New Law on Unfair Competition implemented

A new Law on Unfair Competition entered into force in Chile on February 16 2007. The Chilean Parliament considered that as laws already existed for free competition and consumer protection, it should also bring in a system to regulate against unfair competition and allow the prosecution of this type of activity. Further, the new law helps Chile to adhere to its obligations under international economic treaties.

The new law borrows from the Spanish, Argentinean and Colombian laws in this area, and establishes that 'unfair competition' is any act contrary to honest practices and good faith that, by illegitimate means, intends to divert consumers away from a competitor.

The law sets out the following examples which may be viewed as constituting acts of unfair competition:

• taking advantage of a reputation established abroad;
  
  
• the use of signs and trademarks to mislead consumers;
  
  
• making incorrect or false affirmations about third-party goods, establishments or activities;
  
  
• making false or unjustifiable comparisons;
  
  
• activities intended to induce third parties into breaching the contractual obligations they have with a competitor of the person engaging in such activities; and
  
  
• abusive use of judicial actions to restrain the activities of a competitor.

The law states that conduct may be classified as unfair competition, even if the suppression of such conduct is possible under the free competition, consumer protection or industrial property laws.

The Ordinary Courts are competent to hear unfair competition actions. Expedited or summary proceedings are available.

The law establishes that an action against unfair competition may jointly or separately request the following:

• A declaration that the act complained of is unfair;
  
  
• The cessation of the alleged unfair act or an order prohibiting it;
  
  
• Publication of the judgment finding the defendant guilty of unfair competition; and
  
  
• The indemnification of any damage caused by the unfair act if compensation has not been paid out under other regulations.

The law also allows for an application to prevent any threat of unfair competition. Should the application prove successful, the court will require immediate cessation of any preparatory acts, notwithstanding any other precautionary measures provided under other legislation.

An action against unfair competition must be brought within one year of commencement of the unfair conduct or the date that the plaintiff became aware of such conduct. An action for damages, however, can be brought within four years of the start of the unfair conduct or the date the plaintiff became aware of this conduct.

Sergio Amenábar Villaseca, Estudio Federico Villaseca, Santiago