A recent decision of the first court of contentious administrative matters has confirmed the decision of the Pro-Competition Superintendency. The superintendency penalized a company for carrying out practices of unfair competition by means of deceptive advertising and replication of well-known products.


Mercantil Tomas CA has clients that include members of the domestic oil industry. The company sells valves, connectors and other such parts. A prominent global manufacturer of similar products filed a claim in Venezuela against Mercantil stating that the latter had (i) presented deceptive advertising in which it claimed to be the sole distributor of such products and (ii) sold, as new, products that were identifiable with the manufacturer's trademarks, and which had been altered and recycled to replicate the manufacturer's products.

Evidence ordered by the superintendency showed that Mercantil's products had indeed been recycled and mixed with other components, and that they were being sold as new.


Deceptive advertising
Regarding deceptive advertising as an act of unfair competition, the superintendency stated that the Law to Promote and Protect Free Competition prohibits deceptive and/or false advertising that aims to prevent or restrict free competition. This prohibition closely relates to the protection of the principle of honesty with which all advertisers must comply. Deceptive advertising and a violation of this law take place when essential data concerning advertised goods, activities or services is omitted, or when there is a possibility that consumers may be mistaken.

Replication of products
The superintendency stated that the replication of products is prohibited in order to assure differentiation among products and so that consumers can recognize products by their distinguishing signs.

Often replication of products is intended to associate an imitator's product with that of another which has prestige or a reputation that the unfair competitor wishes to appropriate. Such confusion gives one competitor an advantage over another, thus disturbing market performances.

The superintendency stated that acts of confusion are (i) "those directed to take advantage of consumers' mistakes through the imitation of the names and products of the most well-known competitor" and (ii) "those acts of competition which are capable of confusing the products and the commercial activity of competitors, thus violating the interest in differentiation among the companies competing in the market."

In order for confusing imitation to take place, the sign being imitated must have individual characteristics and be distinguished as the sign of a specific company. Confusion is classified in two categories, namely (i) confusion in a strict sense, which occurs when a mistake is made in relation to the identity of the company offering the product (ie, when it is considered that both products are offered by the same company) and (ii) confusion in a broad sense, which occurs when consumers are not confused in relation to the identity of the company offering the product, but erroneously suppose that commercial, economic, or organizational relationships exist between the companies offering both products.


Acts of confusion are carried out mainly through the use of names, distinguishing company signs and imitation of products. When a trader or economic agent uses the reputation of others instead of attracting consumers on the basis of its own activities and merit, this is necessarily categorized as unfair. A typical example is the use of distinguishing signs identical or similar to those used by a superior competitor.

The superintendency's decision is the first to explain in detail the replication of products as an act of unfair competition and the most important decision so far in relation to this matter. Thus, the confirmation of the first court of contentious administrative matters represents an important development in the protection of free competition.

For further information on this topic please contact Olga Nass de Massiani, Isabel Victoria Márquez or Vera De Brito de Gyarfas at Travieso Evans Arria Rengel & Paz by telephone (+58 212 277 3333) or by fax (+58 212 277 3334) or by e-mail ([email protected], [email protected] or [email protected]).

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