Unfair competition is a recurring business challenge, and when employees are involved in such practices, the effects can be quite serious for employers. Unfair employee practices can generate significant financial losses for employers, affecting the stability and competitiveness of the company. For this reason, prevention and management of unfair competition by employees is essential to protect the economic interests of the company.

According to the Law no. 11/1991, the following commercial practices of the enterprise and/or of the employee which are contrary to honest customs and the general principle of good faith and which cause or are likely to cause damage to other enterprises, as follows, constitute unfair competition and are prohibited:

a) denigration of a competing enterprise or its products/services, of such a nature as to prejudice its legitimate interests, accomplished by the communication or dissemination by another enterprise or a former or current employee of information which does not correspond to the truth;

b) the misappropriation of the clientele of a competing enterprise by a former or current employee, through the use of information which was known to him or her at the time of the commission of the offense to be a trade secret or confidential information and the disclosure of which could be materially prejudicial to the interests of that enterprise;

c) discrediting the activity of a competing enterprise or its products and services, carried out by another enterprise or a former or current employee, by resorting to actions intended to bring about the loss of its good reputation or credibility, by means other than those referred to in letter a);

d) any other business practices which are contrary to honest practices and the general principle of good faith and which cause or are likely to cause damage to competitors.

Employees play an essential role in a company’s business, having access to confidential information, materials, resources and business relationships. Unfair competition from them can be encountered in two main situations:

1. During the course of employment – When an employee uses confidential information or company resources to carry out competitive activities, either for the benefit of a third party or for personal gain. This behavior constitutes a serious breach of the obligations of loyalty and confidentiality that employees owe to their employer under their individual employment contract.

2. After termination of employment – When a former employee begins to perform competing activities based on information acquired during employment. This is also a significant problem, especially if the former employee breaches the confidentiality clauses in the individual employment contract.

There are 3 courses of action that companies can take against employees/ former employees who have committed acts of unfair competition:

1. Filing a complaint with the Competition Council

The Competition Council identifies and penalizes unfair competition practices when there is a public interest at stake consisting in an impairment of the proper functioning of the market. In order to evaluate unfair competition practices, the authors of the complaints must provide the indications and evidence in relation to the possible unfair competition practice, the legitimate interest and the damage caused or imminent damage, as well as all the information necessary to analyze the case. In the event that the Competition Council finds that the notified practices do not fall within the scope of Law no. 11/1991, it will reply in writing within 30 days from the date on which the notification is considered complete.

2. Filing a lawsuit based on contractual or tort liability

Contractual civil liability can be brought on the basis of an individual employment contract in which confidentiality and loyalty clauses are stipulated.

Where contractual liability cannot be incurred, an action in tort may be brought under Art. (2) para. (1) lit. d), according to which unfair competition also includes any other commercial practices which are contrary to honest usage and the general principle of good faith and which cause or are likely to cause damage to competitors.

We emphasize that according to case law in recent years, an overwhelming majority of unfair competition actions have been dismissed by the courts because there was insufficient evidence or the evidence presented by the injured companies was not strong enough to hold the employee/former employee liable.

Relevant is the fact that both claims cannot be brought for the same act of unfair competition, as the two are mutually exclusive. 

3. Filing a criminal complaint under Article 304 paragraph (1) of the Criminal Code

In this case, it will be necessary that the information disclosed is a service secret and that it is not intended for public disclosure.

However, before resorting to these 3 courses of action, there is the possibility to send a notification to the employee/former employee asking him/her to cease the unfair competition actions in order to stop the disclosure of confidential information and its use by the new employer.

Unfair competition practices committed by natural persons that affect the public interest constitute contraventions and are sanctioned with a fine from 5.500 lei to 11.000 lei. If unfair competition practices are committed by legal entities, they are sanctioned with a fine from 50.000 lei to 500.000 lei.

Author: Atty. Felicia Cioflan