensation for the loss (losses incurred, lost profits, reputational harm);
• Publication measures for the judgment and withdrawal of the disputed materials.

Consider the jurisdiction clauses in your contracts: they can usefully guide the choice of court. Our article on choosing your court in advance explains good practice.

5) Quantify the loss using a robust method

• Losses incurred and lost profits (lost net margin, commercial disruption);
• The wrongdoer’s profits and investment savings arising from parasitic conduct (campaigns, R&D, design);
• Reputational harm and remediation costs (rebranding, corrective communications).

Case law allows compensation to reflect both losses and profits made by the wrongdoer, as well as cost savings, particularly for parasitic conduct (see the Court of Appeal factsheet, Oct. 2023).

Proving fault, loss and causation

The claimant must demonstrate:

• Fault: specific acts creating confusion (visual/phonetic similarities, purchasing journey), disparagement (objective evidence, dissemination), disruption (targeted poaching, misappropriation of tools), or parasitic conduct (appropriation of investments, benefits gained without contributing).
• Loss: financial losses, brand dilution, costs of countermeasures, deterioration of key indicators.
• Causation: a demonstrable connection between the acts and the measured impact (timeline, sales correlations, customer testimony).

This evidential framework derives from Article 1240 of the Code civil. For the current official texts (Code civil, Code de commerce), refer to Légifrance.

Complementary strategies and prevention

• Protect your distinctive assets (trademarks, designs, domain names) to strengthen evidence of confusion and combine legal bases if needed. See our guide to registering and defending your trademark.
• Set contractual safeguards (confidentiality, no-poaching, non-solicitation, reasonable non-compete provisions) and include a suitable jurisdiction clause.
• Monitor your markets (keywords, comparison sites, marketplaces) and establish a rapid response protocol (official findings, formal demand, interim relief, proceedings on the merits).

Jurisdiction, deadlines and costs: points to watch

Jurisdiction varies according to the parties and contractual clauses (commercial court or judicial court). Address these issues when drafting your contracts with our article on the jurisdiction clause. Time limits for bringing claims (limitation periods) and procedural timetables strongly influence strategy: consult our overview of limitation periods in commercial law and the practical information on Justice.fr. For situations combining unfair competition and anticompetitive practices, refer to Articles L.420‑1 et seq. of the Code de commerce and Articles 101 and 102 TFEU.