Posted in Marketing and Strategy Terms, Total Reads: 507
Definition: Unfair Competition
It means that some of the competitors create some unfair advantages or they create disadvantages for other competitors in the market. This way these competitors gain at the expense of the others. Some rules are only applicable to some of the players in the market which hampers the competencies of others. Thus only the competitors having unfair advantage drive the market and set prices and markets to suit their needs.
In many countries this is against the law as it undermines the practice of free and competitive market in which the price and quantity is determined by market forces. Practices include bribery, fraud, misinterpretation of laws, setting very low prices, trade infringement etc.
For example in the aviation sector some of the airlines charge very low prices to attract more and more customers even at the expense of running in severe losses. This way they are restricting the other airline companies to operate fairly and charge competitive prices. Thus the small players are forced to exit the industry and only the companies with deep pockets are able to operate in the market.
Another example of creating unfair competition is directly targeting the competitor companies in advertisements. This happened when Surf Excel took a direct shot at Tide in one of the ads which aired on TV for 3 days directly comparing the whiteness that these detergents provide. This was severely criticised and the ad was taken down. Unilever was then required to pay P&G a compensation for damaging the reputation in the market.