JOHN CARLOS I

KING OF SPAIN

To all who present it and understand,

Sabed: That the General Courts have approved and I come to sanction the following Law:

PREAMBLE

I. Unfair competition, still constituting a piece of legislation of capital importance within the system of commercial law, has been a sector traditionally absent by the legislature. This circumstance, partially remedied by the recent approval of Laws 32/1988, of 10 November of Marks, and 34/1988 of 11 November General of Advertising, had led to the formation of a discontinuous and fragmentary discipline that Very soon it would have to be revealed obsolete and to remain, in the reality of the facts, devoid of force. In fact, the rules that have traditionally nurtured such discipline were scattered in laws of different age and origin; they contemplated only partial (and often merely marginal) aspects of that vast reality that is the unfair competition; they responded to outdated models of regulation, which at present-as has been shown by our most recent and attentive doctrine-are lacking in comparative law and even anchor in the general evolution of their own; and, in end, were rules that even within their limitations could be considered effective, due to the Poor quality and flexibility of its sanctioning apparatus. The regime of unfair competition had thus become a languishing regulatory scenario, under which incorrect concurrent practices could proliferate, which in many cases have resulted in a serious deterioration of our mercantile traffic.

II. This Law, completing and, at times, recasting the efforts of the sectoral rationalization initiated by the already remembered laws of Marks and Advertising, aspires to put an end to the traditional situation of uncertainty and helplessness that has the sector, creating a certain and effective legal framework, which is capable of giving the increasingly energetic and sophisticated concurrent struggle to the ever-growing. Several circumstances made this initiative inexcusable.

The first one is given by the growing social demand that has been felt in recent times. The opening of new markets. The emancipation of our mercantile life from corporate and protectionist ties and a greater sensitivity of our company men towards the innovation of the commercial strategies have opened new perspectives to our economy, but to the The Commission's proposal for a Directive on the protection of the environment and the protection of the environment in the field of safety and health at work has been highlighted by the Commission's proposal for a Directive on the protection of the environment. The private interest of entrepreneurs, the collective interest of consumers and the public interest of the State in maintaining a properly sanitized concurrent order.

The Law responds, second, to the need to approve, at the international level, our concurrent order. Spain has omitted this equalisation on previous occasions. But at the present time, this situation could no longer be prolonged without serious inconvenience. The entry into the European Economic Community required, in effect, the introduction into the fabric of our commercial and economic law of a discipline of unfair competition which would establish similar conditions similar to those which (a) in all the other Member States. From this perspective, this Law proposes to take a further step in the direction initiated by the recent Law on Marks, by means of which the commitment contracted in Articles 10a has been made to materialize. and 10 ter. of the Convention of the Union of Paris.

Obeys the Law, finally, to the need to adapt the concurrent order to the values that have taken place in our economic constitution. The Spanish Constitution of 1978 makes our economic system gravitate on the principle of freedom of enterprise and, consequently, at the institutional level, on the principle of freedom of competition. It follows, for the ordinary legislator, the obligation to establish the precise mechanisms to prevent such a principle from being distorted by unfair practices, which may possibly disturb the concurrent functioning of the market. This constitutional requirement is complemented and reinforced by the principle of consumer protection, in its capacity as a weak part of typical market relations, which is welcomed by Article 51 of the constitutional text. This new aspect of the problem in general unknown to our traditional law of unfair competition, has constituted an additional stimulus of the utmost importance for the emanation of the new legislation.

III. The circumstances mentioned above, while at the same time highlighting the law's opportunity, give reason for the criteria and objectives that have presided over its elaboration; namely: generality, modernity and institutionality. The purpose that has guided the legislator has been, in fact, to draft a general law, capable of satisfying the heterogeneous social demand that registers the sector from the unitary perspective of the concurrent phenomenon; a modern law, inspired by the most advanced models of regulation and capable of placing our order of competition in the orbit of European law of the moment; a law, in short, of institutional court, suitable to guarantee or to ensure a ordination of the game competitive according to the scale of values and interests that has crystallized in our constitution economic.

The result could not be any other than a profound renewal of our current law of unfair competition. This renewal is, at least, warned in the triple plane of the orientation, the configuration and the realization of the discipline.

1. As regards the principle of the abovementioned plans, the Law introduces a radical change in the traditional concept of the law of unfair competition. This is no longer conceived as an order primarily aimed at resolving conflicts between competitors in order to become an instrument for the management and control of conduct in the market. The institution of the competition becomes the direct object of protection. Significant in this respect is, inter alia, Article 1. It is also, in particular, Article 5, which implicitly at least enshrines the notion of abuse of competition. This new orientation of the discipline brings with it an opening of it towards the protection of interests that had traditionally escaped the attention of the mercantile legislator. The new law, in fact, is carried out not only by the private interests of the businessmen in conflict, but also by the collective interests of consumption. This extension and reordering of the protected interests is present throughout all the precepts of the Law. In particular, Article 19 provides for the active legitimacy of the exercise of actions arising from unfair competition to consumers (individually and collectively).

2. As far as the substantive configuration of the discipline is concerned, the news is no less important. In this respect, the first two chapters of the Law, in which the general part and the special part of the discipline are incarnated, are particularly noteworthy.

In Chapter I, and specifically in Articles 2 and 3, the general elements of the concurrent illicit are established (applicable to all the specific cases identified in Chapter II, except that provided for in the Article 13 on the violation of industrial secrets). In shaping these elements or budgets of application of the discipline, it has been followed by the imperative of the institutional and social orientation of the Law, a markedly restrictive criterion. In order to ensure that there is an act of unfair competition, the two conditions laid down in the first paragraph of Article 2 must be fulfilled; whereas the act is 'carried out on the market' (that is to say that it is an act of transcendence (i) the fact that it is carried out for "concurrent purposes" (i.e. that the act, as is apparent from the second paragraph of the said Article), is intended to "promote or ensure the dissemination of the services of its own or a third party to the market". If those circumstances are met, the act may be pursued within the framework of the new law. No further condition is necessary; and in particular, as Article 3 states, it is not necessary for the subjects-agent and patient-to be entrepreneurs (the Law also applies to other sectors of the market: (i) craft, agriculture, liberal professions, etc.), nor is it necessary for them to measure a competitive relationship between them. At this point, and by requiring its own starting points, the Law has incorporated the most advanced guidelines of comparative law, disassociating the pursuit of the act of the traditional requirement of the relationship of competition, which only has accommodation within a professional and corporate conception of the discipline.

The general provisions of Chapter I are closed with a unilateral rule of private international law establishing a connection criterion-the market affected by the act of unfair competition-in full harmony with the institutional inspiration of the Law.

The core device of the Law is located in Chapter II, where the unfair conduct is typified. The chapter opens with a generous general clause that will largely depend-as the experience of comparative law shows-the success of the Law and the effective repression of the ever-changing phenomenology of unfair competition. The perhaps most significant aspect of the general clause lies in the criteria selected to assess the disloyalty of the act. It has chosen to establish a criterion of action, as is the "good faith", with a general scope, meaning that the most traditional ("professional correction", "honest uses in commercial and industrial matters", etc.) have been rejected. They are sectoral and of unequivocal corporate flavor.

But the scope of the general clause has not been obice for an equally generous typification of the concrete acts of unfair competition, with which one aspires to give greater certainty to the discipline. The catalogue includes, together with the more traditional practices of confusion (Article 6), denigration (Article 9) and exploitation of the reputation of others (Article 12), the alleged deception (Article 7), the breach of secrets (Article 13), (i) the introduction of a contract infringement (Article 14) and others which have only taken a sharp and rigorous profile in European developments in recent decades, such as the sale of premiums and gifts (Article 8), the violation of rules (Article 15); discrimination (Article 16) and the sale at a loss (Article 17). According to the purpose of the Law, which in short is encrypted in the maintenance of highly transparent and competitive markets, the wording of the precepts mentioned above has been presided over by the permanent concern to avoid that Awkward concurrent practices for competitors can be qualified, simply for this, as unfair. In this sense, it has been tried to make very restrictive classifications, which on some occasions, rather than to try to incriminate a certain practice, tend to liberalize it or at least to settle possible doubts about its disloyalty. Significant in this respect are Articles 10 and 11, relating to comparative advertising and to acts of imitation and even those already mentioned in Articles 16 and 17 in the field of discrimination and sale at loss.

3. Finally, the Law strives to establish sufficiently effective substantive and procedural mechanisms for the proper conduct of the discipline. Chapters III and IV are relevant in this respect. In the first of these, the actions arising from the act of unfair competition are regulated in detail. The most significant extremes are covered by Articles 18 and 19. Article 18 carries out a complete census of such actions (declarative, cessation, removal, rectification, damages and unjust enrichment), making available to the interested parties a wide range of possibilities for an effective pursuit of concurrent illicit. Article 19 discipline in very advanced terms the active legitimation for the exercise of the above mentioned actions. The novelty lies in the foresight, along with traditional private legitimation (which is extended to the injured consumer), of a collective legitimation (attributed to professional and consumer associations). In this way, it is intended to harmonize this sector of the regulations with the general orientation of the Law and at the same time multiply the probability that the incorrect behavior will not be without sanction.

Chapter IV contains a number of procedural issues which have been thought to be appropriate for the purpose of achieving greater rigour and greater efficiency and speed in the causes of competition, without due to the necessary guarantees. disloyal. From this perspective, Articles 24 and 25 are particularly eloquent. The first of these provides for a generous catalogue of preliminary proceedings, aimed at making it easier for the applicant to obtain the information necessary to prepare the case. Experience shows that without such instruments, through which access to the internal scope of the company that has presumably committed an unfair practice is ensured, unfair competition actions are often found to be Doomed to failure. The second of the above mentioned precepts, Article 25, regulates the precautionary measures, another of the key pieces for an effective defence of the person concerned against acts of unfair competition.

The chapter-and with it the Law-closes with a provision inspired by the EEC Directive on misleading advertising. It is Article 26, which provides for the possibility for the judge to invest, for the benefit of the applicant, the burden of proof relating to the misrepresentation and inaccuracy of the indications or manifestations prosecuted in a cause of unfair competition. Certainly, the rule is already contained in the General Law on Advertising. It is, however, not more than repeated in the field of general legislation, due to its wider projection.

IV. Finally, a reference should be made to the opportunity of this Law from the point of view of the territorial distribution of powers. The premise of the party is that "unfair competition" is a matter reserved for the State's competence. This is, in fact, the conclusion to be drawn up pursuant to Article 149 (1) of the Constitution, both in paragraphs 6 and 8 which give the State exclusive competence over 'commercial law' and ' the bases of the contractual obligations "as, in a way, in paragraph 13, which reserves the State the" bases and coordination of the general planning of economic activity ". This view is reinforced by appealing to the Constitutional Court's doctrine that the implicit limit of the autonomous competence must be placed in the need to guarantee the "market unit" in the national territory.

The legislator is aware, of course, that the matter of "unfair competition" is very close to the matters of "internal trade" and "consumer protection" in respect of which the Autonomous Communities have assumed powers. It is precisely for this reason that it has tried to be particularly scrupulous in defining the object and the field of its regulation. The question is clear in relation to the title of "internal trade", whose subjects are perfectly excluded from this Law. More doubts can be raised, at first glance, about the title of 'consumer protection'. An attentive examination of the legislation adopted immediately shows, however, that neither on this side have mixed or confused material orders and different competences. The Law, in effect, directly and immediately discipline the concurrent activity. The fact that in establishing the legal channel for this activity has taken into account, in particular, the interests of consumers does not mean that it has encroached on land which is not its own. merely that, in the course of regulating the conduct of market operators, it has been guided-in accordance with the established criteria in the current evolution of the law compared and by the imperative of the Constitutional Charter itself-by the the need to strengthen the position of the consumer as a weak part of the typical market relations.

CHAPTER FIRST

General provisions

Article 1. Purpose.

This Law is intended to protect competition in the interests of all those involved in the market, and to this end it provides for the prohibition of acts of unfair competition.

Article 2. Target scope.

1. The conduct provided for in this Law shall be considered as acts of unfair competition provided that they are carried out on the market and for concurrent purposes.

2. The concurrent purpose of the act is presumed when, for the circumstances in which it is carried out, it is objectively appropriate to promote or to ensure the dissemination in the market of the services of its own or of a third party.

Article 3. Subjective scope.

1. The Law shall apply to employers and to any other natural or legal persons participating in the market.

2. The application of the Law shall not be subject to the existence of a competitive relationship between the active subject and the taxable person of the act of unfair competition.

Article 4. Territorial scope.

This Law shall apply to acts of unfair competition that produce or may produce substantial effects on the Spanish market.

CHAPTER II

Acts of unfair competition

Article 5. General clause.

Unfair repudiation of any behavior that is objectively contrary to the requirements of good faith.

Article 6. Acts of confusion.

Any behavior that is appropriate to create confusion with the activities, benefits, or establishment of others is considered unfair.

The risk of association on the part of consumers regarding the origin of the benefit is sufficient to substantiate the disloyalty of a practice.

Article 7. Acts of deception.

The use or dissemination of incorrect or false indications, the omission of the true and any other type of practice which, in the circumstances in which it takes place, is deemed to be liable to mislead a the persons to whom it is directed or reached, on the nature, mode of manufacture or distribution, characteristics, fitness in employment, quality and quantity of the products and, in general, on the advantages actually offered.

Article 8. Gifts, premiums and similar assumptions.

1. The delivery of gifts for advertising purposes and similar business practices shall be deemed to be unfair when, for the circumstances in which they are carried out, they place the consumer in the undertaking to contract the principal benefit.

2. The offer of any kind of advantage or premium in the event of the principal benefit being contracted shall be regarded as unfair when it is misleading or liable to mislead the consumer about the price level of other products or services thereof. (i) establishment, or where the assessment of the effective value of the offer or its comparison with alternative offers is difficult for you. These latter circumstances shall be presumed to be verified when the actual cost of the advantage exceeds 15% of the price of the main benefit.

3. The subordination of the conclusion of a contract to the acceptance of supplementary benefits which do not relate to the subject of such a contract shall be deemed to be unfair where one of the circumstances provided for in the preceding paragraph is present.

Article 9. Acts of denigration.

It is considered unfair to carry out or disseminate demonstrations about the activity, the services, the establishment or the commercial relations of a third party that are apt to undermine their credit in the market, unless they are are accurate, true and relevant.

In particular, it is not considered relevant to the manifestations of nationality, beliefs or ideology, private life or any other strictly personal circumstances of the affected person.

Article 10. Comparison acts.

1. The public comparison of the activity, the performance or the establishment itself or the other with those of a third party is considered to be unfair where it relates to extremes other than similar, relevant or verifiable.

2. The comparison that contravened the provisions of Articles 7 and 9 on misleading and denigrating practices is also disloyal.

Article 11. Acts of imitation.

1. The imitation of non-foreign business benefits and initiatives is free, except that they are covered by an exclusive right recognized by the Law.

2. However, the imitation of the benefits of a third party shall be regarded as unfair where it is suitable for the purpose of generating the association on the part of the consumer in respect of the benefit or the misuse of the reputation or the effort foreign.

The inevitability of the indicated risks of association or of taking advantage of the reputation of others excludes the disloyalty of the practice.

3. Similarly, the systematic imitation of a competitor's performance and business initiatives shall be regarded as unfair where such a strategy is directly aimed at preventing or hindering its claim on the market and exceeds which, depending on the circumstances, a natural response from the market may be repudiated.

Article 12. Exploitation of the reputation of others.

It is considered unfair to take advantage of the advantages of the industrial, commercial or professional reputation acquired by another on the market, in its own or foreign profit.

In particular, the use of foreign distinctive signs or false designations of origin accompanied by the indication of the true origin of the product or of expressions such as "models", "system", is disloyal. "type", "class" and similar.

Article 13. Secret violation.

1. The disclosure or exploitation, without authorisation of the holder, of industrial secrets or any other kind of business secrets to which it was legitimately accessed, but with a reserve duty, or illegitimately, is considered to be unfair. as a result of any of the conduct referred to in the following paragraph or Article 14.

2. The acquisition of secrets by means of espionage or similar procedure shall also be considered to be unfair.

3. The pursuit of the violations of the secrets referred to in the preceding paragraphs does not require the concurrency of the requirements laid down in Article 2. However, the infringement must have been carried out with the aim of obtaining benefit, own or third, or prejudice the holder of the secret.

Article 14. Induction of the contractual infringement.

1. It is considered unfair to induce workers, suppliers, customers and others to infringe on the basic contractual obligations they have contracted with competitors.

2. The induction of the regular termination of a contract or the use for its own benefit or of a third party of a contractual breach shall only be regarded as unfair where, where it is known, it is intended to disseminate or exploit a secret industrial or business or is accompanied by circumstances such as deception, the intention to remove a competitor from the market or other similar ones.

Article 15. Rule violation.

1. It is considered unfair to prevail on the market of a competitive advantage acquired through infringement of the laws. The advantage must be significant.

2. It will also have the consideration of unfair infringement of legal rules that aim to regulate the concurrent activity.

Article 16. Discrimination.

1. The discriminatory treatment of the consumer in terms of prices and other conditions of sale shall be disloyal, unless it is justified.

2. The exploitation by an undertaking of the economic dependency situation in which its undertakings or suppliers which do not have an equivalent alternative for the exercise of their business may be found to be unfair.

Article 17. Sale at loss.

1. Unless otherwise provided for in the laws or regulations, the price fixing is free.

2. However, the sale made at low cost, or under purchase price, will be disloyal in the following cases:

(a) Where it is liable to mislead consumers about the price level of other products or services of the same establishment.

b) When it has the effect of discrediting the image of a foreign product or establishment.

(c) When forming part of a strategy to eliminate a competitor or group of competitors from the market.

CHAPTER III

Actions arising from unfair competition

Article 18. Actions.

Against the act of unfair competition, the following actions may be exercised:

1. A declarative action of disloyalty of the act, if the disturbance created by the act remains.

2. The act of cessation of the act, or prohibition of the act, if it has not yet been implemented.

3. Action to remove effects produced by the act.

4. Action to rectify misleading, incorrect or false information.

5. Action to compensate for damages caused by the act, if it has intervened or the agent's fault. The compensation may include the publication of the judgment.

6. Infair enrichment action, which will only proceed when the act injures a legal position covered by an exclusive right or other right of similar economic content.

Article 19. Active legitimation.

1. Any person who participates in the market, whose economic interests are directly harmed or threatened by the act of unfair competition, is entitled to the exercise of the measures provided for in the first five Previous article.

The unjust enrichment action may only be exercised by the owner of the legal position violated.

2. The actions referred to in numbers 1. to 4. of the preceding article may also be exercised by the following entities:

(a) Associations, professional corporations or representative of economic interests when the interests of their members are affected.

(b) Associations which, according to their statutes, are intended to protect the consumer. The legitimation will be conditional on the fact that the act of unfair competition is directly affecting the interests of consumers.

Article 20. Passive legitimization.

1. The actions provided for in Article 18 may be exercised against any person who has carried out or ordered the act of unfair competition or has cooperated in its conduct. However, the unjust enrichment action may only be directed against the enrichment beneficiary.

2. If the act of unfair competition is carried out by workers or other employees in the performance of their contractual duties and duties, the measures provided for in Article 18 (1) and (4) shall be directed against the principal. With regard to actions for damages and unjust enrichment, the provisions of civil law will be in place.

Article 21. Prescription.

The actions of unfair competition prescribe for the course of a year from the moment they were able to exercise and the legitimized was aware of the person who carried out the act of unfair competition; and in any case, for the duration of three years from the moment of the performance of the event.

CHAPTER IV

Procedural provisions

Article 22. Processing of the process.

The processes of unfair competition will be dealt with in any event in accordance with the provisions of the Civil Procedure for the Small Claims Act.

Article 23. Territorial jurisdiction.

1. In cases of unfair competition, the judge of the place where the defendant has his establishment and, in the absence thereof, his domicile shall have jurisdiction. If the defendant does not have an establishment and domicile in the national territory, the judge shall have jurisdiction in the place of his habitual residence.

2. At the request of the applicant, the judge of the place where the act of unfair competition has been carried out shall also have jurisdiction.

Article 24. Preliminary proceedings.

1. Anyone seeking to bring an action of unfair competition may apply to the Judge for the practice of proceedings for the verification of those facts whose knowledge is objectively indispensable for the preparation of the judgment.

2. Such proceedings shall be conducted in accordance with the provisions of Articles 129 to 132 of Law 11/1986 of 20 March of Patents and may extend to the entire internal scope of the undertaking.

Article 25. Precautionary measures.

1. Where there is evidence of an act of unfair competition or the imminence of the act, the judge may, at the request of a person entitled and under the responsibility of the latter, order the provisional cessation of that act and order the other precautionary measures that are relevant.

2. The measures provided for in the preceding paragraph shall be of preferential treatment. In the event of serious and imminent danger, they may be adopted without hearing from the opposing party and must be handed down within 24 hours of the submission of the application.

3. If the measures are requested before the application is filed, they shall also be competent to adopt them by the judge of the place where the act of unfair competition produces or may produce its effects.

However, once the main claim has been filed, the judge who knows about it will be the only one competent for the measures taken.

4. The precautionary measures, as not provided for in this article, shall be governed by the provisions of Article 1,428 of the Law on Civil Procedure.

Article 26. Specialty in probative matter.

In disputes arising from the infringement of Articles 7, 9 or 10, the judge may, at the time of the decision on the receipt of evidence, require the defendant to provide the evidence relating to the accuracy and the accuracy of the indications or statements made.

When such proof is not provided, the judge may estimate that the indicia or manifestations prosecuted are inaccurate or false.

TRANSIENT DISPOSITION

Judicial actions that have been initiated prior to the entry into force of this Law shall be dealt with in accordance with the substantive and procedural rules in force.

REPEAL PROVISION

As of the entry into force of this Law, Articles 87, 88 and 89 of Law 32/1988 of 10 November of Marks will be repealed.

Likewise, any provisions of equal or lower rank shall be repealed as opposed to the provisions of this Law.

Therefore, I command all Spaniards, individuals and authorities to keep and keep this Law.

Madrid, January 10, 1991.

JOHN CARLOS R.

The President of the Government

FELIPE GONZÁLEZ MARQUEZ