German Competition Law Violations: Legal Remedies for International Businesses in Germany

German competition law is based on the Act Against Unfair Competition (UWG). The key element here is the unfair practice (unlautere Handlung), which is subject to sanctions under German law. The German UWG distinguishes between unfair practices in B2C (dealings with consumers) and B2B (dealings between companies) contexts.

In the B2C sector, unfair practices are defined in Section 3(2) UWG as commercial practices directed at German consumers that do not meet the standard of care expected of a business and are likely to significantly affect consumers’ economic behaviour. Foreign companies marketing to German consumers must be particularly careful to understand these standards.

The Unfair Competition Act maintains a so-called blacklist, which lists all prohibited acts in dealings with consumers.

For the B2B sector in Germany, the prohibition is more concise: “unfair commercial practices are prohibited.” In business transactions between companies in Germany, all practices that violate decent customs in German trade, commerce, or craftsmanship are therefore prohibited. Special rules apply to fair competition between companies in Germany, which differ from German consumer protection rules. The key difference is the less stringent standard in the B2B sector, as companies are presumed to have more expertise and, therefore, less need for protection than consumers.

The most common violations in the B2B sector include misleading commercial practices, obstruction of competitors, and violation of trade secrets. These unfair practices are explained in more detail below.

Misleading commercial practices include:

• False statements about product characteristics and/or price advantages
• Misleading advertising with quality seals and/or certificates in Germany
• Inaccurate statements about market position in Germany (“market leader”)

False statements about product characteristics, misleading advertising with certificates, or inaccurate claims about market position account for a large proportion of competition law disputes between companies in Germany.

Example: An international manufacturer of industrial machinery advertising its devices in Germany as offering “100% energy savings compared to standard devices,” when tests show actual savings of only 40%, could face warnings from German competitors for this misleading statement.

Example: A foreign software provider advertising in Germany with the seal “ISA 27001-certified” when only some systems have undergone this certification violates German competition law if the main product is not covered by this certificate.

Example: Claims such as “market leader in Germany,” “number 1 in Germany,” or “largest provider in the German industry” when this position is not actually held constitute violations under German law. This type of misleading statement is particularly problematic in the German B2B sector because German business customers often attach great importance to the market position of their suppliers.

The following aspects fall under the category of obstruction of competitors:

• Targeted poaching of employees
• Calls for boycotts, or
• Blocking patents to block the market.

There is no general prohibition on poaching employees. After all, it is part of normal competition for employees to move to a competing company. However, poaching can become unfair under certain circumstances, namely if:

• There is systematic poaching with the aim of harming the competitor,
• There is exploitation of business or trade secrets by poached employees,
• There is inducement to breach a contract, for example, through premature termination without observing the notice period or
• Several key employees are systematically poached.

A call for a boycott is a request to third parties not to enter into or to terminate business relations with a competitor. Calls for boycotts are unfair if they are specifically aimed at hindering a competitor. This is the case if:

• the call for boycott serves exclusively or predominantly to hinder a competitor,
• if false or misleading statements are disseminated, or
• if pressure or undue influence is exerted on third parties.

If, for example, a retailer spreads false information among its suppliers about the alleged imminent insolvency of a newly opened competitor and urges them to stop supplying goods to that competitor, this is unfair. This action will likely force the new competitor out of the market before it has had a chance to establish itself.

Blocking patents are patents that are registered solely for the purpose of preventing competitors from using certain technologies rather than for their own use. The mere registration of patents is fundamentally legitimate, even if they are not used. It is unfair if this is used systematically to hinder competitors. Specifically:

• If patents are registered solely to block competitors.
• Systematic registration of patents relating to a technology without the intention to use them.
• Abusive exploitation of patent rights.

The following constellations constitute a violation of trade secrets:

• unauthorised use of confidential information,
• poaching employees to obtain trade secrets,
• industrial espionage

According to the Trade Secrets Act (GeschGehG), trade secrets are information that is not generally known, has economic value, and is protected by appropriate confidentiality measures. The unauthorised use of such confidential information constitutes a violation of Section 4 UWG in conjunction with Sections 2, 4 GeschGehG.

Specifically, a violation occurs if:

• confidential information is used without the consent of the owner,
• an employee uses trade secrets after termination of the employment relationship or
• a third party uses trade secrets even though they knew or should have known they were obtained without authorisation.

Poaching employees to obtain trade secrets combines two unfair practices. On the one hand, there is the targeted poaching of employees, as explained above, and on the other hand, there is the violation of trade secrets. It is considered particularly unfair when employees are specifically poached from a company to obtain relevant trade secrets from competitors.

A violation occurs when:

• the poaching is primarily aimed at obtaining trade secrets,
• the poaching entrepreneur incites the employee to take or disclose trade secrets or
• key employees with access to particularly valuable secrets are systematically poached.

Industrial espionage is the illegal acquisition of trade secrets. Within the meaning of the GeschGehG, this is an unauthorised acquisition of trade secrets, which is prohibited under Section 4 No. 3 GeschGehG.

This is particularly the case with:

• unauthorised access to documents or electronic files containing trade secrets,
• use of technical means for spying (eavesdropping devices, hacking, etc.),
• bribery of employees to obtain confidential information or
• breaking into business premises to obtain information.

All these violations can be effectively addressed with German competition law warnings (Abmahnungen). This is a distinctive legal remedy in Germany that should be used consistently by international businesses facing unfair competition.

In the highly competitive German B2B landscape, competition violations can have consequences that threaten the very existence of a company. A quick response to unfair business practices is often crucial for successfully defending against economic damage in Germany.

Involving lawyers experienced in German competition law at an early stage helps to secure evidence and initiate effective countermeasures at the first signs of a violation. Engaging experienced legal counsel familiar with German legal procedures can mean the difference between lengthy, costly proceedings and a quick, efficient solution.

At Schlun & Elseven Rechtsanwälte, our international clients benefit from tailor-made strategies that protect their business interests in Germany, while we work efficiently to enforce their rights under German law. Such an approach allows our clients to focus on what really matters: their core business in the German market.