Denigration and disorganisation: when your competitors' attacks become illegal

Business life is often one of intense competition. But sometimes, certain players go beyond the limits of simple economic rivalry to engage in aggressive practices aimed directly at damaging their competitors. Spreading malicious rumours, publicly and unjustifiably criticising a rival's products, plundering its key personnel... These frontal attacks can cause considerable damage and often amount to unfair competition. Two particularly frequent and damaging forms of aggressive behaviour are denigration and disorganisation. When does criticism become a fault? Where does the freedom to hire end and illegal poaching begin? This article explains these practicestheir concrete manifestations and the red lines that must not be crossed.

Denigration: bringing your company or products into disrepute

Denigration is the dark art of malicious criticism in the business world. For an economic player, it consists of publicly discredit on a competitor, its products, its services or its business in general, with the aim of diverting customers or damaging its reputation. It is a direct attack on a company's image and credibility.

For denigration to be punishable, a number of elements generally need to be met:

1. Critical or negative comments Complaints: They may be directed at the company itself (its lack of seriousness, its allegedly fragile financial situation, its commercial practices deemed dubious, etc.), its managers (their incompetence, dishonesty, etc.) or, more often, its products or services (poor quality, dangerousness, excessive prices, non-compliance, etc.).
2. An advertisement Defamatory statements must be made public, i.e. disseminated beyond a restricted private circle. The medium is irrelevant: an advertising campaign, a press article, a post on social networks, a circular sent to customers, a statement made at a trade fair, or even verbal comments made to customers or suppliers. Even limited distribution (to a few customers, for example) may be sufficient if it is likely to cause damage.
3. Identifying the target The denigrated company or product must be identifiable, even if it is not named by name. If the criticisms are formulated in such a way that customers unambiguously understand who is being targeted (for example, by referring to a competing advertising campaign or by being the only player in a local market), the denigration can be characterised.
4. A faulty character That's the crucial point. All criticism is not denigration. Freedom of expression and the right to information allow us to criticise, compare and express negative opinions, especially if it concerns a subject of general interest (public health, the environment, etc.). For criticism to become a fault, it must exceed certain limits. Denigration is generally considered to have occurred when comments are :
   • Misleading or unverified.
   • Excessive, abusive or unnecessarily aggressive in form.
   • Presented in a biased or one-sided manner.
   • Mainly aimed at damaging the competitor rather than providing objective information.

Please note one essential point: the argument "but it's true!" is generally not enough to avoid being classified as disparagement. Unlike defamation (which is an attack on a person's honour), commercial denigration can be constituted even if the information disseminated is accurate. Publicly criticising the real but mediocre quality of a competitor's product can be considered unfair if the malicious intent or desire to take advantage of the situation is clear. The purpose and extent of the comments are decisive.

Similarly, while humour and caricature can sometimes justify stinging criticism (e.g. certain satirical programmes), they are not an absolute right and can constitute denigration if the intention to harm is predominant under the guise of a joke.

Finally, it should be noted that the perpetrator of the denigration is not necessarily a direct competitor of the victim. An association, a supplier or even a dissatisfied customer who goes beyond the limits of mere criticism could be held liable for denigration.

Disorganisation: disrupting your competitor's internal workings

The second form of aggressive attack is disruption. Here, the objective (or effect) is not so much to damage reputation as to undermine the smooth running of the company of the rival company or, more generally, of disrupt the rules of the game on the market. As in the case of disparagement, it is not necessary to prove malicious intent; a careless action having the effect of disorganising a competitor may suffice.

There are generally two main types of disorganisation:

1. Disorganisation of the rival company

It directly targets the internal workings of the competitor's business. The methods are varied:

• Recruiting staff : This is undoubtedly the most frequent and sensitive case. The principle is clear: the job freedom and the freedom of employment authorise a company to recruit employees from a competitor. Similarly, an employee is free to leave his or her employer to join a competitor (unless there is a specific non-competition clause). The simple fact of taking on several former employees of a rival is therefore not a criminal offence. not, in itself, an act of unfair competition. When does poaching become at fault ? When recruitment is accompanied by special circumstances revealing an intention to disorganise or having an abnormal destabilising effect. The judges then examine a series of clues:
  • Le massive and/or simultaneous Departures: the concerted departure of an entire sales team or several key managers at the same time can paralyse a department or the company.
  • Le targeting Target employees who possess unique know-how or manufacturing secrets, or who maintain privileged relations with strategic customers.
  • The manoeuvres used These include excessive and abnormal financial incentives to attract employees, denigration of the former employer by its own employees to encourage them to leave, active organisation of resignations by the new employer, etc.
  • L'real effect has poaching actually disrupted the victim company, or was it able to quickly replace the staff who left? A particular case is the hiring of an employee who was bound by an employment contract. non-competition clause valid with his former employer. If the new employer was aware (or, according to the judges, should have been aware, for example because of the practices of the profession) of the existence of this clause, he is obliged to inform the new employer. accomplice of its violation and commits a fault of unfair competition towards the former employer.
• Disclosure or use of secrets or know-how Obtaining or using confidential information belonging to a competitor (manufacturing secrets, commercial strategies, customer files, etc.) constitutes a serious act of disorganisation. This can happen through dishonest former employees, but also through business partners (suppliers, subcontractors) who betray the trust placed in them. It is important to distinguish between general know-how and experience that a former employee can legitimately take with him, from the specific and confidential know-how belonging to the company, which must not be divulged or used for the benefit of a new competitor. The protection of business secrecy has been reinforced by specific recent legislation.
• Other acts of disruption Examples include the systematic diversion of orders intended for a competitor, industrial espionage, the physical disruption of access to the company, the removal or damaging of a rival's advertising material, etc.

2. General market disruption

Sometimes the misconduct is not aimed at a particular company, but disrupts the competitive balance of the market as a whole. This is particularly the case when a company deliberately ignores regulations which apply to all players in the sector (tax, social and environmental rules, technical standards, compulsory licences, etc.). Failure to comply with these rules will result in a undue competitive advantage (lower costs, shorter lead times, easier access to the market, etc.) which distorts competition to the detriment of all virtuous competitors. This breach of the law, in addition to any administrative or criminal penalties that may be imposed, may be considered an act of unfair competition in which injured competitors may seek compensation.

Denigration and disorganisation are particularly damaging forms of unfair competition. They reflect a desire to win not through merit, innovation or efficiency, but by directly weakening or sabotaging rivals. These aggressive practices are not only damaging for the companies that fall victim to them, but they also undermine the trust and fairness necessary for markets to function properly.

Denigration and disorganisation can seriously affect your business. If you are faced with such practices, it is important to react quickly. Contact our firm to discuss possible remedies.

Sources

• Civil Code: Article 1240, Article 1241.
• French Labour Code: Articles L1227-1 (trade secrets), L1237-3 (wrongful termination by the employee).
• Commercial Code: Book IV, Title IV (reference to restrictive practices as a form of market disruption).
• Consumer Code: Articles L121-1 et seq (misleading commercial practices), L122-1 et seq (comparative advertising).
• Law of 29 July 1881 on freedom of the press (distinction from defamation).
• Law No. 2018-670 of 30 July 2018 on the protection of business secrecy (mention).