Why protect competition?
- Economic system is based on competition, if something harms the competition it shouldn’t be allowed.
- It is very important that the competition is fair.
Goals of competition Law
- Fairness among competitors.
- Protection of consumer’s welfare.
- Access to the market.
Competition Law
It is concerned with the problems that occur when 1 or more firms possess market power.
Areas of Competition Law
- Free competition Law.
- Unfair competition Law.
- European competition Law.
Free Competition Law:
- Control of conducts contrary to free competition.
- Controls the market: prevents the formation of dangerous competition.
- 4 Types: Collusive practices, Abuse of dominant parties, Economic Concentrations, Control of State Aid.
Collusive Practice (FC)
- All agreements, decisions or collective recommendations that may produce the effect of preventing or restricting competition shall be PROHIBITED.
- e.g: Horizontal and vertical agreements.
Abuse of Dominant parties (FC)
- Companies with a dominant position has a special responsibility in relation to the market.
- Importance of elimination of market power.
- Abusive conduct.
Economic Concentrations (FC)
- Operation that supposes a change in the structure of control of one or more companies:
- Merger.
- Acquisition of control.
- Joint venture.
Control of Aid State (FC)
- Objective is to ensure that government interventions do not disturb competition and trade among EU.
Unfair competition Law:
- Protection of competition among enterprises, competition has to be fair.
- Relationship with consumers and users: acts that can distort economic behavior of normal consumers.
Acts that injure the interest of COMPETITOR (UCL)
- By confusion.
- By denigration.
- By comparison.
- By imitation.
- Exploitation of the reputation of others.
- Violation of trade secrets.
Acts that injure the interest of CONSUMERS (UCL)
- For misleading omission: false info.
- Aggressive practice: harassment, coercion.
Acts that injure the PUBLIC INTEREST (UCL)
- Violation of rules.
- Discrimination or economic dependency.
- Selling at loss.
- Unlawful advertising.
Importance of Intellectual Property (IP)
- Essential business asset.
- IP protects small innovative firms.
- Needed to enable the release of IP into the public under controlled conditions.
- IP guarantees standard for public benefit by means of licensed trademarks.
- Protection of IP rights is a way to protect consumers too.
IP System:
- Rights over the use of inventions, designs, brands, literary and artistic work.
- Innovators: make significant investments in development.
What is a patent?:
- A legal title that grants the holder the exclusive right to prevent others from making, producing or offering for sale a product that uses his patent without authorization.
What can be patented?:
- Patents protect inventions which solve technical problems: chemical substances, pharmaceuticals.
- Processes, methods, uses, products, devices and systems.
- They must be:
- NEW
- INVENTIVE
What is a design?:
- It is the outward appearance of a product resulting from its features.
- Requirement for protection:
- Novelty.
- Individual character.
Design Protection:
- Exclusive right.
- Principle of territory.
- Duration:
- registered design rights: max. 25 years.
- unregistered design rights: 3 years.
What is a Trademark?:
- It is any sign, capable of being represented graphically, which distinguished the goods and services of one undertaking from those of another.
Refusal for Trademarks
- Absolute grounds: lack of distinctiveness.
- Relative ground: when peaceful co- existence of mark is impossible.
Trademark protection:
- Exclusive right.
- Potentially perpetual (renewal every 10 years).
- Risk of loss of protection if: not used after 5 years, found to be invalid.
What is a copyright?:
- Protects and production of the human mind, such as literary and artistic work.
- Production must be an expression and not an idea.
Protection of copyright:
- Economic right: exploitation of work, freely transferable/ licensable.
- Moral right: relate to a moral interest of author, always retained by author.
What is a Trade Secret?:
Information that:
- Is not generally known easily discovered.
- Has business, commercial or economic value.
- Is subject to reasonable effort to maintain secrecy.
Protection of Trade Secret:
Practical - Limited access to information. - Encrypted. - Monitored entry to installations. Contractual - Non- disclosure agreements.
Concept of negotiable instrument
It is a document that:
- Incorporates a legal right.
- The right becomes independent from the underlying transaction.
- Contains all the legal details of the right that it incorporates.
- Normally freely transferable.
Main economic functions of NI:
- Means of payment (substituting cash).
- Credit instrument evidencing a deferred payment.
- Means to obtain credit through bank discounting.
Types of payment NI
- Bill of exchange.
- Check.
- Promissory Note. (Pagaré)
Bill of exchange:
- NI which is issued by a person and includes a payment obligation to be accepted by another person of an specific quantity on the due date.
- Drawee may not accept the payment obligation.
- Drawer remains liable if drawee does not accept and fails to pay.
Parties involved in BOE
- Drawer: person that issues BOE giving payment order to Drawee.
- Drawee: person to whom the payment is addressed.
- Payee: person to whom BOE has to be payed.
- Endorser: creditor who transfers the right to receive payment.
- Endorsee: person to whom the right to receive payment has been transferred.
Types of action in BOE:
- Direct action: action against the drawee to claim the payment of the BOE.
- Backwards action: action against the endorser and/ or drawer to claim the payment of the BOE if drawee does not accept or pay.
Check:
- NI issued by a person which contains an order of payment to the bank in favor of the legitimate holder of document.
- Issue of the check must be drawn against bank or credit institution.
- Could be endorsed.
- Not an official form.
Promissory Note:
- NI which contains an unconditional promise of payment of an specific amount by an issuer in favor of an specific holder on a due date.
- Could be endorsed.
Director’s Role:
- Fiduciary duties: duty of diligence and loyalty.
- Main Role: manage and govern the company in which they participate.
- Have the capacity to nominate and terminate all executives working in the company.
- Ultimate responsible for the company’s performance and activity.
Corporate (Civil liabilities):
- Additional regulation depends on sector,
- Liable to shareholders for damages due to acts against the law, bylaws or breach of their duties.
- Liable for debt.
- EX: bankruptcy, imbalance and shadow directors.
Main principles of Civil Liabilities:
- Breach of the obligations and duties.
- Existence of a damage.
- Casualization.
- Director’s performance to be negligent or bad faith.
- Joint and several liability of all directors.
Litigation Action of Civil Liabilities:
- Corporate action: SGM, Shareholders, Creditors.
- Individual action: shareholders, 3rd parties, provided damage.
Key issues of Civil Liabilities:
- Aks for it at any SGM, without the need to be in agenda.
- Incitation of an action implies the termination in the position as director.
- Statute of limitations: 4 years.
Criminal Liabilities of Directors: en
- Deriving from Criminal Code.
- Company liable from the criminal point of view.
- Specific case of criminal offence.
- Money laundering.
Administrative Liabilities of Directors:
- Deriving from the General Tax Law.
- The company is the main responsible.
- Directors are subsidiary liable.
What happens if an enterprise goes wrong?
- Option 1: entrepreneur can continue paying all its creditors when due, no need to apply insolvency law.
- Option 2: entrepreneur can no longer pay all its creditors when due, insolvency law will apply.
Insolvency Law:
Area of law that deals with a situation where a debtor is unable to pay all creditors in the due time.
Goals of Insolvency Law (Traditional View):
- Protect creditors against debtor.
- Distribute assets of the enterprise among creditors.
- Creditors should be treated equally.
- Court drives process.
- Only a court can offer sufficient legal warranties to make the insolvency process fair.
Goals of Insolvency Law (Modern View):
- Protects creditors and debtors.
- Maximize the possibility of recovery (distribute assets isn’t always the best option).
- Creditors & debtors have to drive process.
Protect creditor and debtor:
- Unsecured creditors may not recover any amount.
- Try to achieve an out of court agreement.
Problems of distribute the assets among creditors:
- We lose 1 entrepreneur = bad for economy.
- We lose workplaces = (bad for people)
- Distribution can damage creditors.
Problem of Court processes:
- High cost.
- Long time.
- Damages debtor’s reputation.
CONCLUSION of modern insolvency law:
Aims to balance the interest from the creditos to get a quicker satisfaction, with the interest of the economy to preserve a debtor.
Which law should we apply for insolvency?
- Mostly governed by national law.
- ## European court COMI: debtor has its “center of main interest”.
Insolvency Act
- Law 22/ 2003 of 9th of July.
- Insolvency is a de facto situation.
- Insolvency proceeding: opened in relation to debtor’s insolvency.
- Each of them has a different legal effect.
Voluntary insolvency (by debtor)
- Current and imminent insolvency.
- Debtor has no obligation to evidence that it is insolvent.
- Under legal obligation to ask for insolvency.
Problem: nobody wants to negotiate with an entrepreneur that has been declared insolvent. - Solution: debtor will not be under obligation to file for insolvency if he notifies that it has started negotiations with creditors ( 3 months to negotiate).
Compulsory insolvency (by creditor):
- Only in case of insolvency.
Creditors have to evidence certain factors: - General suspension of payment.
- Seizures over all or a significant part of assets of debtor.
- Creditor can not make a petition for insolvency if debtor has notified.
Initial steps:
Declaration of insolvency:
- Made by Commercial Code.
- Legal Publicity: official Gazzett & Commercial Registry.
Appointment of insolvency receiver:
- It is appointed by judge.
- In general: 1 insolvency receiver.
- Main functions: helps the court in development of insolvency.
List of creditors:
- We need to know how many creditors does the company have.
- Classification of creditors.
Classification of creditors:
- Against state.
- Privileged creditors.
- Ordinary creditors.
- Subordinated creditors.
Claw back action:
- Way to protect the creditor against actions made by the creditors before the declaration of insolvency that are prejudicial for the insolvency state.
- 2 years before insolvency declaration.