The Bulgarian competition authority rules that employees, who work in parallel for a competitor of their employer, would be guilty of assisting unfair competition.
With a recent decision the Bulgarian competition authority – the Commission for Protection of Competition (“CPC”) ruled for the first time that a natural person is guilty for assisting unfair competition activities and imposed a personal fine. The case involves two individuals, who were employees of a company active in the labour medicine market. One of them founded a new company (NewCo) that would compete with their employer and acted as its manager. Both individuals marketed the services of the new company in parallel with the performance of their obligations towards the original employer. The CPC ruled that such “parallel activities” of the newly found NewCo conducted by two of the employees of a competitor, using its resources without its knowledge or consent, could be classified as a form of unfair competition. It is interesting to note that the authority decided that a violation was committed solely on the basis of the unauthorised exploitation of the resources, material base and human power of the employer for the purposes of launching a competing activity, noting that “stealing” of clients is irrelevant. Surprisingly on the issue of unfair solicitation of clients (which is a separate offence under the Bulgarian Protection of Competition Act) the CPC ruled in favour of NewCo reasoning that the switch (which was indeed proven in a couple of cases) was triggered by the offer of better terms, which was deemed to be a pro-competition result. By its decision the CPC imposed sanctions on NewCo and one of the individuals involved in the “parallel activity”. However, the fine was not imposed on the one, who was a shareholder in the company and its manager, since she was treated as extension of the company and not a separate person. Instead the second individual, who helped the competing activities of a company to which she was not formally associated with, was found guilty of accessory and obliged to pay a personal fine and cover the expenses of the claimant in the proceedings pro rata with the principal defendant – NewCo. In summary, the recent CPC decision reinforces the rights of employers to protect against competing activities of their employees conducted in parallel during the course of the employment relationship.