Exceptio Veritatis and Denigratory Acts

Spreading statements about the activity of a third party that undermines its credit in the marketplace would “a priori” be an unfair act.

What kind of demonstrations can undermine a company’s credit in the market? And if we spread an opinion about the services of another company, do we commit an unfair act? What if we spread opinions that harm the reputation of a competitor, but they are based in real facts?

Very often a company or an individual feel that is being “attacked” by a competitor, accusing him of committing a denigrating act. It usually occurs in an environment where an entity intends to praise its product through an advertising campaign. And in which the diffusion of manifestations about the mercantile benefits of a third party dedicated to the same activity comes into play.

However, in order to qualify it as a denigrating act, the law and case law require the concurrence of certain requirements. These requirements affect both the content of the statements and their veracity.

Below, we will see what these requirements are and the exceptions that prevent the classification of harmful manifestations as denigrating.

Denigratory acts

Our Article 9 of the Unfair Competition Act (UCA) tells us:

“It is considered unfair to make or disseminate statements about the activity, performance, establishment or commercial relations of a third party that are suitable to undermine their credit in the market, unless they are accurate, true and relevant.

In particular, manifestations that have as their object the nationality, beliefs or ideology, the private life or any other strictly personal circumstances of the affected party are not deemed relevant”.

Therefore concluding that it is sufficient for the conduct to harm the reputation of a third party. The factor of intentionality is therefore irrelevant.

The Supreme Court, in its ruling of July 11, 2006, ruled that they must be carried out with a concurrent purpose and must contain three elements:

“(a) the impairment of the reputation and credit of the third party in the market, as is deduced from the Judgment of March 20, 1996 (RJ 1996, 2246); (b) the falsehood; (c) that they are impertinent, and (d) that they have a concurrent purpose. (…)”

In addition, the Supreme Court insists in the Judgment of June 30, 2011, that these requirements must be cumulative:

“In order to be denigration, and not mere discredit, Article 9 of the UCA requires that the statements be capable of undermining the credit of the third party in the market, unless they are true, accurate and relevant. These requirements must be cumulative, and the doctrine refers to the correspondence with the reality of the facts, to the provocation in the consumers of the faithful representation of such reality -the inaccuracy is irrelevant if it does not lead to the deception of the average addressee-, and adequacy to influence the decision making in the market, also considering that they are not pertinent if they are not justified or are disproportionate. (…)”

Finally, add that to estimate an illicit act of denigration, the context in which it was carried out and its purpose should be studied. (Valencia’s Provincial Audiencie Sentence May 23, 2005 and March 22, 2007)

Therefore, in no case shall the issuance of mere value judgments involve a denigrating act. Neither will opinions that are not directed at specific facts that must endure the control of veracity. Sentence 443/2005 of the Barcelona’s Provincial Audience emphasizes that the denigrating act must be coordinated with freedom of expression:

“It should be noted, however, that protection against the act of denigration in the context of competition must be coordinated with the higher interest represented by the constitutional rights to freely express and disseminate one’s thoughts and the right to freely communicate or receive truthful information (Article 20 EC [RCL 1978, 2836] ); hence, the assessment of the unlawfulness of denigration must be subject to a canon of restrictive interpretation insofar as it may clash with the former or imply a limit on its exercise. In particular, mere value judgments or opinions that do not summarize the assessments that certain facts deserve, and that are not capable of withstanding truthfulness controls (on which the disloyalty of the conduct depends in any event), as opposed to those that are linked to data or circumstances of a tactical nature, cannot be classified as unlawful. The latter are the ones susceptible to disloyalty control as denigrating manifestations.”

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Limits on freedom of expression

Freedom of expression is one of the legal concepts that most social interest arouses, because of its abstract character and the value it represents.

The “Exceptio Veritatis” as an enervating of the action with respect to acts of unfair denigrating competition

Once  set out the requirements to qualify an act as a denigration, we will see how a denigration can be considered lawful.

Denigration will have the character of licit when these three components concur: the exactness, the veracity and the pertinence of the manifestation. But even if the manifestation is true, it will not be licit if it turns out to be impertinent. In general, manifestations about private life, race, religion or nationality are impertinent.

On the other hand, we must not forget that whoever invokes this exception as enervating, must be in condition to prove it.

In this sense, on the so-called “Exceptio Veritatis”, the Madrid’s Provincial Audience Sentence 324/2006 of May 8 is interesting. We quote the following fragments:

“There is no doubt about the concurrence in the denounced advertising campaign of the diffusion of demonstrations about the commercial services of a third party. What there is serious doubt about is that they are untrue and that their objective is to undermine the market position of the competitor, and even of their objective aptitude to achieve such an end. (…)”

“(…) Note that the requirement of lack of veracity in denigrating behavior is essential. If this requirement is not met, it is difficult to apply the precept invoked. When the Supreme Court has been faced with cases such as the present one, the criterion has been restrictive. Thus, in the judgment of 20 March 1996 (RJ 1996, 2246), in the case of a letter addressed to potential customers in which a competitor attributes to the opposing company a lower level of solvency because it is not included in the obligatory registers of the Delegation of Industry, this being true, the High Court understands that “the competent purpose of the letter in question is a reality that offers no doubt makes (…)”.

” Finally, let´s not forget ,that the Supreme Court has declared in a sentence of 4/june/2002 (RJ 2002, 4978) that the exceptio veritatis is “expressly admitted as enervating the action regarding acts of unfair competition denigrating “.

Therefore, denigration will not be punishable, when what is affirmed is exact and true. Because such requirements contribute to make the market more transparent.

Conclusions

• The conduct that harms the reputation of a third party will be qualified as unfair even if it is done without malice or intent.
• To appreciate denigration in an act, the following requirements must be met: detriment to the credit of the third party in the market, falsehood, impertinence, context and concurrent purpose.
• In no case shall mere value judgments and opinions be considered an act of denigration.
• It is possible that the denigration is licit as long as what is stated is true, exact and pertinent. Even if it is true, if it turns out to be impertinent, it cannot be considered licit.
• The purpose of the exceptatio veritatis as an enervating of the unfair action is to make the market more transparent.
• Whoever invokes this exception must be in a position to prove that what is stated is accurate and true.

If this article has been of interest, we also suggest you to read the following article published on our website: Plagiarism, copy and paste. Who is free of guilt?