The Effect of Unfair Competition Laws on Global Trade

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International business law is an extremely critical element in today’s business world. It can be defined as the law that governs international business and all activities associated with it. International business on the other hand entails any profit-oriented business association that is conducted among different countries / across borders. It includes a variety of activities such as investment in industries, general buying and selling of goods and services, issuing of trademarks and patents, and licensing of processes among others. This, therefore, shows that international business law is relatively comprehensive. Unfair competition is a major concern in international business. It can be defined as any trade practice or activity that is associated with more harm or drawbacks than the benefits it brings to the parties involved. It is covered under unfair competition laws (Wengler, 1955). This piece of work seeks to give an in-depth discussion of international business law and the different aspects associated with it. Much emphasis will be given to the international legal environment and how this environment affects management and business decisions. An analysis of unfair competition laws and application of various legal concepts and appropriate case law will also be given.

Definition and Historical Background

The issue of competition is not a new concept but rather has been there in the business world for a relatively long period. Various governments and business-related bodies have been involved in efforts aimed at regulating the competitive markets for different products and services. These efforts have yielded a wide range of competition laws to govern the markets even in present times, both at domestic as well as international levels. The history of competition law can be traced back to when the Roman legislators were in need of controlling the products and services price fluctuations and other general unfair business practices that were being experienced in the business markets at that time. In Europe, for example, the Kings and Queens who ruled through the middle ages tried as much as possible to do away with monopolies of any kind including those that were state-owned. This was in an effort to do away with unfair competition in the markets. The English common law doctrine of restraint of trade is still considered crucial and various concepts in the modern competition law have been drawn from it. Currently, competition law has shifted its focus to international competition due to the issue of globalization and its effects.

Unfair competition law is an incredibly crucial law in business and commerce. It is a law that deals with a wide range of laws that are usually enforced in an attempt to protect consumers and businesses, particularly those that are in a similar field, from unfair and deceptive businesses practices. In regard to businesses, the unfair competition law includes laws that govern concepts such as trade defamation, trademark and patents infringements, licensing procedures, and embezzlement of business trade secrets among others. With respect to the consumers, the unfair competition law concentrates much on false representations and unfair pricing strategies that could be imposed by different suppliers (Wengler, 1955).

The Effect of Unfair Competition Lawson on Global Trade: Analysis

There are various perspectives that could be considered with respect to the effect of unfair competition laws on global trade. For the sake of this assignment, I will analyze the topic from two different perspectives in an effort to gain a deeper understanding of what it entails in unfair competition laws and their effect on global trade. The perspectives are derived from the attributes that are involved in different markets and what is perceived to be a form of infringement of the competition law.

In regard to the European market, it is agreed that business-related practices ought to be regulated in the interests of all the involved parties. In addition, there must be rules and regulations that govern the practices to ensure that fairness is always maintained. Unfair commercial practices are highly prohibited through various regulatory laws. Nevertheless, unfair rivalry regulation is left to be a matter of national law that depends on various issues, for example, legal and cultural attributes among others. The European unfair competition law is formed by two major components; the national laws and the European necessities that include aspects of the judiciary (Hilty and Henning-Bodewig, 2007).

In regard to the Asian market, it is evident that competition policy has not had a lot of positive contribution to the domestic trade in most Asian countries. For example, Hong Kong and China are not well established in regard to the development and implementation of competition policy and laws. The unfair competition law in China that was enforced in 1993 is not strictly implemented and thus not much attention is given to it. This can be attributed to the fact that it is enforced by the local administrative agencies. These agencies are ineffective and do not work well in regard to combating infringements by protected local interests.

Unfair Competition Laws and How It Impacts Trade in A Foreign Market

Competition is a positive attribute in the business world. This is because it allows for enhanced productivity with respite ect to the production of high-quality products among the suppliers and also charging fair prices on products and services. Trading in a foreign market is considered tricky as compared to trading in a local market. This is so because there are various business regulations that could be present in one country and absent in the other. This, therefore, necessitates that the various laws that are associated with the competition are adhered to, strictly, to avoid cases of infringement that would cost a given business entity a lot when presented in a court of law.

Export is one aspect that is related to trading in a foreign market. For example, cartel agreements on limited competition are in most cases permitted in regard to export trade. The unfair competition laws are deemed to be very significant in enhancing trade in a foreign market. This is so because it allows for business equality among the countries involved without necessarily favoring the host country in any way. Without the unfair competition laws, it would be difficult for a country to carry out business activities in a foreign market successfully. The unfair competition law allows for the adherence to the desirable code of conduct through the stipulation of the dos and don’ts (Henning-Bodewig, 2006).

From the above analysis, it is evident that unfair competition laws have a great influence on global trade. In as much as competition is essential in contributing to the success of the business at a domestic as well as an international level, unfair competition should always be avoided to allow for healthy progress.

Unfair Competition Laws and How It Affects Global and/Or Domestic Trade

As stated earlier, the unfair competition laws touch on various business related issues. For this reason, it affects domestic as well as global trade in different ways. The unfair competition law affects domestic trade in a positive way through the various functions it is able to fulfill. For instance, the law has promoted domestic trade in the following ways; it ensures that the creative, intell, as well as economic investments that are produced by different individuals and business organizations in an effort to distinguish themselves and the products and services they offer, offer, are always protected and any form of infringement is prevented. The unfair competition law also enhances global trade by ensuring that the goodwill which is established between businesses and the consumers is at all times preserved. This is a very crucial aspect that helps in reinforcing the loyalty of the consumers towards the businesses.

Although it may sound disadvantageous, the unfair competition law seeks to discourage business organizations from influencing in any manner, the good will of the competitors. This allows for healthy competition. The unfair competition law has also been deemed to be extremely useful in the promotion of stability and clarity in domestic trade. This is achieved through encouragement of the consumers to always focus on a business’ good will and its reputation in the process of analyzing the quality of other competing products. This is a positive move that has allowed consumers to make informed decision and thus reduce chances of deception. The unfair competition law also enhances global trade through bringing out strategies that are aimed at increasing the level of competition. This is done through provision of business incentives that are aimed at allowing the businesses to provide the consumers with better and desirable products and services as compared to those produced by others in a similar arena.

The global market is also not left untouched by the unfair competition law. All the business practices that are conducted among nations ought to be governed by the unfair competition law to ensure that no nation takes advantage of the other (Nayler, 2005).

Legal Concepts in the Unfair Competition Law

The unfair competition law is associated with a wide range of legal concepts all aimed at ensuring that fairness in the business market is enhanced to the highest possible level to allow for positive progress at the domestic as well as global level. Free enterprise system is a crucial element that allows for effectiveness and efficiency in the contemporary business world. A free enterprise system entails having the freedom to operate a business, compete equally in the market place, and pursue a livelihood away from inconveniencies. In business and legal context, competition is considered to have both positive as well as negative effects in the business field. For instance, competition creates motives for business enterprises enabling them to gain the loyalty of the customers. This is achieved through provision of quality products and services at reasonable prices. This is a positive move towards not only attracting customers but also retaining them for the longest time possible. On the negative side, competition can be harmful to business entities and also to the consumers. For instance, the freedom to compete in the market place allows businesses to entice customers away from each other. This creates rivalry which may even cause some businesses to close down especially when it goes to the extreme (World Intellectual Property Organization International Bureau, 1994).

There are a number of remedies that are made available for those businesses that are in one way or the involved in deceptive trade practices as they undertake their day to day activities. For instance, there is the remedy of injunctive relief. This involves a court giving an order that restrains a competitor from engaging in any kind of deceptive trade activity. A business enterprise could also be considered for money damages. This entails compensation for the losses that a business could have suffered as a result of competition injuries. It is however unfortunate that the consumers who suffer from competition related deception are not provided with remedies in a direct way but rather, the remedies are available to proprietors, and business enterprises. The affected consumers are expected to avail themselves for the assistance that is usually provided by the consumer protection laws as stipulated by the state and federal governance. This does not however mean that the consumers are completely excluded by the unfair competition law but instead, the law tries to protect the consumers from any form of injuries experienced as a result of deceptive business practices. This is achieved through various strategies, for example, encouraging of the consumers to focus on a business’ good will and its reputation all the time in the process of analyzing the quality of other competing products. This avoids unnecessary deception and the costs that go hand in hand with it (World Intellectual Property Organization International Bureau, 1994).

It is worth noting that the law of unfair competition does not penalize a business enterprise mainly on the basis of being successful in the marketplace but rather based on the means through which the successes are achieved. In addition, no liability is imposed on a business just because it is assertively involved in marketing of its product or service. However, it is wrong to make profits at the expense of a competitor. There is usually an assumption that for every dollar that is made by a particular business, there is a dollar that is lost by a competitor in the same market and hence a balance. The aspects that constitute unfair competition vary depending on many factors for instance the cause of action that is asserted in a given case. This may entail actions that pertain to different forms of infringement for example on copyrights, patents, and trademarks. Others include actions related to publication of defamatory, deceptive and false representations. There is also another category that involves misappropriation of trade names, service marks, trade dress, and trade secrets.

Legal Cases That Can Help In Development of the Analysis

There are various legal cases that can help in the understanding of unfair competition laws. Some of the legal cases fall under civil, administrative or criminal case category. Kingdream versus Fafen Xing and Lilin Group is a permissible case that relates to unwarranted competition and trade secrets. In this case, Kingdream Public Limited Company accused Fafen Xing, a former senior engineer of a revealing trade secret in an illegal manner to the Lilin group in 2001. In response to this issue the accused was sentenced to six years imprisonment and a fine of RMB 50,000. Kingdream was also awarded RMB 10 million for the damages suffered as a result of the unfair competition practice. An appeal was consequently launched whose results saw the trio parties concur that Lilin group was to pay compensation amounting to RMB 17 million. This was meant to be payment for the damages caused. This case shows seriousness of the trade secret theft offence that people commit especially as they move from one company to another. Significance of mediation in law is also evident in this case (MWE China Law offices, 2010).

In 2007, there was a Chint versus Schneider case which can be considered as a utility model patent infringement. In this case, Schneider Electric was sued by the Chint Group Company Ltd for contravention of a patent related to a small circuit breaker efficacy model. In response to the case, the intermediate court of Wenzhou city awarded the Chint Group Ltd an extremely large amount of money, RMB 334.8 million. Thereafter, Schneider appealed to the High Court where the case was reconciled and the two companies ended up settling for RMB 157.5 million, an amount that was considered a bit fair. This case is an example of unfair competition that can be experienced through infringement of patents. Some business negates innovation resulting in cases like the above mentioned. It is therefore important that business enterprises engage in independent innovation in an effort to maintain the intellectual property rights. The case also highlights the concept of win-win strategy and harmony as exhibited in international competition. This is shown through the reconciliation of the foreign party and the Chinese party in the case.

Another significant legal case for the analysis of the topic of discussion is Shanghai Sanlian versus Suzhou Wu Liang Cai case. This case involves a trade mark dispute and unfair competition where one company assumes another organization’s trade mark in an attempt to attract more customers through increased popularity. According to unfair competition law, a company that registers another company’s trade mark as an organization name is deemed to have infringed not only the trade mark law but also the unfair competition law. Another good example is the unfair competition that was experienced in the case of Beijing Golden Holiday versus Xiecheng Computer Technology Ltd (MWE China Law offices, 2010).

From the above analysis, it is evident that the unfair competition law covers a wide range of business issues some of them being in a domestic context while others are international. Business entities ought to adhere to everything that is covered under the unfair competition law to avoid any unnecessary costs and inconveniences that go hand in hand with violation of the unfair competition law. In as much as making of a high profit margin is a desire of all business enterprises, the businesses should engage in fair and legally acceptable practices.

Final Opinion Relating To the Topic

From the above discussion, it is clear that international business law is a relatively complex concept of law that is in a fast changing move. New and emerging concepts are incorporated in the law day by day. Unfair competition law is extremely essential in fighting for the rights of the consumers as well as those of businesses, an aspect that would otherwise not be possible. This is more so because business people are usually in a move to make as much profits as possible and would therefore engage in any activity that is geared toward enhancing the profit margin irrespective of the consequences involved. This would in turn affect different parties negatively for instance high pricing and production of poor quality products and services.

There are various perspectives in regard to unfair competition law depending on how it is viewed in different market places and the issues that are involved. Unfair competition law has considerable impact in both domestic and foreign trade. Various concepts are involved in the law and they can be depicted from a variety of cases that have been there as discussed above.

I consider the unfair competition law to be incredibly important in the business field as it tries to equalize every party involved through stipulation of the issues that should be adhered to in conducting business. Apart from fighting for the rights of business entities and proprietors, the law also protects the consumers from any form of trade deception. For this reason, the law should be reinforced as a way of allowing for healthy competition in the business world. Healthy competition will in turn bring about productivity and enhance aspects of creativity and innovation among businesses in different part of the world, an aspect that will foster overall economic development. Although it is essential even in domestic trade, the unfair competition law becomes extremely crucial when it comes to international business trade where many issues are involved.


Henning-Bodewig, F. (2006). Unfair Competition Law: European Union and Member States. London: Kluwer Law International.

Hilty, M.R. and Henning-Bodewig, F. (2007). Law against Unfair Competition: Towards A New Paradigm in Europe? New York: Springer

MWE China Law offices. (2010). Top Ten Chinese Intellectual Property Cases of 2009. Web.

Nayler, P. (2005). Business Law in the Global Marketplace: The Effects on International Business. UK: Elsevier Butterworth-Heinemann

Wengler, W. (1955). Laws Concerning Unfair Competition and the Conflict of Laws. The American Journal of Comparative Law, Vol. 4, No. 2

World Intellectual Property Organization International Bureau. (1994). Protection against Unfair Competition: Analysis of the Present World Situation. London: World Intellectual Property Organization.

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DemoEssays. "The Effect of Unfair Competition Laws on Global Trade." December 24, 2022.