Unfair & deceptive practices

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Does your business take steps to prevent unfair or deceptive practices?

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This Scorecard is due to be updated in 2018

In a competitive market, businesses often have opportunity to engage in unfair or deceptive practices or actions that could disadvantage other business and/or customers. Though the precise definition of ‘unfair’ or ‘deceptive’ is impossible because each case must be judged on its own facts, there are certain categories of behaviour that can be recognised to be harmful, if not illegal, and detrimental to people, the planet and other businesses. These may include:
● Misrepresentation in a commercial setting, such as ‘mis-selling’ an insurance policy
deliberately making contractual terms obscure and overly complex;
● Changing terms once a contract has been signed, particularly if one party has more power/money/clout than the other
● Ignoring or disregarding hazards, dangers and inconveniences, such as poorly made products that purport to be higher quality than they are
● Deceiving creditors and suppliers, in regards to an organisation’s financial health
● Extending credit to an individual who is not creditworthy
● Libeling or slandering another organisation's product or business activities, either overtly in advertising or covertly e.g. fake negative reviews/cyber trolling in discussion forums etc
● Making a false representation to make a person believe that the goods or services offered are those of another, such as a competitor (‘passing off’)
● Falsely implying that a network/endorsement exists
● Charging for a service that can be accessed/undertaken freely elsewhere
● Limiting production and supply, controlling access to technical developments or markets, such as through contractual conditions
● Interfering with another company’s contracts, directly or indirectly
● Systematic overcharging of customers, e.g. consistently overcharging on wines so that significant ‘discounts’ can be made without affecting profits
● Misleading customers with hidden costs e.g. charging cancellation fees out of proportion to initial membership fees
● Discriminatory pricing, such as variable tariffs according to method of payment, e.g. charging to use debit cards, or time of joining, when new customers get a better deal not offered to old customers
● Exclusivity or other unfair trading conditions, e.g. limiting payment options to one provider such as Visa at the London 2012 Games.

Many of these behaviours are very subtle or even unconsciously taken by those who have not questioned the norms of current business practice. They are often hard to identify and rectify, so may persist for a long time and be inherent in a business’ working culture and processes. Often, they are a question of degree and context rather than a clear infringement of black and white, right or wrong. Often, when challenged at law, the result is the award of both compensatory and punitive damages.

This question is focused on the more intangible shading of values and principles before the activity becomes outright illegal.

Dominant Position

'Dominant Position' a variety of factors need to be taken into account to establish whether a business holds a dominant position on the market (starting with a full definition of the particular market in which the business is operating). A good indicator is whether the business has a 50% market share. If this is the case they will usually be accepted to be dominant. However, in some cases companies holding a market share of 40% have been found to be dominant (the corresponding competition authorities are the ones that determine this in each particular case).

Unfair Practices

'Unfair business practices' encompass fraud, misrepresentation, and oppressive or unconscionable acts or practices by business. Such acts, prohibited by law in many countries, are often undertaken against consumers but are also committed in business-to-business contexts.

Answering YES

All Businesses MUST

Confirm they do not engage in agreements or activities that could be considered abuses of their market power

Confirm they are not currently involved in any investigation or procedure before the Corresponding competition authorities

Describe the review procedure for ensuring that their practices and agreements do not result in unfair or deceptive business practices and explain how often these reviews take place

All Businesses MAY

Describe any internal competition compliance policy they have

Describe any other good practice they implement, such as promoting an understanding amongst employees as to what type of behaviour is and is not permissible under competition law

Describe any future intentions regarding this issue

Large and Multinational Corporations (MNCs) MUST

Confirm that their policies and practices are consistent across all subsidiaries and branches

Mention if any of their subsidiaries or branches are currently involved in any investigation or procedure before the corresponding competition authority

Answering NO

All Businesses MUST

Explain why they do not or cannot answer YES to this question

Confirm if they are engaged in agreements or activities that could be considered abuses of their market power

Describe if they are currently involved in any investigation or procedure before the corresponding competition authorities

All Businesses MAY

Assess whether this issue is likely to affect them more or less in the future

Mention any future intentions regarding this issue

DON'T KNOW is not a permissible answer to this question

NOT APPLICABLE is not a permissible answer to this question

Version 1

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