International Journal of Law And Criminology
23
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VOLUME
Vol.05 Issue08 2025
PAGE NO.
23-27
10.37547/ijlc/Volume05Issue08-05
Unfair Competition in The European Union: Doctrinal
Evolution, Legal Harmonization, And the Role of
Directive 2005/29/EC
Zokhirjon Ochilovich Mirzarakhimov
Independent PhD Researcher, Uzbekistan
Received:
09 June 2025;
Accepted:
05 July 2025;
Published:
07 August 2025
Abstract:
This article offers a comprehensive analysis of the legal regulation of unfair competition within the
European Union, focusing on the doctrinal development and harmonization efforts that culminated in the
adoption of Directive 2005/29/EC on Unfair Commercial Practices. Drawing on comparative perspectives, the
paper examines the historical foundations and divergent regulatory approaches of EU member states, highlighting
the shift from traditional business protection models toward a consumer-centered framework. Special attention
is paid to the implementation challenges, structural components, and harmonization impact of the Directive,
particularly in balancing national legal diversity with supranational standards. The study also addresses persistent
discrepancies in the interpretation of key legal terms such as "unfairness," "misleading," and "professional
diligence," as well as the limits of voluntary self-regulation. The article concludes that while Directive 2005/29/EC
has significantly advanced the alignment of national laws with EU competition principles, the complete unification
of unfair competition regulation remains a long-term objective, impeded by both legal pluralism and conceptual
fragmentation.
Keywords:
Unfair competition, Directive 2005/29/EC, EU competition law, harmonization, consumer protection,
commercial practices, misleading advertising, legal regulation, comparative law, internal market.
Introduction:
According
to
the
well-founded
observation made by Z. Pitzker and S. Bretthauer, legal
regulation of unfair competition is essential for the
protection of competitors, consumers, and the public
at large. This perspective underscores that competition
law is not solely about regulating market conduct, but
also about maintaining trust in market systems and
ensuring that economic players adhere to rules of
fairness and integrity.
With the economic integration of EU member states, a
single competitive space has emerged, which in turn
necessitates the harmonized legal regulation of unfair
competition across the European Union. The goal is to
provide equal conditions for businesses and protect the
integrity of the internal market, preventing national
disparities that could lead to competitive imbalances or
regulatory arbitrage.
EU member states have adopted diverse models of
legal regulation concerning relationships that arise in
the context of preventing unfair competition:
For example, in Germany (FRG), Austria, and Hungary,
there is specialized legislation explicitly devoted to the
prevention and suppression of unfair competition.
These legal frameworks offer clear definitions,
enumerated
prohibited
acts,
and
procedural
mechanisms tailored specifically to this area of law.
Germany’s Gesetz gegen den unlauteren Wettbewerb
(Law Against Unfair Competition), for instance, is a
leading example of such legislation, combining
traditional civil law principles with modern commercial
realities.
In contrast, countries such as France, the United
Kingdom, Italy, and the Netherlands regulate unfair
competition primarily through general provisions of
civil law, particularly those dealing with tort liability
(delict). This approach treats unfair competition as a
form of unlawful conduct that causes harm, and relies
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International Journal of Law And Criminology (ISSN: 2771-2214)
heavily on judicial interpretation and case law to apply
broad civil norms to specific commercial disputes.
While this provides flexibility, it may lack the legal
precision found in codified, specialized statutes.
This divergence in regulatory models reflects both legal
traditions and policy preferences. Countries with a civil
law tradition tend to favor codification and specificity,
whereas common law countries rely more heavily on
judicial discretion and precedents. Regardless of the
model, however, the overarching aim remains
consistent: to safeguard market integrity and ensure
that competitive practices do not cross into deception,
coercion, or manipulation.
In the broader context of EU law, the European
Commission and the Court of Justice of the EU (CJEU)
play an increasingly important role in interpreting
competition rules and ensuring that national measures
align with the objectives of the Treaty on the
Functioning of the European Union (TFEU), particularly
Articles 101 and 102 concerning anti-competitive
agreements and abuse of dominant position. However,
unfair competition
—
while closely related
—
is not fully
harmonized at the EU level, which leaves room for
national diversity, especially in matters not directly
involving cross-border or internal market effects.
At the core of the supranational legal regulation of the
institution of unfair competition in the European Union
lie the provisions of Article 3 of the Treaty on European
Union (TEU) , which ensures the establishment of a
highly competitive social market economy, and Chapter
1 of Title VII of the Treaty on the Functioning of the
European Union (TFEU) , which lays down the general
competition rules applicable across the EU internal
market.
However, true harmonization of EU legislation in the
field of unfair competition can only be seen with the
adoption of Directive 2005/29/EC of the European
Parliament and of the Council on Unfair Commercial
Practices towards Consumers in the Internal Market
(hereinafter
–
Directive 2005/29/EC). This Directive
represents a significant milestone in the EU’s effort to
create a uniform legal framework for combating unfair
business practices, particularly those that affect
consumers' economic interests.
The EU's attempts to harmonize the legal regulation of
unfair competition date back to the 1960s, when the
first working group was convened to draft unified
standards in this area. In the 1980s, several sectoral
directives were adopted that addressed specific
aspects of unfair competition, such as misleading
advertising and comparative advertising. During that
time, advertising law was chosen as a common
foundation for the development of unified unfair
competition regulations, since advertising was (and
remains) one of the primary vehicles through which
unfair commercial practices are conducted.
However, in the early 1990s, the development of EU
unfair competition law entered a phase of stagnation.
This was eventually overcome through a shift in
doctrinal focus: the concept of unfair competition
moved from the protection of competing business
entities toward a consumer-oriented model. That is,
the doctrinal transformation involved re-framing unfair
competition as a consumer protection issue, especially
in the context of deceptive, aggressive, or otherwise
unethical commercial practices.
This evolution reflects a broader trend in EU law, where
consumer welfare has become a central pillar of
internal market policy. The Directive 2005/29/EC thus
represents a culmination of decades of doctrinal and
regulatory development and aims to ensure that
consumers across the EU are equally protected from
unfair commercial practices, regardless of the Member
State in which a business is established. The Directive
takes a maximum harmonization approach, meaning
Member States may not introduce stricter national
rules than those provided in the Directive, thereby
ensuring uniform standards of consumer protection
across the internal market.
The general clause on unfair competition at the EU level
is enshrined in the provisions of Directive 2005/29/EC,
the primary aim of which is to ensure the proper
functioning of the internal market and to achieve a high
level of consumer protection.
Although Directive 2005/29/EC is primarily focused on
protecting the economic interests of consumers from
unfair commercial practices, it also indirectly protects
honest businesses from dishonest competitors. This
dual effect reinforces market integrity by ensuring that
not only consumers but also law-abiding traders are
shielded from predatory or unethical behavior by rivals.
The broad scope of the Directive is confirmed by its
provisions regarding its field of application, which state
that the Directive shall only not apply in situations
where there is a conflict with other EU legal provisions
that govern specific aspects of unfair commercial
conduct. This clause underscores the general
applicability of the Directive within the EU legal system
while allowing room for sector-specific regulations to
prevail in their respective domains.
It is appropriate to distinguish four key substantive
components of Directive 2005/29/EC, which together
form a comprehensive legal framework against unfair
commercial practices:
A General Prohibition of Unfair Commercial Practices
–
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International Journal of Law And Criminology (ISSN: 2771-2214)
This is the core clause that prohibits all commercial
behaviors that are contrary to the requirements of
professional diligence and that materially distort or are
likely to distort the economic behavior of the average
consumer.
Prohibition of Misleading Practices
–
This includes both
misleading actions (e.g., providing false information
about products or services) and misleading omissions
(e.g., withholding essential information), particularly
where such practices deceive or are likely to deceive
the average consumer.
Prohibition of Aggressive Practices
–
This concerns
commercial behavior that involves coercion, undue
influence, or harassment, and which significantly
impairs the consumer's freedom of choice.
The "Blacklist" of Commercial Practices
–
This is an
annexed list of 31 commercial practices that are always
considered unfair, regardless of their actual effect on
consumer behavior. These include false "limited time"
offers, fake claims of professional endorsement, and
other deceptive tactics.
This structure allows the Directive to act both as a
general framework and as a detailed regulatory
instrument, promoting uniform consumer protection
across the EU while facilitating the free movement of
goods and services by eliminating divergent national
rules.
Directive 2005/29/EC of the European Parliament and
of the Council represents a fundamentally new legal
regulatory mechanism within the European Union’s
framework for addressing unfair commercial practices.
Unlike the majority of EU directives, which typically
establish only minimum requirements for the
harmonization of national laws among member states,
Directive 2005/29/EC mandates a maximum level of
harmonization. This means that member states are not
permitted to legalize any unfair commercial practice
that is prohibited by the Directive, nor are they allowed
to prohibit practices that are not explicitly forbidden by
it. Consequently, the Directive obliges member states
to revise and align any general provisions or legal
principles that conflict with the EU’s unified legal
standards on unfair competition. Although A. Yu. Zak
has expressed doubts regarding the feasibility of
implementing the Directive’s norms into national
legislation, these concerns appear unconvincing. The
Directive is structured around general provisions that,
while binding, neither conflict with the foundational
models of national legal systems nor drastically alter
them. The unifying role of the Directive, however, is
somewhat mitigated by the partial retention of the
country-of-origin principle and by the divergent
approaches among EU member states in interpreting
core legal terms such as "unfairness", "misleading", and
the "professional duty of an economic operator to
respect the interests of a counterparty". Moreover,
although the Directive promotes the establishment of
sector-specific standards of conduct through voluntary
codes of practice, only two such codes had been
adopted at the EU level as of January 16, 2012. This
signals a limited effectiveness of the Directive’s
reference mechanism encouraging self-regulation.
Nevertheless, despite these shortcomings, Directive
2005/29/EC
has
undoubtedly
stimulated
the
harmonization of legal regulation concerning unfair
competition within the EU. Notably, the Directive
introduced the novel concept of "unfair commercial
practice", which has since been incorporated into the
national laws of several member states. For instance,
Germany’s Law Against Unfair Competition now
defines commercial practice as any conduct by a trader,
whether acting in their own interest or that of a third
party, before, during, or after a business transaction,
provided that the transaction is objectively aimed at
the sale or purchase of goods or services, or the
conclusion and execution of a contract relating to such
goods or services. This shift reflects a broader doctrinal
transition from protecting competitors to safeguarding
consumers, marking a significant milestone in the
evolution of EU competition law.
Historically, in Germany, the primary criterion for
determining whether a business practice constituted
an act of unfair competition was rooted in the broad
and ethically charged concept of “good morals” (gute
Sitten) . This approach, grounded in moral and
customary expectations of fairness in commerce,
lacked legal precision but reflected prevailing societal
norms. In the contemporary legal framework, however,
this standard has been replaced with a more objective
and legally definable criterion
—
the notion of
unfairness (Unlauterkeit), which is assessed based on
the need to protect the legitimate interests of market
participants, including business entities, consumers,
and the broader public. This shift mirrors a transition
from a moralistic to a more structured and rights-based
approach within EU legal systems. The provisions of
Directive
2005/29/EC
have
been
effectively
implemented into the national legislation of several
member states. For example, Hungary has adopted the
Directive’s standards, achievin
g a significant degree of
harmonization. Nonetheless, Hungarian law continues
to exhibit a hybrid legal regime in which elements of
both antitrust regulation and unfair competition
controls are intermixed
—
with the dominant
regulatory emphasis still leaning toward antitrust
mechanisms. One of the key legal challenges addressed
by the Directive was the so-
called “competition of
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International Journal of Law And Criminology (ISSN: 2771-2214)
claims” problem in the United Kingdom. Prior to the
Directive’s adoption, overlapping legal protections
under the Competition Act and the Trade Descriptions
Act both of which sought to defend the interests of
honest market players and consumers
—
created
practical difficulties in distinguishing claims based on
unfair competition from those based on intellectual
property infringement. The Directive contributed to
resolving this confusion by introducing a harmonized
legal standard, helping to streamline legal actions
involving deceptive or misleading practices. Despite
measurable progress in aligning national regulations
with EU standards, it would be premature and
unconvincing to claim that a uniform legal regime
governing unfair competition has been fully established
across the European Union. Significant divergences
remain in how national legal systems define and
enforce rules concerning dishonest commercial
practices. While a long-term objective may involve the
construction of an integrated and cohesive EU-wide
model for the regulation of unfair competition, current
harmonization efforts have only partially bridged legal
and doctrinal discrepancies among member states.
Thus, while Directive 2005/29/EC has undeniably
catalyzed reform and stimulated legal convergence, full
unification remains a distant and incremental goal.
CONCLUSION
The regulation of unfair competition within the
European Union reflects a complex interplay between
national
legal
traditions
and
supranational
harmonization efforts. The adoption of Directive
2005/29/EC marked a turning point in EU competition
policy by introducing a unified legal framework aimed
primarily at protecting consumers, while also indirectly
safeguarding fair market practices among businesses.
The Directive’s approach—
centered on maximum
harmonization
—
has prompted significant legislative
reforms across member states and helped resolve
longstanding issues such as overlapping legal claims
and inconsistent standards.
Nevertheless, the goal of establishing a fully integrated
legal regime for unfair competition throughout the EU
remains only partially achieved. Member states
continue to diverge in their definitions, enforcement
strategies, and interpretation of core concepts such as
“unfairness”
and
“misleading
conduct.”
The
coexistence of general civil law provisions in some
countries and specialized legislation in others
illustrates the enduring diversity of legal cultures within
the Union. Moreover, the limited uptake of sector-
specific codes of conduct reveals the practical
challenges of relying on self-regulation mechanisms
envisioned by the Directive.
In sum, while Directive 2005/29/EC has laid the
foundation for a more coherent and consumer-focused
regulatory landscape, further doctrinal refinement,
institutional cooperation, and legal convergence are
needed to realize the vision of a truly unified EU
framework against unfair commercial practices.
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