Unfair Competition and the Primacy of Community Law

competencia desleal

Regarding unfair competition, Community law prevails over national regulations that are contrary to this

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National rules that violate EU law are not applied to determine the existence of unfair competition.

 
The primacy of Community law applies in all matters. In this post we review a case about unfair competition resolved by the Civil Chamber of the Supreme Court in ruling on 6 June 2020, (Resolución 264/2020). The extraordinary appeal for procedural infringement and the appeal for cassation filed by CODERE against BETFAIR was dismissed, not having existed unfair competition by the latter when offering online games and bets in Spanish territory with a license granted in Malta.

Fact background,,es,Juan Alberto and Paulina filed suit against FTA,,es,Asset Securitization Fund,,es,requesting the declaration of nullity for abusive of the floor and ceiling clauses contained in the novation contract of the mortgage loan of,,es,with the corresponding refund of amounts unduly collected,,es,The Securitization Fund Management Company,,es,Beech,,es,acting on behalf of FTA, he responded to said claim alleging that he lacked passive legitimacy since the entity had no legal personality and that it constituted only a private and open fund and that therefore the passive legitimization corresponded to BBVA as successor of Catalunya Banc that was the Company fund constituent,,es

CODERE filed suit on 31 May 2012 against BETFAIR under the provisions of arts. 15, 21, 23, 29.2 and 32 of la Law 3/1991, of 10 January, Unfair Competition for offering games of chance and bets to users in Spain through its website without the authorization of the AFE to offer this type of service, using the license obtained in Malta.

For CODERE, this action has impaired their activity on slot machines, allowing BETFAIR to have a competitive advantage in online gaming activity by anticipating CODERE.

CODERE requested in the lawsuit that disloyalty be declared in the conduct imputed to BETFAIR and the order to cease and prohibit such activities.

Primera Instancia

The Commercial Court No. 2 Madrid gave judgment on 2 February 2015, refusing the application.

For the Court, “There was a situation of unlawfulness and the will of the legislator and the Public Administrations was always to consent to the provision of online gambling services in Spain to the point that BETFAIR (and the other operators) They had been providing the service in the Spanish market for years without having been subject to administrative sanction despite the notoriety of their activity.

(…). in the absence of legal prohibition, the provision of online gambling services in Spain by BETFAIR before the full entry into force of the LRJ (and in particular the end of the transitional regime), cannot be considered as constitutive of unfair competition conduct contrary to the legal system.

(…) rejects the violation of the Advertising Law and the data protection regulations.

(…) It rejected that after the expiration of the transitional period (1/06/2012), BETFAIR would have offered online gambling services in the Spanish market without the appropriate administrative license. "

Provincial Court

CODERE filed an appeal.

The 28th Section of the Provincial Court of Madrid issued a ruling on 20 October 2017, dismissing the appeal.

Section considered, taking into account the law of the European Union, It was not acceptable that the provision of this type of service was considered illegal, Although it was exercised prior to the LRJ when operating with licenses from other EU countries. BETFAIR acted under the license granted in Malta, Collecting, treating and transferring the data in the exercise of an activity considered lawful.

Supreme Court

CODERE filed an extraordinary appeal for procedural infringement and cassation appeal.

The extraordinary appeal for procedural infringement was based on a single ground, while the appeal, in four.

The extraordinary appeal for procedural infringement was dismissed.

In the case of the appeal, having been based on four reasons that stemmed from the illegal nature of the activity of offering online games, were jointly resolved by the Chamber, analyzing for it, the jurisprudence of the TFEU that interpreted the art. 56 TFEU in the relative "To restrictions on the provision of online gambling services by operators based in EU Member States."

For the Board, "The regulatory situation prior to the entry into force of the LRJ, constituted an excessive restriction of the freedom to provide services recognized in art. 49 EC, later 56 TFEU, (…).”This restriction supposed an incompatibility of the National Law with the treaties of the European Union.

"In the STJUE de 30 April 1996, Case C-194/94, caso CIA Security International, the Court of Justice held that a rule of national law incompatible with Community law cannot be invoked against another individual. "

(…) la primacía del Derecho de la UE frente al Derecho nacional incompatible es aplicable la doctrina delacto aclarado”, inasmuch as it results from extensive jurisprudence on the significance of the freedom to provide services of art. 49 EC, actual art. 56 TFEU, in restrictions on online gambling service providers. "

Ultimately, the Chamber dismissed the appeal because "The decision of the Provincial Court, considering that the conduct did not incur in the unfair conduct of the LCD was correct, since the claim was based on the fact that the conduct of offering online gambling services in Spain, infringed gambling regulations, and that national regulation was contrary to art. 56 TFEU ​​for restricting online gambling disproportionately, unsystematic and incoherent with purposes that the CJEU has considered adequate to support such restriction.

(…) the fact that BETFAIR had an authorization granted in another EU Member State, also excludes the commission of unfair conduct, (…).

(…) the control of national law that the ordinary judge performs when applying EU law is not a validity check, but of applicability. The national rule that is not in accordance with EU law does not cease to be valid and can be applied to legal situations outside the scope of EU law, (…). But when the legal situation falls within the scope of EU law, EU law rule supersedes incompatible national rule, which is therefore not applicable. "

Conclusion

En un litigio sobre competencia desleal no puede reputarse como una infracción legal, determinant of disloyalty of conduct, the infringement of a concurrent rule of national law that is contrary to the requirements of the EU treaties, cuya primacía desplaza la aplicación de las normas nacionales incompatibles en aquellas situaciones que quedan incluidas en el ámbito del Derecho de la UE.
 

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