‘Disloyal competition’ — here and abroad
Commuters on their way to Paris’ major airports and train stations were disrupted this week by the presence of a rolling blockade. Taxi drivers, under pressure from competition presented by the emergence of transportation network companies like Uber, obstructed crucial thoroughfares to draw attention to their plight.
Among the most bizarre aspects of this truly bizarre episode is the personage who first broke the story – former Hole lead singer and Kurt Cobain widow Courtney Love:
they’ve ambushed our car and are holding our driver hostage. they’re beating the cars with metal bats. this is France?? I’m safer in Baghdad
— Courtney Love Cobain (@Courtney) June 25, 2015
As of Friday evening, Paris remained in a state of total lockdown. But even when police do finally clear the streets, the French notion of concurrence déloyale – translated directly as “disloyal competition” – likely will take more time to correct.
The political rhetoric surrounding the demonstration makes that clear. Lydia Guirous, representative of France’s center-right Parti républicain, characterized Uber’s presence in the market as “wild competition” and called for a quick solution to “unfair competition.”
France’s unfair competition law is broad in comparison to its U.S. equivalent. The result of France’s permissive approach is predictable enough. Competing firms abuse the cause of action with an eye toward hobbling their competition.
The distinction between the U.S. and French approach is, at bottom, that the French law is predicated on a broad definitions of harm (including “imitation” and “parasitism”) whereas the U.S. law is predicated upon specific deceptive business practices (like misrepresentation or false advertising). Thus, in the United States, taxi complaints about unfair competition would not be fit for legal recourse. Instead, such concerns are relegated to the realm of public policy.
While these kinds of high-profile displays of competitive resistance are not common here, they certainly do occur. Be it in the courts, in the legislatures or the on digital highways, nontraditional venues are ignored at a firm’s peril. In the realm of technology, this is particularly true.
On flimsy pretexts, firms can establish virtual roadblocks that effectively deny their rivals the ability to compete. Recently, this occurred when the payroll processing giant ADP chose to deny a new player in the benefits market, Zenefits, ordinary and vital access to its customers on the basis of publicly unsubstantiated security concerns.
While that conflict has subsequently turned into something of a “he said; she said” affair, if ADP is acting in an anti-competitive manner, as Zenefits’ alleges, to protect their own forthcoming benefits platform, the fact pattern raises a broader question about the nature of competition in new fields.
When taxis obstruct streets, it is easy enough to correct. When digital roads are blocked to subvert competition, who does one call? At the moment, the only option is to call a lawyer.
It is clear that using market position to work in an anti-competitive manner is far easier in a non-corporeal space than it is on city streets. As a remedy, for the sake of preserving market flexibility, there is a need to undertake fact-intensive analyses on an accelerated basis to peer beyond pretext when one firm subverts another in a structural way. Doing so in a manner that avoids the pitfalls we see in France will be tricky.
To be sure, U.S. law does not yet have an answer to this question.
While different market actors should not be subject to different legal standards, lawmakers need to be cognizant that incumbent market actors already enjoy plenty of advantages. There is no need for them to also reserve an ability to literally shut-down traffic. When they do so, when outright and structural alienation occurs, savvy regulators should cast a suspicious eye.
