Companies invest significantly in expanding and maintaining their customer base. In doing so, they increase their market share and thereby their market position compared to competitors. They therefore have a legitimate interest in not losing their customer base due to unfair competition or anti-competitive hindrance. Companies are particularly hard hit by the poaching of customers by other market participants, especially competitors. The poaching of end customers takes place, for example, through targeted contact and interception of customers, be they consumers or companies, or through support in terminating contracts. It is also conceivable that a competitor wants to increase its market share by combining different products and services. This indirectly deprives potential end customers of the opportunity not to turn to a competitor in the first place.
Overview – UWG and GWB
The Act to Prevent Unfair Competition, or UWG for short, and the Act Against Restraints of Competition, or GWB for short, contain regulations on how the poaching of customers or, in general, the customer-related hindrance of competitors are to be assessed. Such obstruction may be unfair, i.e. anti-competitive and impermissible. It can also violate antitrust law. In both cases, the company concerned can issue a warning for unfair business conduct or for abuse of a dominant or strong market position and demand injunctive relief and compensation.
However, not every poaching of current or potential customer relationships is anti-competitive. Here you will find out which special circumstances and requirements must be met for an unfair act or an anti-competitive hindrance to occur. In principle, both the UWG and the GWB protect competition for the market and market shares. And part of competition is attracting new customers. Poaching customers is therefore part of competitive action and is therefore generally permissible. This means that not every hindrance to a competitor is prohibited. Your own competitive action necessarily automatically hinders a competitor. Consequently, a competitor's customer base is not in itself a protected asset. Competition thrives on customers switching providers and other market participants entering the market. In principle, even a dominant company is entitled to take consumers away from a competitor.
Targeted unfair obstruction – violation of UWG
The law in the form of the UWG (law against unfair competition) only draws a line where a business act is used specifically against a competitor. Unfair hindrance is therefore only seen as an impairment of the opportunity for competitive development. At the same time, the UWG requires that this impairment be targeted. It is only through the feature “targeted” that a restriction that is permissible in itself becomes a violation of competition law. According to case law, in particular the Higher Regional Court of Düsseldorf and the Higher Regional Court of Frankfurt, targeted hindrance means that, taking all circumstances into account, a business act is primarily not intended to promote one's own competitive development on the downstream market, but rather is aimed at hindering a competitor. The targeted hindrance of competitors results from the intention to exclude them.
Case law has formed case groups for unfair obstruction aimed at end customers or competitors. Only if one of these groups of cases applies will courts assume that there is an unfair commercial act because of buyers on the downstream market level, the sales market. Case law is always based on the principle that the targeted and systematic penetration of a competitor's customer base and the exclusion of end customers is part of and reason for competition. A violation of the UWG only occurs if additional circumstances and actions by the competitor arise. The affected competitor can then demand injunctive relief and compensation.
One of these case groups is the interception of potential end customers. Above all, influencing end users, especially consumers, with unfair means leads to unfair targeted obstruction and a violation of competition law. What is meant here is the exertion of pressure, very short reflection times, deception about circumstances, for example about the competitor and their products, the redirection of customer orders, especially typo domains or call redirections, or the influence on search engines.
Another case group is the poaching of existing end customers. Here, too, the competitor must act unfairly before one can assume a violation of competition law according to the UWG. This requires special circumstances and unfair means so that poaching, which is generally permissible, goes beyond permissible competition. Attracting customers with discounts or benefits to encourage them to switch is an expression of competition and permissible. However, the line between competition and targeted hindrance of competitors is crossed when the end customer cannot make an informed decision or is put under pressure. Inducing a breach of contract, such as immediate termination of the contract even though there is no good reason, will generally constitute a case of unfair competition, especially if the customer's decision is unfairly influenced. The request for termination by the company is only inadmissible if there is no right of termination or if the consumer or customer's decision is improperly influenced.
Finally, the coupling of services can give rise to accusations of unfair competition and claims for damages and injunctive relief. If a company designs its services in such a way that a customer can now purchase a specific product if he or she purchases another product or service, it may be violating the law, in particular the UWG, under certain conditions. This can represent unfair competition, particularly in the case of the IT industry and the coupling of software products. However, such a coupling is not per se a violation of the UWG. In principle, every company is free to offer its products and services as it wishes. As a rule, tying circumstances are judged according to antitrust law unless coercion, misleading or exerting pressure accompany the tying. The requirements of antitrust law are much stricter and may not be undermined by the UWG.
Unreasonable obstruction – violation of GWB
So that a consumer or customer-related unfair hindrance also represents an unfair hindrance and violates antitrust law, in particular the provisions of the GWB, in particular Section 19 Paragraph 2 No. 1 GWB in conjunction with Section 18 Paragraph 4 GWB or Section 20 Paragraph 1 GWB, violates it, an abuse of market power must be proven. However, this is not always the case when poaching customers.
The prohibition of unreasonable, abusive obstruction requires that the company that is accused of obstruction is dominant or at least strong in the market. Market dominance is assumed under the GWB if a company has a share of more than 40% on the relevant product and local market. The relevant market must always be determined first. However, it is often difficult to prove that a dominant company has a market share of 40% or more. But it is not just a dominant company that is not allowed to abuse its market power.
Even companies with superior market power are not allowed to hinder competitors who depend on them. With such a dependency, market dominance is not important. One then speaks of market strength. Dependency occurs when a company relies on another company to supply it so that it can maintain its competitiveness. This is always the case if the dependent company objectively has no supply alternatives or cannot be expected to have such alternatives. A specialist retailer, for example, is dependent on being able to offer a certain core range of brands and products in order to meet consumer expectations. This is then referred to as assortment-related dependency. The decisive factor is always the individual case. Signs of dependence and therefore relative market power are the high level of awareness of a brand, high advertising budgets of the market-strong company and its distribution rate. Distribution rate means the proportion of specialist retailers who carry a particular product. The higher the distribution rate and the coverage of the relevant market with the product, the more likely superior market power is to be considered (read more detailed explanations of the distribution rate and a ruling by the Düsseldorf Higher Regional Court here).
An unreasonable hindrance can occur, for example, if a company denies an end customer or other market participant software that the consumer needs in order to connect hardware or software from the company with strong market power with products from the dependent competitor. This often occurs when the company with strong market power deprives a competitor of the opportunity to compete at all by combining services. If the strong company refuses to deliver, the end customer may be forced to terminate a contract with the dependent company. Such an obligation to terminate in the event of a tie-up is a restriction of competition.
It is also important to note that market dominance in itself is not impermissible. Only restrictions on competition that lead to the abuse of a dominant market position are prohibited. This can be the coupling of products and services in order to specifically prevent competitors from selling their own products. Although the coupling is used for the end customer, it hinders competitors. This means that the connection occurs subsequently and the end customer is prompted to terminate a contract. If a company is not dominant because its market share is below 40%, this only applies if the company is strong in the market because the demanding company is dependent.
In order to assert claims for damages or injunctive relief or to issue a warning, the competitor who is the victim of the unfair hindrance must either prove that they have a market share of 40% or that they are dependent. In a second step, the hindrance caused by a restriction of competition and also the unfairness must be demonstrated.
The customer base is not protected per se. The direct poaching of customers or the coupling of products and services, which can cause customers to terminate their contractual relationship with another company or not to enter into it at all, is therefore generally permitted.
However, poaching can constitute unfair hindrance and a violation of the UWG if particular pressure is exerted on the customer or false information is claimed about the competitor or their product. The coupling of products and services can be a violation of the GWB in two constellations. In one constellation there is abuse of a dominant market position. This assumes that the trading company has a market share of 40%. In the other constellation, the threshold for abuse of a dominant market position has not been exceeded, but the trading company is strong in the market because competitors are dependent on it.
In the case of claims due to the poaching of customers, the market position, the specific actions and the question of whether the hindrance is unfair or unfair must always be examined.