By Jan Peter Heidenreich*
- A Introduction
- B The structure of the new Act
- C Aims and scope of the Act
- D The substantive provisions
- 1 Definitions, sec 2 UWG
- 2 The General clause, sec 3 UWG
- 3 Negative list of unfair acts of competition, sec 4 UWG
- (a) Unreasonably manipulating or exploiting consumers, sec 4(1) and (2) UWG
- (b) Surreptitious advertising, sec 4(3) UWG
- (c) Sales promotions, competitions, draws and prizes, sec 4(4) to (6) UWG
- (d) Attacks on business reputation, sec 4(7) and (8) UWG
- (e) Exploitation or misappropriation of another’s work or reputation, sec 4(9) UWG
- (f) Systematic obstruction of competitors, sec 4(10) UWG
- (g) Violation of laws regulating marketing activities, sec 4(11) UWG
- 4 Misleading advertising, sec 5 UWG
- 5 Comparative advertising, sec 6 UWG
- 6 Unacceptable nuisances (unsolicited communications), sec 7 UWG
- 7 Special sales and offers
- E Remedies
- F Enforcement and Procedure
- G Criminal provisions
- H Conclusion
The German Act against Unfair Competition (Gesetz gegen den unlauteren Wettbewerb, UWG)1 prohibits certain trade practices, which are considered unfair, excluding cartel law and merger control, which are governed by a separate Act (Gesetz gegen Wettbewerbsbeschränkungen, GWB). The Act against Unfair Competition has been thoroughly revised with the aim of modernising German law against unfair competition and bringing it into line with developments in EC law.2 The revision follows earlier repeals of the Premiums (Free Gifts) Ordinance (Zugabeverordnung) and the Discounts (Rebates) Act (Rabattgesetz) in 2001. The new Act does not contain any transitional provisions. It has entered into force the day after its publication in the Official Journal (Bundesgesetzblatt) on July 8, 2004.
Rather then merely amending out-of-date provisions of the old Act (dating from 1909), the German legislature decided to pass a completely new statute. The stated aims of the revision are to increase consumer protection, to provide greater transparency of the rules relating to unfair competition, particularly for non-lawyers, and to provide more freedom to businesses.3 The new Act uses modern (European) legislating techniques such as a list of definitions of important terms (sec 2 UWG) and negative lists of conduct regarded to be unfair to complement the general clauses. The new Act to a large extent codifies and clarifies the (more recent) case law of the German courts, utilising the categorisation of unfair trade practices into various groups of cases by legal writers. It is therefore submitted that most of the case law concerning the old Act is still good law. Although thus to a large extent building on court decisions on the old Act, in some parts the new Act departs from the previous case law and sets new standards. The most important changes are the introduction of a de minimis threshold in sec 3 UWG; the repeal of provisions governing special sales events and special offers; the revision of the rules relating to direct marketing activities (sec 7 UWG); and the introduction of a claim to skim unlawful profits (sec 10 UWG).4
The new Act is divided into five chapters:
- general provisions (sec 1-7),
- remedies (sec 8-11),
- enforcement and procedure (sec 12-15),
- criminal sanctions (sec 16-19), and
- final provisions (sec 20-22).
The first chapter, containing the substantive law, features a statement of the aims of the act (sec 1 UWG), followed by a section that sets out definitions of fundamental terms used throughout the act, with a further reference to definitions contained in the Civil Code (Bürgerliches Gesetzbuch, BGB). Sec 3 UWG contains an all-encompassing general clause prohibiting unfair acts of competition. Sec 4 UWG features a (non-exhaustive) list of specific examples of acts regarded to be unfair. Sec 5 UWG prohibits misleading advertising, sec 6 UWG contains rules governing comparative advertising and sec 7 UWG regulates direct marketing activities, banning all forms of “unacceptable nuisances”.
The available remedies are set out in chapter 2 of the Act, again to a large extent codifying remedies already developed by the courts. Sec 8(1) UWG gives a right to file for injunctive relief and to apply for an order that goods unlawfully advertised be recalled or destroyed, sec 9 UWG gives a general right to compensation (damages), and sec 10 UWG contains a new right to skim unlawful profits (Gewinnabschöpfung). Sec 11 UWG contains a limitation clause.
The third chapter contains provisions relating to enforcement and procedure (sec 12-15 UWG), including pre-trial procedures, interlocutory injunctions and jurisdiction, as well as rules governing mediation boards (sec 15 UWG). Chapter 4 penalises certain unfair trade practices, namely intentionally misleading advertising (sec 16 UWG) and betrayal of trade and industrial secrets (sec 17 to 19 UWG). The fifth chapter contains final provisions concerning the entry into force of the Act and amendments to other Acts.
Sec 1 UWG clarifies the aims and the scope of the Act in line with the case law of the Federal Supreme Court and EC law. According to sec 1 UWG the new Act aims to protect competitors, consumers and other market participants against unfair acts of competition, as well as the interests of the general public in undistorted competition. This protection ‘trias’ (competitors, consumers and the general public) is in accordance with the case law and literature on the old act.5 However, the consumer is now explicitly placed within the scope of protection of the Act, clarifying that the interests of consumers are on an equal footing with those of competitors and other market participants.6 It is submitted, however, that this will neither change the general concept of the UWG nor transform it into a “consumer protection act”. Rather, the Act will continue to be confined to the protection of competition and competition-related aspects.7 Non-competition-related aspects, such as the protection of the work force or the environment, are not within the scope of the Act.8
The substantive provisions are contained in sec 3 to 7 of the new Act. Sec 3 UWG contains a general clause that prohibits unfair acts of competition. Sec 4 to 7 UWG contain lists of specific examples of acts typically regarded to be unfair. The technique of using a general clause covering all unfair competitive practices coupled with special provisions giving examples of such practices implicates that all requirements of the general clause apply to the special provisions as well.9
The examples of unfair practices listed in sec 4 to 7 UWG are non-exhaustive. There may thus be cases of unfair competition, which are not explicitly listed in those sections. Whether these cases can be brought within the scope of application of the general clause (sec 3 UWG) will have to be decided on a case-by-case basis. It has to be noted, however, that, due to the codification of the existing case law, the threshold for the application of the general clause to acts of competition not listed in sec 4-7 UWG will presumably be higher than under the old Act.10
Sec 2(1) UWG defines four terms which are used throughout the Act and determine the scope of protection of the Act: “act of competition”, “market participant”, “competitor”, and “communication”.
- “Act of competition” means “every act by a person with the aim of increasing the sale or supply of goods or services, including immovable goods, rights and obligations, for his own benefit or for the benefit of a third party”.
- “Market participants” are, in addition to competitors and consumers, “all persons, who supply or demand goods or services“; thus, competitors and undertakings in a different line of business that do not directly compete with the infringing party are equally protected by the Act.11
- “Competitor” means “every undertaking that competes with one or more other undertakings in the supply or demand of goods or services, provided the competitive relationship is not merely conceptional (abstract).12
- The term “communication” comprises all forms of individual communication via public communications services, excluding broadcasting services.13
Sec 2(2) UWG refers to definitions of the terms “consumer” and “undertaking” as set out in the Civil Code (Bürgerliches Gesetzbuch, BGB).
- “Consumer”, according to sec 13 BGB, means “a natural person who, in legal transactions, is acting for purposes which can be regarded as outside his trade or profession”.
- “Undertaking” is defined in Sec 14 BGB as “a natural or legal person who, for the transaction in question, acts in his commercial or professional capacity”.
These definitions, tailored to (existing) contractual obligations, do not exactly fit for the purposes of the Act but the legislator obviously considered it desirable not to introduce new definitions different from those governing contracts.14
Sec 3 UWG prohibits “unfair acts of competition which are liable to have more than an insubstantial impact on competition to the detriment of competitors, consumers or other market participants”. Sec 3 UWG thus stipulates three criteria: “acts of competition”, “unfairness” and “more than an insubstantial impact on competition”.
According to sec 2(1) UWG the term “act of competition” comprises “every activity by a person with the aim of increasing the sale of goods or services, including immovable goods, rights and obligations, for his own benefit or for the benefit of a third party”. The term “act of competition” thus by and large corresponds to the phrase “in the course of trade and for the purposes of competition” used in the former general clause (sec 1 UWG).15 Accordingly, private statements, internal communications, and acts of state of public authorities are not “acts of competition” within the meaning of sec 2(1) UWG.16
Instead of the former concept of bono mores (gute Sitten) the new Act postulates in sec 3 UWG the concept of unfairness (Unlauterkeit), used in line with EC law.17 The Act contains no definition of the term “unfair”. Rather, the act gives examples of practices regarded to be unfair in the following sections, leaving the determination of the precise scope and meaning of the term to the courts and legal writers. It remains to be seen whether the change in terminology will result in a change of substance as well. It is to be assumed, however, that any examination of allegedly unfair business practices would have to focus on market- and competition-related aspects, not on ethical or legalistic principles.18 Thus, it is submitted that a subjective element such as intent or knowledge will not be required under the new Act.19
Sec 3 UWG defines a de minimis threshold below which unfair competitive practices will no longer be actionable, even if they might be regarded as unfair. Only acts of competition, which are liable to “have more than an insubstantial impact on competition”20 are prohibited by the Act. How the courts will construe the phrase “more than an insubstantial impact on competition” remains to be seen. It is submitted, however, that the threshold will presumably be lower than the threshold for competition associations in former sec 13(2) UWG which required that competition be “seriously impaired” by the allegedly unfair practice.21 In determining whether the impact on competition is more than insubstantial account has to be taken of all circumstances of the case, in particular the nature and seriousness of the offence, the anticipated impact on competition, the aims of the Act (sec 1 UWG), the number of affected market participants, and the risk of other market participants following the model of behaviour of the offender.22
Sec 4 UWG contains examples of acts of competition regarded to be unfair. The examples are to a large extent based on previous case law, although some groups of cases have been omitted or modified in accordance with the aim of modernising German law against unfair competition. Some of the examples (especially sec 4(1) and sec 4(10) UWG) contain “general clauses” themselves.23
Competitors must advertise their products and services on the market in a way that does not unreasonably influence the customers’ independent judgement and free choice. This general rule, developed in the case law on the old Act has (partly) been codified in sec 4(1) and (2) UWG. These provisions prohibit practices that influence customers without actually misleading them.
Sec 4(1) UWG prohibits acts of competition that are liable to impair the freedom of choice of consumers or other market participants by way of psychological pressure, unreasonable and non-factual influence, or in an inhumane manner. Sec 4(2) UWG, in line with established case law, prohibits activities exploiting consumers’ lack of business awareness (in particular that of children), gullibility, anxiety, or exigency. These provisions will have to be construed in accordance with the stated aim of the new Act to liberalise marketing activities. Thus, cases of “psychological obligation to buy” (psychischer Kaufzwang), “exaggerated decoy” (übertriebenes Anlocken) and so-called “shock advertising”24 will only be prohibited if the act of competition can actually be shown to have unreasonably influenced the customers’ independent judgement and free choice.25 The most important cases covered by sec 4(1) and (2) UWG will presumably be those involving coupled offers (also covered by sec 4(6) UWG), addressing customers’ play instincts, and cases of “power-shopping”.26
According to sec 4(3) UWG it is regarded to be unfair to conceal the advertising nature of acts of competition (surreptitious or subliminal advertising). This corresponds to the case law on former sec 1 and 3 UWG.27 Examples of surreptitious advertising are disguised sales events and concealed advertisements in scientific publications or in the media,28 including the Internet.29
Sec 4(4) UWG prohibits sales promotions, such as rebates, premiums, and free gifts, if the seller does not state the conditions of participation in a clear and unambiguous manner. Sec. 4(5) UWG renders unfair draws and competitions if the entry rules are not stated in a clear and unambiguous way. This reflects the case law under the previous Act and also corresponds to Art 4 of the proposed EC Regulation on sales promotions.30 The prohibition of sec 4(6) UWG applies to draws and competitions directed at consumers the participation in which is dependent on the purchase of goods or services. As under the previous law,31 draws and competitions involving coupled offers are permissible (only), if the purchase is necessarily linked to the competition; this is, for example, the case with competitions in magazines, where the magazine necessarily needs to be purchased in order to participate in the competition.32
Sec 4(7) and sec 4(8) UWG cover all forms of disparagement, which were previously contained in sec 14 UWG. Whereas sec 4(7) UWG covers statements of opinion, sec 4(8) applies to statements of fact.33 According to sec 4(7) it is regarded to be unfair to disparage or to denigrate the goods, the services, the activities or the personal or commercial circumstances of a competitor. Sec 4(8) UWG prohibits the allegation or circulation of facts concerning the goods, the services or the business of a competitor, or the person of the proprietor or a member of the board, which are liable to damage the operation of the business or the credit of the proprietor, unless those facts can be proved to be true, the burden of proof being on the person alleging or circulating the facts.34 Where a confidential communication is involved in which the communicator or the recipient has a legitimate interest, the allegation or circulation is prohibited only if it is (verifiably) untrue, the burden of proof in this case being on the claimant.35 Additional protection against attacks on business reputation might be obtained through sec 6 UWG (comparative advertising).
Sec 4(9) UWG codifies the existing case law concerning the exploitation of another’s reputation or the misappropriation of another’s work (ergänzender Leistungsschutz). Thus, it is regarded to be unfair to offer goods or services that are imitations or replicas of a competitor’s goods or services
- where this might mislead customers and cause confusion in the market place as to the commercial origin of those goods or services, sec 4(9)(a) UWG,
- in cases of the original manufacturer’s reputation being unfairly exploited or impaired, sec 4(9)(b) UWG, or
- where the necessary knowledge or required documents for the production of the imitation or replica have been obtained by dishonest (unredlich) means, sec 4(9)(c) UWG.
Sec 4(10) renders it unfair to systematically obstruct a competitor’s freedom to act within the market (obstruction of an individual competitor). This provision also reflects previous case law. Examples of obstructive competition are boycotts, the alienation of customers or employees, the abuse of market power on the demand side, obstructive use of trademarks, discrimination, and the systematic undercutting of prices.36 To be regarded as unfair the obstructive act needs to be systematic (gezielt),37 i.e. with the (primary) intent to obstruct or eliminate a competitor. Additional protection might be obtained through sec 20 of the Act Against Restraints on Competition (Gesetz gegen Wettbewerbsbeschränkungen, GWB).38
Acts of competition that are not aimed at the obstruction of an individual competitor but cause or threaten to cause a (general) obstruction of competition in a specific market (market disturbance), eg the systematic undercutting of prices or the gratuitous offer of goods or services, especially of media products,39 held to be against honest practices under the old Act, are not listed in sec 4 UWG. It is to be assumed, however, that these practices will be covered by the general clause (sec 3 UWG) and will thus still be actionable.40
According to sec 4(11) UWG it is regarded as unfair competition to violate statutory provisions regulating the behaviour in the market in the interest of market participants. This section applies to provisions regulating market behaviour only, not to those regulating market entrance,41 although the boundary may be hard to define and some provisions may well be regarded as regulating both the entrance to and the behaviour in the market.42 Violations of provisions not regulating market behaviour (eg regarding employment, the environment, taxes or discrimination) are not covered by sec 4(11) UWG.43 The (state) laws governing commercial activities of municipal authorities, allowing them to pursue such activities under special circumstances only, are not laws regulating marketing activities and thus cannot be relied upon by competitors; this has now been clarified in the legislative materials.44 In contrast to earlier case law, overruled in more recent judgements of the Federal Supreme Court,45 no subjective element, such as knowledge of the violation or intent to acquire a competitive advantage, is required.46
Sec 5 UWG is based on the previous Act and on the wording of the EC Directive on misleading advertising.47 Sec 5(1) UWG contains a “small” general clause, prohibiting all forms of misleading advertising. Sec 5(2) UWG lists criteria for determining whether a statement is misleading. These criteria refer to the product offered, the circumstances and conditions of the offer, and the undertaking advertising the products.48 In determining whether an advertising statement is misleading (sec 5(2) UWG), account shall be taken of all its features, and in particular of any information it contains concerning
- the characteristics of goods or services, such as their availability, nature, execution, composition, method and date of manufacture or provision, fitness for purpose, uses, quantity, specification, geographical or commercial origin or the results to be expected from their use, or the results and material features of tests or checks carried out on those goods or services;
- the occasion of the sale, the price or the manner in which the price is calculated, and the conditions on which the goods are supplied or the services provided;
- the nature, attributes and rights of the advertiser, such as his identity and assets, his ownership of industrial, commercial or intellectual property rights, his qualifications or his awards and distinctions.
According to sec 5(3) UWG statements in connection with comparative advertising, pictorial representations and other devices intended and suited to replace an advertising statement shall be considered to be equivalent to explicit statements. In all instances the statement must be liable to influence costumers’ decision to contract. It is to be assumed that this requirement, which is expressly stated in sec 5(1)(2) UWG for cases of concealment only, extends to all other incidents of misleading advertising as well.49
Sec 5(4) UWG contains a (rebuttable) presumption that it is misleading to base sales promotions on price cuts if the original (higher) price has only been demanded for an unreasonably short period of time (“moon price advertising”, Mondpreiswerbung). The burden of proof with respect to the period for which the original higher price has been demanded and for the reasonableness of that period is on the advertiser.50
According to sec 5(5) it is misleading to advertise goods if the quantities held in stock are not adequate to satisfy anticipated demand (“decoy offers”, Lockvogelangebote). An inventory level is deemed to be adequate if it is sufficient for two days’ (anticipated) sales. A smaller inventory level might be justified in certain cases, the burden of proof for the justification being on the advertiser. Lower stock levels could be justified, for example, for promotional sales of computers in supermarkets, which are typically designed only for a very short period of time.51
With regard to comparative advertising, the relevant EC Directive52 had already been transposed into the old Act. The relevant provisions could thus be taken from that Act without any substantial changes.53 According to sec 6(1) UWG comparative advertising means “any advertising which explicitly or by implication identifies a competitor or goods or services offered by a competitor”. Sec 6(2) UWG gives a list of examples of comparative advertising regarded as being unfair for the purposes of sec 3 UWG. According to that list comparative advertising is prohibited if
- it compares goods or services not meeting the same needs or not intended for the same purpose;
- it does not objectively compare one or more material, relevant, verifiable, and representative features or the price of those goods and services;
- it causes confusion in the market place between the advertiser and a competitor or between their respective goods or services or between the advertiser’s and the competitor’s trademarks;
- it takes unfair advantage of or impairs the reputation of a trademark of a competitor;
- it discredits or denigrates the goods, services, activities, or personal or commercial circumstances of a competitor;
- it presents goods or services as imitations or replicas of goods or services bearing a protected trademark (also covered by sec 4(9) UWG).
Sec 6(3) UWG stipulates that any comparison referring to a special offer shall indicate in a clear and unequivocal way the date on which the offer ends and, where the offer has not yet begun, the date of the start of the offer. If the special offer is subject to the availability of the goods or services this has to be indicated clearly and unequivocally as well.
Sec 7 UWG (partly) codifies existing case law pertaining to certain direct marketing activities (telephone calls, faxes, emails).54 It further aims to transform the EC Directive on privacy and electronic communications.55 In implementing the directive the German legislature has opted for the highest level of consumer protection allowed under that directive.56 Marketing by email, fax or telephone requires the recipient’s consent (so-called opt-in-model), the only exception being the use of customer data for direct advertising purposes if the customers have made their electronic contact data available in connection with the purchase of a product or service.
Sec 7(1) UWG declares that “unacceptable nuisances” (unzumutbare Belästigungen)57 are regarded to be unfair competitive practices within the meaning of sec 3 UWG. The requirement of the nuisance being “unacceptable” is meant to exclude minor disturbances from the prohibition.58 Sec 7(2) UWG contains four examples of unacceptable nuisances, particularly in relation to electronic communications. Accordingly, direct marketing activities are considered to be unacceptable nuisances and thus unfair
- where it is apparent for the advertiser that the recipient does not wish to receive advertisements (sec 7(2)(1) UWG);
- where telephone calls are directed at consumers who have not given their explicit consent to receive such communications (opted in) or where they are directed at other market participants without at least their assumed consent (sec 7(2)(2) UWG);
- in cases of automatic calling machines, fax machines or electronic mail being used where the recipients have not given their prior consent; this applies both to consumers and to other market participants, so even if the recipient is not a consumer an assumed agreement will not suffice in this case (sec 7(2)(3) UWG);
- where the identity of the sender on whose behalf the communication is made is disguised or concealed (anonymous communications) or where no valid address is given to which the recipient may send a request that such communications cease, without incurring costs other than the transmission costs based on the basic tariff (sec 7(2)(4) UWG).
Sec 7(3) UWG contains a narrow exception to the prohibition in sec 7(2)(3) UWG, stating that direct marketing by email is not regarded as unfair competition
- where the advertiser has obtained from his customers their contact details for electronic mail in the context of the sale of a product or a service,59
- the advertiser uses these electronic contact details for the direct marketing of his own similar products or services,
- the customers have not objected to such use (opted out), and
- the customers clearly and distinctly are given the opportunity to object to such use when their contact details are collected and on the occasion of each further use, without incurring costs other than the transmission costs based on the basic tariff.
One of the most significant changes in the new Act is the repeal of the provisions governing special sales events and special offers.60 Under the previous Act special sales outside regular business, which created the impression of special advantages, especially price reductions, being granted to customers were prohibited. The prohibition did not apply to certain special offers of individual goods; to end of season (summer and winter) sales, restricted to a period of 12 working days; anniversary sales; and clearance sales in cases of business closure and in certain circumstances of damage. These provisions have been abolished without substitution. Any businessman is now free to hold temporary sales events at any time, featuring price reductions or any other purchase benefits. He may also use the expression “clearing sale” or “summer sale” as he sees fit.61 In addition to the provisions discussed above, the regulations governing the sale of goods from bankruptcy estates, the sale by wholesalers to end users, and the trade in coupons and other purchase authorisations have been repealed without substitute. Any special sales events and special offers are now subject to the general provisions only, especially sec 5 UWG (misleading advertising) and sec 4(1) and (2) UWG (unreasonably manipulating or exploiting consumers).62
The legal remedies available in cases of unfair competition are set out in chapter 2 of the Act. Offenders are subject to cease and desist orders (injunctions) and to orders to recall or destroy the goods unlawfully advertised, sec 8(1) UWG. According to sec 8(3) UWG these orders may be applied for by
- direct competitors63;
- certain associations for the promotion of commercial interests, provided the interests of their members are affected;
- qualified entities64 registered in the lists referred to in Art 4 of the EC Consumer Protection Directive65 and in sec 4 of the Injunctive Relief Act (Unterlassungsklagengesetz, UKlaG);66
- Chambers of Industry and Trade (Industrie- und Handelskammern) and Chambers of Crafts (Handwerkskammern).
An injunction may, however, not be applied for if, with respect to the full circumstances of the case, its assertion is abusive, especially if its predominant aim is to generate a claim to compensation for expenses or costs of legal procedure against the person who has committed the violation, sec 8(4) UWG.67
Sec 9 UWG gives parties injured by unfair acts of competition a right to claim damages, provided the offender has acted intentionally or negligently. Damages may be calculated in three ways: The injured party can claim compensation for actual damages, for lost profits, or he can demand an adequate licence fee.68 Persons responsible for periodical printed matter (journalists, publishers, printers and distributors) are answerable for damages only in cases of intentional violations of the Act (so-called media privilege).69 As under the former Act, consumers and customers have neither a right to file for an injunction nor a right to claim damages.70
Sec 10(1) UWG contains a new remedy that has been hotly debated, both in Parliament and in the legal profession.71 It stipulates that the offender may be ordered to pay over to the Treasury any profits made as a result of an intentional violation of the Act when those profits were made at the expense of a multitude of customers. Such an order may be applied for by competition associations, qualified entities, Chambers of Industry and Trade, and Craft Chambers, though not by individual competitors or consumers. The new sanction is primarily aimed at cases of dispersed damages, ie violations affecting a multitude of customers but causing only minor individual damage.72 Individual customers affected by such violations generally refrain from enforcing their claims,73 not least because of the possibly high costs of taking legal action. This results in such violations often going unpunished. The listed associations and entities can now apply for the profits of such violations to be skimmed and paid over to the Treasury, after deduction of certain expenses (sec 10(2) UWG). Whether this new sanction will prove to be effective remains to be seen.74
The general right to disclosure and accounting, long recognised in case law, has not been codified in the new Act. According to the principles of good faith (Treu und Glauben), sec 242 of the Civil Code (BGB), any person who has a right to claim damages has a right to disclosure against the (alleged) offender, provided the injured party is, without fault, in doubt about the existence and/or the extent of his rights and the offender can easily and reasonably give the necessary information.75 Sec 8(5) UWG in connection with sec 13 Injunctive Relief Act (Unterlassungsklagengesetz, UKlaG) grants competition associations, qualified entities, Chambers of Industry and Trade, and Chambers of Crafts a special right to disclosure against providers of telecommunication services.
The right of buyers to withdraw from a contract, the formation of which has been induced by misleading advertising (former sec 13a UWG) has been repealed without substitute, as the legislator deemed the revocation rights and other remedies available in the Civil Code (Bürgerliches Gesetzbuch, BGB) sufficient to protect misled buyers.76
The limitation period for claims for injunctive relief (sec 8 UWG) or damages (sec 9 UWG) is six months, sec 11(1) UWG. It begins when the claim has arisen and the injured party becomes aware of the circumstances giving rise to the claim and of the identity of the offender or ought to have become aware of those matters but for his gross negligence. Irrespective of knowledge or grossly negligent lack of knowledge, claims for damages are time-barred ten years after they arose or, at the latest, 30 years from the date on which the act occurred, sec 11(3) UWG. Other claims are time-barred, irrespective of knowledge or grossly negligent lack of knowledge, three years after they arose, sec 11(4) UWG.
The defence of unclean hands (venire contra factum proprium) is generally not permissible, as the Act protects not only individual rights but also the interest of the general public in undistorted competition. The defence of laches is permissible but rarely successful.77
Sec 12(1)(1) UWG for the first time codifies the obligation to issue a warning (Abmahnung) to the offender before taking legal action.78 In this warning the alleged offender is given notice of the conduct regarded as violating the Act and is called upon to sign a cease and desist declaration (Unterlassungserklärung), containing a contractual penalty clause (Vertragsstrafe). According to sec 12(1)(2) UWG the offender is obliged to refund any expenses incurred by the person issuing the warning.79
Sec 12(2) UWG facilitates applications for preliminary injunctions as it suspends with the requirement set out in sec 935 and 940 Civil Procedure Act (Zivilprozessordnung, ZPO) to demonstrate a case of special urgency in order to obtain such an injunction. According to sec 12(3) UWG successful claimants have the right to publish the judgement provided they show a legitimate interest.
Sec 13 UWG establishes the exclusive competence of the District Courts (Landgerichte) for hearing claims based on the UWG, abolishing the competence of the Regional Courts (Amtsgerichte) for low-value claims.80 As under the previous Act, jurisdiction lies with the court in whose district the defendant has his business establishment or his place of residence (sec 14(1) UWG) or with the court in the district of which the act has been carried out (sec 14(2) UWG).81 Sec 15 UWG adopts the provisions of the former Act pertaining to mediation boards.
Chapter 4 of the new Act penalises certain unfair trading practices (sec 16-19), namely intentionally misleading advertising (sec 16 UWG), betrayal of trade or industrial secrets (sec 17 UWG), betrayal of documents or instructions of a technical nature (sec 18 UWG), and seeking to induce another person to betrayal (sec 19 UWG). These provisions have been taken from the former Act without substantial changes. Former sec 15 UWG (defamation) has been repealed, as the legislator considered the provisions relating to defamation contained in sec 187 of the Penal Code (Strafgesetzbuch, StGB) to be sufficient.82
As has been shown, the new Act to a large extent codifies existing case law, thus providing more transparency of the law against unfair competition, benefiting not only non-lawyers but also, it is to be assumed, foreign lawyers and undertakings trying to get an overview of the relevant German law. The liberalising tendencies of the Act, reflecting a change in the more recent case law, are partly set off by the strengthening of consumer protection, especially as regards direct marketing activities.83 Nevertheless, the new Act, by and large, constitutes an acceptable and balanced framework for doing business and advertising in the German market. Whether it will actually “spur the German economy by transforming it into a flexible business location”84 seems at least doubtful.
1 Gesetz gegen den unlauteren Wettbewerb vom 3. Juli 2004 (BGBl. I 2004 32/1414). A German translation of the Act is – to the Author’s knowledge – unfortunately not yet available.
2 For an outline of the legislative history of the New Act see M Finger and S Schmieder ‘The New Law Against Unfair Competition: An Assessment’ (2005) 6 German LJ 201, 202-203 http://www.germanlawjournal.com (23 January 2005); an in-depth analysis of the history of the Act is given by F Henning-Bodewig ‘Das neue Gesetz gegen unlauteren Wettbewerb’  Gewerblicher Rechtsschutz und Urheberrecht (GRUR) 713, 713-715.
3 Cf the legislative materials, BT-Dr 15/1487, 12 http://www.nordemann.de (23 January 2005); S Engels and TH Salomon ‘Vom Lauterkeitsrecht zum Verbraucherschutz: UWG-Reform 2003’  Wettbewerb in Recht und Praxis (WRP) 32; U Bäumer ‘Reform of the German Law against Unfair Competition’, (2004) 13 German American Law Journal http://www.amrecht.com/baeumeruwg2004.shtml (23 January 2005).
4 W Nordemann Wettbewerbsrecht, Markenrecht (10th edn Nomos-Verlag Baden-Baden 2004) .
5 F Henning-Bodewig (n 2) 715; M Finger and S Schmieder (n 2) 204; H Köhler in Baumbach and Hefermehl, Wettbewerbsrecht (23rd edn Munich 2004) § 1 - .
6 H Köhler (n 5) § 1 ; see also the legislative materials, BT-Dr 15/1487, 16: “integrated model of equal protection of competitors, consumers and the general public”.
7 U Bäumer (n 3); H Köhler (n 5) § 1 .
8 Cf the legislative materials, BT-Dr 15/1487, 16; H Köhler (n 5) § 1 .
9 M Finger and S Schmieder (n 2) 206-207; H Köhler (n 5) § 4 [1.10].
10 F Henning-Bodewig (n 2) 716; see also H Köhler (n 5) § 4 .
11 M Finger and S Schmieder (n 2) 205.
12 The previous concept of so-called “conceptually affected competitors” (abstrakt betroffene Mitbewerber) has been repealed by the new Act; cf H Köhler (n 5) § 2 .
13 The wording of the definition is modelled closely on Art 7(d) of Directive 2002/58/EG of the European Parliament and of the council of 12 July 2002 concerning the processing of personal data and the protection of privacy in the electronic communications sector (Directive on privacy and electronic communications)  OJ L201/37.
14 S Engels and TH Salomon (n 3) 32; H Köhler (n 5) § 2  and .
15 F Henning-Bodewig (n 2) 716; H Köhler (n 5) § 2 .
16 W Nordemann (n 4) -; H Köhler (n 5) § 2 -.
17 Cf the legislative materials, BT-Dr 15/1487, 16; see also M Finger and S Schmieder (n 2) 205.
18 F Henning-Bodewig (n 2) 716.
19 Cf H Köhler (n 5) § 3 ; F Henning-Bodewig (n 2) 716.
20 The translation of the corresponding German phrase proposed by M Finger and S Schmieder (n 2) 205-206 (“materially distorted”) seems misleading to the Author, as it suggests a higher threshold for the application of the Act than the original German term (“nicht nur unerheblich”).
21 U Bäumer (n 1); S Engels and TH Salomon (n 3) 34; see also W Nordemann (n 4) -.
22 Cf the legislative materials, BT-Dr 15/1487, 17; W Nordemann (n 4) .
23 F Henning-Bodewig (n 2) 716; H Köhler (n 5) § 3 .
24 For a discussion of the Federal Constitutional Court’s (Bundesverfassungsgericht, BVerfG) recent ruling on Benetton’s shock advertising campaign see ‘Federal Constitutional Court Rejects Ban on Benetton “Shock” Ads: Free Expression, Fair Competition and the Opaque Boundaries Between Political Message and Social Moral Standards’ (2001) 2 German LJ 1 http://www.germanlawjournal.com (23 January 2005); H Köhler (n 5) § 4 [1.143]; F Henning-Bodewig (n 2) 716.
25 F Henning-Bodewig (n 2) 716.
26 F Henning-Bodewig (n 2) 716.
27 H Köhler (n 5) § 4 [3.1].
28 H Köhler (n 5) § 4 [3.13]-[3.51].
29 W Nordemann (n 4) .
30 Amended proposal for a European Parliament and Council Regulation concerning sales promotions in the Internal Market (COM(2002), 585 final).
31 Cf H Köhler (n 5) § 4 [6.1].
32 Cf the legislative materials, BT-Dr 15/1487, 16; see also S Engels and TH Salomon (n 3) 35; M Finger and S Schmieder (n 2) 207; H Köhler (n 5) § 2 [6.15]-[6.18].
33 H Köhler (n 5) § 4 [7.5].
34 H Köhler (n 5) § 4 [8.20].
35 H Köhler (n 5) § 4 [8.21].
36 R Münker and J Kaestner ‘Das reformierte UWG im Überblick – Die Sicht der Praxis’  Betriebs-Berater (BB) 1689, 1694; H Köhler (n 5) § 4 [10.24]-[10.219].
37 R Münker and J Kaestner (n 36) 1694; H Köhler (n 5) § 4 [10.7]-[10.11].
38 W Nordemann (n 4) .
39 H Köhler (n 5) § 4 [12.13]-[12.29].
40 H Köhler (n 5) § 4 [12.1].
41 H Köhler (n 5) § 4 [11.44].
42 R Münker and J Kaestner (n 36) 1694.
43 R Münker and J Kaestner (n 36) 1695.
44 Cf the legislative materials, BT-Dr 15/1487, 41; see also M Finger and S Schmieder (n 2) 207; H Köhler (n 5) § 4 [11.47].
45 BGH  WRP 1116, 1119 (Abgasemission); BGH  GRUR 164, 165 (Altautoverwertung).
46 R Münker and J Kaestner (n 36) 1695; H Köhler (n 5) § 4 [11.50]-[11.58].
47 Council Directive 84/450/EEC of 10 September 1984 relating to the approximation of the laws, regulations and administrative provisions of the Member States concerning misleading advertising  OJ L250/17.
48 Cf J Bornkamm in Baumbach and Hefermehl, Wettbewerbsrecht (23rd edn Munich 2004) § 5 [1.79].
49 R Münker and J Kaestner (n 36) 1696; see also Art. 2(2) of the Misleading Advertising Directive (n 47).
50 M Finger and S Schmieder (n 2) 208; J Bornkamm (n 48) § 5 [7.78]-[7.83].
51 U Bäumer (n 3).
52 Directive 97/55/EC of the European Parliament and of the Council of 6 October 1997 amending Directive 84/450/EEC concerning misleading advertising so as to include comparative advertising,  OJ L290/18.
53 Cf H Köhler (n 5) § 6 .
54 Cf the legislative materials, BT-Dr 15/1487, 15; M Finger and S Schmieder (n 2) 207.
55 Directive 2002/58/EG of the European Parliament and of the council of 12 July 2002 concerning the processing of personal data and the protection of privacy in the electronic communications sector (Directive on privacy and electronic communications)  OJ L201/37.
56 For an in-depth discussion see M Finger and S Schmieder (n 2) 215-216.
57 Translated by M Finger and S Schmieder (n 2) 208 as “unreasonable harassment”.
58 H Köhler (n 5) § 7 .
59 It is submitted that it is not be required that a contractual obligation has actually been entered into; cf. C Schmoll ‘E-Mail-Werbung im Rahmen bestehender Kundenbeziehungen’ JurPC Web-Dok. 283/2004, - http://www.jurpc.de/aufsatz/20040283.htm (23 January 2005).
60 U Bäumer (n 3).
61 Cf the legislative materials, BT-Dr 15/1487, 14.
62 M Finger and S Schmieder (n 2) 209.
63 The previous entitlement of so-called “conceptually affected competitors” (abstrakt betroffene Mitbewerber) has been repealed. It is reckoned that the option of appealing to industry or competition associations provides adequate protection to competitors not directly affected by the allegedly unfair practices.
64 Under sec 13(2) of the former Act consumer and competition associations could bring actions only “to the extent that the claim concerns an act that is liable to significantly impair competition on the market”. This provision has been repealed; the named associations can now bring actions, according to the general provision of sec 3 UWG, in all cases of acts being liable to “have more than an insubstantial impact on competition”, the threshold, thus, (presumably) being lower than under the old Act.
65 Directive 98/27/EC of the European Parliament and of the Council of 19 May 1998 on injunctions for the protection of consumers’ interests,  OJ L166/51.
66 A list of qualified entities registered in accordance with sec 4 Injunctive Relief Act can be found in H Köhler (n 5) § 8 [3.53].
67 This provision, taken from the former Act, is aimed at so-called “Abmahnvereine“, associations solely or predominantly occupied with trying to detect unfair practices and issuing warnings in order to claim compensation for legal expenses (especially attorney’s fees) against the offender.
68 Cf W Nordemann (n 4) -.
69 For details see H Köhler (n 5) § 9 [2.1]-[2.17].
70 M Finger and S Schmieder (n 2) 210 and 214; W Nordemann (n 4) .
71 M Finger and S Schmieder (n 2) 214; A Stadler and H-W Micklitz ‘Der Reformvorschlag der UWG-Novelle für eine Verbandsklage auf Gewinnabschöpfung’  WRP 559, 562; see also S Engels and TH Salomon (n 3) 42-43; H Köhler (n 5) § 10 -.
72 Cf the legislative materials, BT-Dr 15/1487, 23.
73 Cf the legislative materials, BT-Dr 15/1487, 23.
74 Most of the commentators are critical, see eg M Finger and S Schmieder (n 2) 214-215; G Zettel ‘Das neue Gesetz gegen den unlauteren Wettbewerb’  Monatsschrift des Deutschen Rechts (MDR) 1040, 1043.
75 See eg BGH  GRUR 630, 632 (Cartier-Armbandreif); BGH  GRUR 841 (Entfernung der Herstellungsnummer II); OLG Hamburg  ZUM 202, 205; H Köhler (n 5) § 8 [5.1]-[5.7].
76 Cf the legislative materials, BT-Dr 15/1487, 14-15.
77 W Nordemann (n 4) -.
78 The issuing of such a warning is not a necessary precondition for taking legal action; if the claimant, however, takes such action without issuing a prior warning he may have to bear the costs of the proceedings even if his case is successful, sec 93 Civil Procedure Act (Zivilprozessordnung, ZPO); cf. BGH  GRUR 352, 354 (Pertussin II).
79 The obligation to refund the expenses incurred by the warning is in line with established case law; cf W Nordemann (n 4)  and ; JP Heidenreich ‘Zum Kostenerstattungsanspruch für eine wettbewerbsrechtliche Gegenabmahnung’  WRP 660, 661.
80 Sec 12(4) UWG contains rules for the assessment (and the reduction) of the value of a claim (Streitwert).
81 This provision is widely used, especially in cases involving acts of competition on the Internet as such acts are deemed to have been carried out throughout Germany, with the consequence of every German court having jurisdiction.
82 Cf the legislative materials, BT-Dr 15/1487, 15
83 Cf for the critical assessment by S Engels and TH Salomon (n 3) 44.
84 M Finger and S Schmieder (n 2) 216.
© 2005 Jan Peter Heidenreich. This HTML edition by Marcin Szala and © 2005 Gerhard Dannemann. The contents of this page may be downloaded and printed out in single copies for individual use only. Making multiple copies without permission is prohibited.