Consequences of regulatory non-compliance - Part 3

Market participants in almost every industry need to be prepared to follow the state’s regulations concerning their respective business. Regardless of whether your business is selling your products through direct marketing, a pharmacy, or transporting goods to or through Austria: your business has to follow the rules of the trade, otherwise there will be consequences.

But what are the consequences of not following the rules of your trade in Austria? Learn more in our three-part series on the importance of regulatory compliance.

Part 3: Unfair competition lawsuits

Non-compliance with laws governing your business can constitute an act of unfair competition: breaking the law might safe one’s business costs or entail some other unfair advantage. This exposes your business to lawsuits by competitors who are in compliance with these regulations. Unfair competition claims include cease and desist orders, claims for damages and unwanted publicity in the form of the publication of the court verdict (at the cost of the perpetrator). In fact, the costs associated with such civil lawsuits can exceed any fine the state might impose. And competitors may have and dedicate more resources to finding perpetrators than any authority. In addition, industry associations for the prevention of unfair competition specifically look for market participants who do not comply with applicable regulations and bring lawsuits against non-compliant competitors. If your business is established and operating outside of Austria, fines (cf. part 1) and the threat of your business being shut down (cf. part 2), may not be an issue you prioritize. But even if you do not have a business establishment in Austria, you might be targeted by Austrian competitors, interest groups and associations: promoting and selling your product or service over the internet can be enough to bring your business before an Austrian court. And a verdict against your company can generally be enforced within the European Union.

Conclusion

Businesses are well advised to keep an eye on complying with regulations in order to avoid costly and time-consuming consequences. A single violation is unlikely to immediately endanger your business. But it can be enough to expose you to unfair competition claims. If your business is facing charges for allegedly violating a regulation, act quickly: typically, the time to react is not more than two weeks. This applies to orders from authorities as well as cease and desist demands and injunctions. At Sabadello Legal we have extensive experience in defending businesses and managers in proceedings relating to alleged non-compliance with regulatory provisions. We also represent companies in unfair competition claims against competitors. Aside from defending our clients in civil and public-law litigation, we have a strong track record in advising our clients on how to set up effective compliance and control systems to prevent transgressions.

Below under "Files" you can download all three parts of this series as a PDF.

Contact:
RA Mag. Andreas Sabadello

+43 1 9971037

office@sabadello.legal