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COMBATING UNFAIR TRADE PRACTICES: THE EXPERIENCE OF
UZBEKISTAN AND INDIA
Tadjibayeva Mahsuda Rustamjonovna
Senior Lecturer , TSUL
Ph.D. in Law
Siddhant Saini
Lawyer
Master of Laws (LL.M.), Manipal University Jaipur
https://doi.org/10.5281/zenodo.14574936
Abstract
This article examines the legal mechanisms used globally to combat unfair
competition and divides them into key approaches based on legislation and case
law. In addition, the article comparatively examines the issues of liability in
combating unfair trade practices in Uzbekistan and India, and proposes to
strengthen the existing legal framework, its limitations, and civil, administrative,
and criminal liability for unfair trade practices and unfair competition. This
analysis, drawing on advanced international experience and the current legal
environment in Uzbekistan, emphasizes the importance of robust legal
mechanisms in shaping a competitive and fair market.
Keywords:
unfair competition, civil, administrative and criminal
responsibility
Unfair trade practices are one of the most important problems of the modern
economy, violating the principles of fair competition and threatening the
stability of competitive relations. Various legal frameworks have been developed
around the world to combat unfair trade practices, which include different
approaches adapted to the legal traditions and economic realities of different
jurisdictions. These measures are aimed at protecting the rights and interests of
market participants, ensuring transparency and promoting fair competition.
Taking into account the civil law methods of protection against unfair
competition used in the world practice, four approaches can be distinguished:
1. Prohibition of unfair competition is expressed in special legal norms
regulating general offence with separately enumerated characteristics and
forms of offences and a list of applicable remedies (Germany, Austria,
Switzerland) or in legal norms containing individual offence (Japan, Canada).
2. Regulation of means of protection against unfair competition is carried
out on the basis of both special legal norms and general norms of civil law on
tort liability (Belgium).
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3. Legislative prohibition of unfair competition is based on general civil
prohibition of infliction of harm; regulation of ways of protection from unfair
competition is based only on civil law rules on tort liability (Italy, Netherlands,
France).
4. Regulation of activity on elimination of unfair competition is carried out
by law enforcement bodies on the basis of judicial practice (Great Britain, the
USA, Australia).
The Republic of Uzbekistan is just entering the process of creating modern
legislation regulating unfair competition. The competition legislation of
Uzbekistan reflects the norms of public law determining the legal prohibition of
monopolistic activity and the norms of private law determining the legal
prohibition of unfair competition. Apart from the Law of the Republic of
Uzbekistan "On Competition", the issue of creation of other special legal
documents was not considered.
However, the current legislation applies legal measures to protect the rights and
interests of business entities and consumers, to prevent the inclusion of a person
in the legislation and business practice for unfair competition - various ways of
bringing to responsibility before the law.
Liability for unfair competition means bringing to responsibility of persons
guilty of non-compliance with requirements of fair (honest) and free
competition set forth by regulatory legal acts. When establishing the fact of
violation of legislation on unfair competition, the following set of features must
be proved:
- existence of competitive relations between business entities on the commodity
market;
- actions aimed at gaining advantages (profit) in entrepreneurial activity;
- actions could cause harm or losses to other competitors or damage or harm
their business reputation;
- actions are contrary to the requirements of competition law.
According to the current legislation, a measure of influence on unfair
competition is to apply a liability measure to a person who has violated Article
13 of the Competition Law due to unlawful actions related to limitation and
termination of free competition in the market.
The Law establishes the following criteria for liability for unfair competition in
trade relations:
1. making false comparisons capable of harming another business entity or
damaging its business reputation;
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2. blocking another business entity from entering the commodity or financial
market.
Our national legislation provides for three forms of legal liability for the offence
of unfair competition, such as civil, administrative and criminal liability.
Civil liability.
The act of unfair competition includes the objects of intellectual
property, which are exclusive rights, and unfair trade practices, which are the
subject of competition law. If we analyze the issues of legal responsibility for
unfair competition in respect of these two objects, it is known that the
ownership of exclusive rights is a civil law relationship, which gives the right
holder the opportunity to apply civil law protection measures. On the other
hand, protection against unfair competition, which is the object of competition
law, is of public nature and does not protect the interests of individual market
participants aimed at ensuring the fairness of competition.
Nevertheless, civil liability can be effectively used as a means of legal protection
against unfair competition in commercial relations. First of all, to qualify unfair
competition as a civil law offence it is necessary to determine the presence or
absence of liability conditions that allow it.
Uzbek legal scholar O. Okyulov defined a civil offence as a violation of rights and
legitimate interests of civil law subjects as a result of illegal actions, causing
material and moral harm to subjects. That is, it is specified that the action or
inaction of subjects, which violates the rights of other participants of civil
relations and causes them harm, is a civil tort.
Applying these concepts to the definition of unfair competition, we can say that
actions of unfair competition committed by an entrepreneur contrary to the
legislation on competition, violating subjective rights of other competitors and
consumers as participants of civil legal relations, are civil law offenses.
The difference between unfair competition and other anticompetitive actions is
that an entrepreneur commits unfair actions knowing that they will entail a
certain social risk for his competitor. At that, the purpose of a person who
commits an unfair competition is to have an advantage on the market and oust a
competitor from the market.
Proceeding from the need to clarify the legal essence of unfair competition, the
civil remedies to be applied to a person who has violated the prohibition of
unfair competition established by law should be clearly defined.
Despite the presence of sufficient grounds for civil liability for an act of unfair
competition, the Civil Code of the Republic of Uzbekistan does not provide for a
separate provision regulating unfair competition in trade relations. Absence of
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such norm limits the possibility to clearly and unambiguously indicate the civil
law nature of prohibition of unfair competition in trade relations.
An act of unfair competition is characterized as an offence with all the elements
and attributes of a civil offence. For this reason non-contractual liability
measures are applied as a measure of civil-law action against a person who has
committed an act of unfair competition, in particular, due to infliction of harm.
The right to a civil law action against a person (group of persons) who has
committed unfair competition is expressed in monetary compensation of harm
caused to the person who has committed the violation.
At the same time, the conduct of a business entity which is contrary to the
customs of business conduct established by the Civil Code of the Republic of
Uzbekistan, in particular, discrediting it due to dissemination of knowingly false
information, also entails civil liability.
One of the main signs of unfair competition is violation of rights, freedoms and
legitimate interests of competitors and consumers, unlawful actions of a person
associated with causing damage; degree of guilt of a person who caused damage,
proof of damage caused by the person who violated the right, etc.
In this case, in bringing a person who has committed unfair competition to civil
liability, the offender must prove that this person has acted unfairly in
competitive relations or has not acted, and if the victim of unfair competition is a
competitor or consumer, the fact that he has suffered.
In the context of unfair competition, damages should be considered as follows:
- consequences - real damage (costs associated with loss or damage to the
property of the person whose rights are violated;
- possible consequences (possible damage or losses - costs which the person
whose right has been violated must make to restore the violated right)
- lost profits (income, which a person cannot receive under normal conditions of
civil behavior, if his right is not violated).
In accordance with the current Civil Law, compensation for material damage
caused by unfair competition is made in accordance with Article 14 of the Civil
Code of the Republic of Uzbekistan. Due to the fact that this norm provides a
general means of compensation for damages, this norm is applied in practice to
the person to whom damage was caused by unfair competition. Accordingly, a
person whose rights were violated by unfair competition has the right to claim
full compensation for the damage caused to him (costs incurred or to be
incurred to restore the violated right, loss or damage to his property (actual
damage), as well as lost profits). If a person who has committed unfair
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competition has received income as a result of it, the person whose right has
been violated has the right to demand payment of lost profits in the amount not
less than such income as well as other compensation of losses.
However, the recovery of losses from an economic entity which allowed unfair
competition in this way cannot seriously influence the activity of a person who
allowed unfair competition, the absence of a "hard" rule preventing him from
committing anticompetitive actions in the future may open the way for him to
repeat this action.
Here we felt it necessary to draw attention to the following methodology of the
U.S. Institute of Losses with respect to unfair competition. In the United States, a
consumer can sue for damages if he or she is subjected to unfair trade practices
in the purchase of personal, family or household goods and services and suffers
property damage as a result. The U.S. Unfair Trade Practices and Consumer
Protection Act provides for treble damages, up to three times the actual damages
suffered by the injured consumer, as well as attorney's fees at the discretion of
the court. Holding the business entity civilly liable in this way set the stage for it
to resolve the problem in court by compensating the consumer for damages at a
reasonable cost. This plurality view of damages in the United States poses a
serious threat to the business of anyone who plans to commit unfair competition
in their business by providing a strong remedy under the Act.
The implementation of multiple damages can play a significant role in deterring
other market participants from committing the same violation.
In addition, as another way to recover damages for unfair competition, it is
appropriate to recognize that the experience of the U.S. Federal Trade
Commission in suing all consumers or competitors who have been harmed by
unfair competition has had a good effect.
In addition, the German Law on Unfair Competition establishes that a person
who has suffered damage as a result of unfair competition may appropriate the
profits made by the offender as a result of unfair competition or pay
compensation to the person who suffered losses at the rate of 4% of the annual
turnover of the offender who committed unfair competition.
Based on the above, we propose to introduce the following new provision into
the Law of the Republic of Uzbekistan "On Competition" "Liability for damage
caused by unfair competition".
"Legal entities and individuals engaged in entrepreneurial activities shall be
obliged to compensate for losses caused as a result of unfair competition.
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Administrative liability
.
As a civil offence, causing harm or threatening to cause
harm to a subject of competitive relations through unfair competition, the
requirement to compensate the harm caused in the manner prescribed by law is
civil law liability, and the requirement to stop actions of unfair competition is a
measure of administrative responsibility.
Usually the application of administrative and legal measures for unfair
competition is based on the fact that a competitor or a consumer whose rights
have been violated applies to the Antimonopoly Committee. At that, at the
initiative of the Antimonopoly Committee, it is indicated that appropriate
administrative and legal measures may be applied to the competitor due to the
deficiency revealed by the investigation related to unfair competition. It can be
said that such legal measures are applied to the unfair competition rules mainly
in relation to the intellectual property and partially apply to the rules which are
the subject of the Competition Law. At that, cases of causing harm to consumers
as well as failure to provide information about goods (works, services) to
consumers or provision of knowingly false information and misleading
consumers about consumer properties or quality of goods are regulated by
Article 178 of the Code of Administrative Responsibility. However, we can say
that a form of unfair competition that prevents another business entity to enter
the commodity or financial market is exempt from administrative and legal
measures. The main reason for this is that the norm is general and unclear, it
does not occur in practice. Because of this, we can say that no measure of
responsibility is established in relation to it.
As a result of the ongoing reforms on liability measures for unfair competition,
the Decree of the President of the Republic of Uzbekistan "On further reforms to
improve the business environment and create conditions for sustainable
economic growth through the development of the private sector" from 1
September 2022 established anti-competitive actions, in particular the
application of financial penalties to economic entities for unreasonable
overpricing of products and unfair competition. Now the antimonopoly
committee can impose financial penalties on a person who has committed an act
of unfair competition.
However, application of the financial penalty for unfair competition together
with the method of administrative liability is a violation of the principle "Non bis
in idem" (Non bis in idem) with the addition of the rule prohibiting bringing a
person to administrative liability in the event of execution of the instruction of
the Antimonopoly Committee will be an effective solution to the problem.
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Based on the above, we propose to add the following paragraphs to the above
proposed rule "Liability for damage caused by unfair competition" in the Law of
the Republic of Uzbekistan "On Competition".
"Legal entities and individuals engaged in entrepreneurial activities shall be
obliged to ensure that profits obtained as a result of unfair competition are
credited to the state budget.
Reimbursement of the amount, transfer of the profit received to the state budget
and payment of a monetary fine shall exempt the person from administrative
liability".
Criminal liability.
The prerequisite for criminal liability as a legal measure of
unfair competition is very large material damage to the victim.
In countries with developed market economies it is considered that competitive
relations should be strictly protected by the state, since infringement on such
relations undermines the essence of the market economy. For example, in the
USA, Germany, France, Great Britain and even China, competition offences are
criminally punishable. It should be noted that in many countries where
government intervention in the economy is minimal, there is liability for anti-
competitive actions. This shows the importance of competitive relations. In
foreign countries, criminal liability is provided as a special measure to combat
many types of unfair competition. In particular, such types of unfair competition
in trade relations as boycott, bringing to bankruptcy through unfair competition,
discrediting, bribery of employees of a competitor, bribery of partners of a
competitor are considered crimes.
In our country, the Criminal Code of the Republic of Uzbekistan does not contain
a separate special provision on criminal liability in the field of unfair
competition, except for the illegal use of intellectual property rights. The reason
for this is that types of unfair competition are narrowly defined in the Law on
Competition, and very common in practice violations containing signs of unfair
competition are not considered as unfair competition by the law.
The Criminal Code has types of crimes that are regulated without calling them
unfair competition. In particular, Article 192 of the Criminal Code establishes
criminal liability for discrediting a competitor, and this crime objectively
represents the act of spreading false, unclear or distorted information in order
to damage the business reputation of a business entity through printed or
otherwise reproduced texts. or mass media. Such anti-competitive defamation
should be considered unfair competition in all its parameters.
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Also, Article 192 of the Criminal Code of the Russian Federation provides for
criminal acts in the form of bribery extortion. Such crimes are inherently unfair
competition, and in most cases unfair competition can be committed by inducing
management bodies or officials of a non-state commercial organization (Article
192) or an employee of a non-state commercial organization (Article 192) to
abuse their authority in exchange for a bribe initiated by a competitor.
Furthermore, in practice there are also cases of unfair competition by causing
damage to a debtor-competitor through premeditated bankruptcy and causing
material damage to a competing creditor through fictitious bankruptcy or
concealment of bankruptcy. Although this is not considered unfair competition,
Article 180 of the Criminal Code provides for criminal liability of persons who
have committed a false bankruptcy.
In connection with presence of specific features of unfair competition in each of
the above mentioned crimes we propose to introduce to the Criminal Code of the
Republic of Uzbekistan a special provision "Crimes related to unfair
competition" summarizing them under a single norm.
Another important issue in the criminal-legal regulation of unfair competition is
the absence of a norm on the occurrence of liability under the Criminal Code for
repeated commission of an offence specified in the Code on Administrative
Responsibility. The norm on criminal liability should be reflected in the Criminal
Law, if a person brought to administrative responsibility for an act of unfair
competition continues to cause harm to competitors and consumers by re-
committing a socially dangerous act.
In conclusion, we can say that the reduction of cases of unfair competition is
connected not only with the appearance of norms of professional ethics in
competitive struggle in separate spheres of production, development of
practices of business turnover which promote fair competition among
entrepreneurs, but also with the application of legal, administrative and criminal
law. Therefore, it is necessary to emphasize the need to strengthen specific legal
means of combating unfair competition, norms determining administrative
responsibility, as well as the need to introduce criminal liability for criminal
actions in the field of unfair competition.
India's approach to combating unfair trade practices stems primarily from its
Consumer Protection Act, 2019, the Competition Act, 2002, and various sectoral
laws. These legislative frameworks address unfair trade practices through a
combination of civil, administrative, and criminal remedies. India employs a dual
structure of general principles and specific prohibitions. The Indian Consumer
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Protection Act focuses on consumer rights and provides a framework for
addressing unfair competition practices such as false advertising,
misrepresentation, and misleading information. The Competition Act, on the
other hand, defines anticompetitive practices as indirect unfair trade practices,
including abuse of dominance, cartels, and predatory pricing. Indian competition
law also includes specific provisions to regulate practices such as false
comparisons, tied selling, and non-disclosure, similar to the German and Swiss
approaches.
Civil remedies are complemented by regulatory measures implemented by
bodies such as the Competition Commission of India (CCI) and the Central
Consumer Protection Authority (CCPA). The CCI often imposes fines on entities
for unfair competition and includes specific provisions for the use of tort
liability, drawing on the Belgian model. The Indian legal framework prohibits
any practice detrimental to the interests of consumers and includes extensive
provisions for damages and consumer protection. The Consumer Protection Act
establishes a general legal obligation and allows consumers to file complaints
through online platforms. The e-Daakhil portal improves accessibility and
efficiency in enforcement. Indian civil remedies for unfair trade practices include
compensation for damages and injunctions. Civil law in India guarantees that
individuals who have suffered losses as a result of unfair trade practices can
seek compensation for those losses. Victims of unfair trade practices can file
claims for damages in accordance with the principles of tort law. If a court finds
an unfair trade practice to be an infringement, it can order compensation to
competitors or consumers for the losses caused.
For instance, cases involving abuse of dominance or cartel conduct often result
in substantial fines and sanctions. Notable examples include cases such as
Google vs. CCI, where the tech giant was penalized for unfair practices in
advertising and search engines. In India, the Central Consumer Protection
Authority can impose monetary penalties based on turnover or profits for
administrative liability related to unfair trade practices. These penalties are
usually determined by the seriousness of the violation and the profits gained.
For repeated violations of unfair trade practices, stiffer penalties may be
proposed. The CCPA can also issue orders to halt illegal practices, stop the
marketing of suspect products, or withdraw unfair advertisements. It may
require manufacturers to recall defective or unsafe products and, in conjunction
with relevant administrative authorities, prosecute violators and confiscate their
proceeds.
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Indian law has demonstrated strict measures against repeated unfair trade
practices. For example, fines of up to 10-15% of the annual turnover or profits of
the violating companies can be imposed, and this figure can be increased further
for repeated violations. Specific administrative penalties also exist for non-
compliance with advertising rules. Companies that provide unreliable or
misleading advertisements can be fined starting from 50,000 rupee. If the
violation continues, the fines can be increased to 1,000,000 rupee and the
responsible individuals may also face imprisonment. There are numerous legal
cases in India regarding unfair trade practices. In 2021, e-commerce giants such
as Amazon and Flipkart were investigated by the CCPA. They were warned for
incorrect product descriptions and deceptive advertising practices. Misleading
advertising practices are among the most common violations in India.
In 2015, Nestlé India was fined a large sum and temporarily removed from the
market for incorrect ingredient descriptions in its Maggi instant noodles. In
India, unfair trade practices are criminalized, with specific cases such as fraud or
misrepresentation requiring the application of criminal provisions under the
Indian Penal Code. There are also sectoral laws, such as the Drugs and Cosmetics
Act, which criminalize false advertising in the pharmaceutical sector.
Uzbekistan’s legal framework on unfair competition is developing, with the
Competition Act and other relevant laws providing key measures to address
anti-competitive practices. However, the lack of clear provisions in the Civil and
Criminal Codes for many forms of unfair trade practices limits the effectiveness
of enforcement mechanisms. Learning from countries with robust legal systems,
such as the United States’ treble damages rule or Germany’s profit-sharing
principle, Uzbekistan could strengthen its legal and institutional framework to
comprehensively address unfair trade practices. Recent reforms and proposed
amendments demonstrate progress in aligning national legislation with best
international practices. India, with its Competition Act of 2002, provides another
important example of a comprehensive legal mechanism to address unfair trade
practices. The Act establishes the Competition Commission of India (CCI) to
investigate and punish violations, including abuse of dominance, cartels and
deceptive trade practices. In addition, the Consumer Protection Act, 2019
complements this by protecting consumers from unfair trade practices such as
false advertising and fraudulent claims. The Indian approach emphasizes market
regulation and consumer protection, balancing punitive measures with
preventive strategies to promote fair competition.
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For Uzbekistan, incorporating insights from India’s dual focus on competition
law and consumer protection could be crucial in addressing the shortcomings of
the current system. Adopting clear rules for repeat offenders, providing
dissuasive penalties, and strengthening judicial and administrative oversight
could significantly reduce the incidence of unfair trade practices.
Ultimately, reducing unfair trading practices in both Uzbekistan and India relies
not only on strong legislation, but also on promoting ethical business practices,
promoting fair competition through education and awareness, and ensuring
effective enforcement mechanisms. Strengthening these pillars will pave the way
for sustainable economic growth and a fair, competitive marketplace.
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