DECREE LAW NO. 26122 ¡V UNFAIR COMPETITION REPRESSION LAW

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Decree Law dated on December 24, 1992 (issued on December 30, 1992). Amended by Legislative Decree No. 788 issued on December 31, 1994, Legislative Decree No. 807 issued on April 18, 1996 and Legislative Decree 822 issued April 24, 1996.

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THE PRESIDENT OF THE REPUBLIC

WHEREAS:

The Government of Emergency and National Reconstruction;
ith the Cabinet's voting being in favor;
Has issued the following Decree Law:

TITLE I

PURPOSE, SCOPE, RELATION OF COMPETITION

AND EVIDENCE OF DAMAGES

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Article 1¢X.- This Law is intended to prevent, discourage and sanction acts contrary to the free competition in economic activities.

Article 2¢X.- This Law is applicable to all individuals and companies, whether public or private, including nonprofit organizations, de facto business associations, trade unions or any other organizations engaged in economic activities.

Article 3¢X.- This Law is applicable exclusively to acts of unfair competition in the national territory and product imports to the country.

This Law is not applicable to acts covered by the Supreme Decree No. 133-91-EF, its modifications, extensions and related provisions.

Article 4¢X.- Imitation of a third party's services or business initiatives shall not be considered as acts of unfair competition, except for those cases stipulated herein or those cases where exclusive rights as recognized by the law are infringed on or violated.

Article 5¢X.- To determine an act of unfair competition, it will not be necessary to prove real damages or a wrongful conduct. The potential illegal damages to the competitor or public order will suffice.

Without prejudice of provisions as specified in the above paragraph, an act of unfair competition will be that specifically intended to remove or take illegally the clientele away from a competitor.

TITLE II

ACTS OF UNFAIR COMPETITION

CHAPTER I

GENERAL CLAUSE

Article 6¢X.- Every conduct contrary to business good faith, the normal development of economic activities and, in general, the good practices that must govern economic activities will be considered as an act of unfair competition.

CHAPTER II

DETAILED LISTING OF UNFAIR COMPETITION ACTS

Article 7¢X.- Acts of unfair competition are those intended to create confusion, reproduce, imitate, mislead, denigrate, discredit a third party's activities, products, services or establishments, violate production or commercial secrets, take undue advantage of a third party's reputation and, in general, any acts that, by its nature or purpose, can be considered analogous or similar to those specified in this Chapter.

Article 8¢X.- Acts of confusion: Every conduct intended to create confusion as to another person's activity, services, products or establishment.

The risk of confusion to which consumers are exposed as to the business origin of an activity, product, establishment will suffice to determine an unfair act.

Article 9¢X.- Misleading acts: The use or dissemination of wrong or false information, omission of truths and any other practices that, due to circumstances under which they take place, are capable to mislead target people about nature, manufacturing or distribution process, features, fitness for use, quality and quantity and, in general, real advantages of a product or service.

Especially, showing off or stating the possession of prizes, awards, medals or certificates of any kind that have not been obtained or are not valid any more, particularly in advertisements or on labels, containers, packings or wrappings is deemed unfair.

Articles 10¢X.- Prohibited acts related to geographic origin: Acts or expressions that may mislead about the geographic origin of a product or service are deemed unfair.

Particularly, false indications of origin and false names of origin as well unauthorized names of origin are considered unfair, even when they are accompanied by terms such as type, model, system, class, variety and the like.

Article 11¢X.- Acts of denigration: The dissemination of news or making statements or diffusion of statements about a third party's or his officers' activity, product, service, establishment or business relations, which may damage their goodwill in the market, are deemed as unfair competition, unless they are true, accurate and relevant.

Among other things, statements about the affected party's nationality, beliefs or ideology, intimacy, private life or any other strictly personal situation are also classified in the above paragraph.

Article 12¢X.- Acts of comparison: Comparison between one's own or third party's activity, product, service or establishment and that of another third party is deemed unfair when it is based on false or unverifiable statements.

A comparison shall not create confusion, be misleading or denigrating pursuant to the articles 9¢X, 10¢X and 11¢X herein.

Article 13¢X.- Acts of imitation: Systematic imitation of a third party's services or business initiatives is considered unfair when such strategy is intended to impede or hinder directly their strengthening in the market, and exceeds what can, according to the characteristics, be considered as a natural response to it.

Article 14¢X.- Use of a third party's goodwill: The illegal exploitation of a industrial, commercial or professional goodwill earned by a third party in the market, for one's own benefit or for benefit of others, is deemed unfair.

In particular, the use or imitation of a third party's distinctive marks, as well as the use of labels, containers, receptacles or other means of identification that are associated with a third party in the market, are considered unfair.

Article 15¢X.- Violation of a secret: The following acts are deemed as unfair:

  1. Spreading or exploitation of, without the permission of his owner, knowledge, information, ideas, technical or other procedures to which a third party has had access legally but in confidence, or illegally, as a result of any of acts as specified below or in the Article 16o.
  2. Finding out secrets by means of espionage, undue access to microforms in the form of microfilm, computer files or the like, the use of telematics through espionage or similar procedure. ( Amended by the Article 7¢X of Law 26612)

Violators of secrets as specified hereinabove will be persecuted, irrespective of the fact that they develop business activities or are engaged in the economic traffic.

Article 16¢X.- Inducing to break contracts. The following acts are deemed unfair:

  1. Interference by a third party in a contract between a competitor and his employees, suppliers, clients and other obliged parties, that is intended to induce them to break the contractual obligations.

    2. Pursuant to the above paragraph, it will be not necessary that the breach refers to the whole contractual obligations, but it will be sufficient that it is linked to some basic aspect of the contract.

    Likewise, in order to consider the act as unfair, the subrogation of the interfering party in the contract between his competitor and the one that breaks the contractual obligations, will not be necessary.

  2. Inducting to terminate normally a contract or taking advantage of the breach of a contract by another party for one's own benefit or for benefit of a third party will be considered unfair only when, being known, this is intended to divulge or exploit a business secret or is accompanied by circumstances such as misleading, intent to eliminate a competitor from the market and the like.

Article 17¢X.- Violation of laws: Making use, in the market, of an illegal competitive advantage gained by violating the law is considered unfair. Such advantage shall be significant.

Article 18¢X.- Discrimination: The discriminatory treatment of consumers in relation to prices and other terms of sale will be considered unfair, unless there is a justified reason.

Article 19¢X.- Unauthorized copy or reproduction: Manufacture, import and sale of products that are an unauthorized copy or reproduction of a third party's products protected by laws on industrial property or copyright will be considered unfair.

TITLE III

ACTIONS AND RULES OF PROCEDURE

Article 20¢X.- Pursuant to the provisions in Title I, whoever is or may be affected by an act of unfair competition will have the right to file an action against the one that has performed or ordered to perform it.

The affected party may bring the action when such act is being performed, or when there is an threat thereof, or even when the effects thereof have already stopped.

Article 21¢X.- Pursuant to paragraph b) in the Article 47¢X of Law on Organization and Functions of INDECOPI (National Institute for the Defense of Competition and for the Protection of Intellectual Property), the Technical Secretariat of Commission on Unfair Competition Repression may file an action on its own initiative only when the act of unfair competition is being performed. (Amended by the Article 53¢X of Legislative Decree 807).

Article 22¢X.- The party affected by an act of unfair competition may demand the following in his petition:

  1. the declaration of the act as unfair competition, even when the effect thereof does not exist anymore;
  2. the discontinuance of the act or the prohibition thereof whether it has been not still put into effect;
  3. the seizure and/or destruction of products, labels, containers, advertising material violating the law and other items leading to false identification;
  4. the temporary closure of the establishment that violates the law, if applicable;
  5. the elimination of effects caused by the act;
  6. the rectification of misleading, wrong or false information
  7. (Derogated by the Article 17¢X of Legislative Decree 807);
  8. the publication of the condemnatory decision;
  9. the taking of necessary measures that allow the customs authorities impede the entry of products violating the law into the country; and
  10. any other measures intended to bring the damaged party back to the condition in which he was before the act were performed.

The competent administrative office shall keep a record of violators.

Article 23¢X.- Pretensions and petitions as referred to in the Article 22¢X may be tried jointly. Actions established by the regulations on publicity may be also tried jointly, provided that this is not incompatible. (Amended by the Article 15¢X of Legislative Decree 807).

Article 24¢X.- The noncompliance with the regulations established herein will give rise to a sanction in the form of admonition or fine, without prejudice of the measures to be taken to discontinue the acts of unfair competition or to prevent them from taking place.

The fines to be imposed by the Commission on Unfair Competition Repression for violations of this Law will amount to a maximum of a hundred (100) UITs. The application and grading of fines will be determined by the Commission on Unfair Competition Repression, considering the seriousness of the infraction, the violator's conduct throughout the proceeding, the possible effects on the market and other criteria that, as the case may be, are deemed suitable by the Commission. Recidivism will considered as an aggravating circumstance, in the case of which the fine to be imposed shall not be less than the previous fine (Amended by the Article 15¢X of Legislative Decree 807).

Article 25¢X.- The procedure for sanctioning the ones that violate the regulations on unfair competition shall be governed by the provisions in the Unique Procedure of the Commission on Consumer Protection and Commission on Unfair Competition Repression (Amended by the Article 16o Legislative Decree 807).

Article 26¢X.- If the obliged party fails to comply with the decision that puts an end to a proceeding within three (03) days therefrom, a fine equivalent to the maximum permissible amount, according to the criteria referred to in the Article 24¢X, shall be imposed on him, and the coercive collection thereof shall be arranged for. If the obliged party continues to fail to comply, the Commission on Unfair Competition Repression shall impose a new fine, doubling successively and unlimitedly the amount of the immediate previous fine until the decision issued is complied with, without prejudice of filing an action against the responsible before the Office of the Attorney General in order that it opens the corresponding criminal proceeding. (Amended by the Article 15¢X of Legislative Decree 807).

Article 27¢X.- Once the action has been filed, the competent administrative office will require, on its own initiative, evidence deemed pertinent by it and will have full powers to investigate. For this purpose, it will have the support of the police power.

The refusal to provide information as specified hereinabove will serve as evidence against the party that was requested to provide it.

Article 28¢X. ¡V (Derogated by the Article 17¢X of Legislative Decree 807).

Article 29¢X. ¡V (Derogated by the Article 17¢X of Legislative Decree 807).

Article 30¢X.- Actions for acts of unfair competition will extinguish after two (02) years from the date when an act stopped being performed.

Article 31¢X.- In conformity with the Article 16o of Law on INDECOPI organization and Functions, civil actions arising from acts of unfair competition will be filed only when a final decision has been issued through executive action.

Article 32¢X.- Before filing a criminal action for crimes referred to in the Articles 165, 190, 191, 222, 223, 224, 225, 238, 239 and 240 of Penal Code and related to this Law, the Prosecuting Attorney shall request a technical report from INDECOPI, which shall be issued within five (05) working days. Such report will be one of elements to be appreciated by the Judge or the Court when issuing a resolution or decision (Amended by First Final Provision of Legislative Decree 822).

Article 33¢X.- Once the Court's decision has been issued, the executive action is exhausted and the parties will have the right to challenge the decision before the court, in accordance with the Article 540¢X of Code of Civil Procedure.

The challenge will be submitted to the Civil Division of Supreme Court of the Republic (Amended by the Article 64¢X of Legislative 807).

Article 34¢X.- In all cases not specifically provided for herein, the regulations contained in the General Law on Industrial Property, the Law on Copyright and Ordinary Law shall be enforced.

TEMPORARY DISPOSITION

A ONE PROVISION.- Actions for unfair competition being in process at the effective date of this Law will be substantively governed by the Law in force at the date when such actions were filed.

FINAL PROVISIONS

FIRST.- Regulatory norms will be issued through a Supreme Decree.

SECOND.- Derogate the Articles 110, 111, 118, 119, 120 and 121 of Supreme Decree No. 001-71-IC/DC, the INDECOPI Board of Directors' Resolution No. 003-89-ITINTEC and other norms contrary to this Law.

THIRD.- While the Civil Procedural Code approved through Legislative Decree No. 768 does not enter into force, its provisions referred to shall be understood as references to the Code of Civil Procedure in force.

FOURTH.- This Law will enter into force the day after its publication in the Official Gazette "El Peruano".