Abstract
A former partner who becomes a competitor, taking clients, know how and turnover with them. Can this be regarded as conduct contrary to fair competition? Perhaps, but the damage must be proved.
Commenting on an order of the Venice Court, the article addresses the evidentiary burden in litigation as to damages, because loss is not always in re ipsa and a drop in turnover is not enough to prove the wrongful conduct.
In what way can a “war between former partners” turn into a battle over the numbers (and what they mean)?
Italy is a country rich in family businesses, which make up 85% of the entrepreneurial fabric (source: Family Business). In these, as is well known, many commercial relationships are built over time and pass through personal networks handed down within the family. The consequence is that, where the company happens to split, for instance between siblings who set up competing businesses, the dismantling of the corporate set-up can make the company’s future uncertain and slippery.
That is what happened in the dispute decided by the Venice Court, Order of 15/05/2024. On an interim appeal, the panel confirmed the dismissal of an application for a conservatory seizure based – so far as quantification of the prejudice was concerned – on an apparently “simple” argument: the drop in turnover.
The matter arises in a family context. Two brothers, shareholders in companies operating in the production and marketing of marbles and granites, embark on a “separation” process: on the one hand, the transfer of shares in the family’s “historic” companies; on the other, the incorporation of a new business by one of the brothers, active in the same sector.
After the new company begins trading, objections fly. Cease-and-desist letters are sent alleging conduct deemed unfair: from the use of confusing distinctive signs, to commercial “free-riding”, up to alleged diversion of clientele in foreign markets and the exploitation of confidential information and know-how (for a deeper look at the various practices that may amount to unfair competition: Unfair competition: when it occurs and how to defend yourself).
As is well known, however, at the interim stage two elements must still be proved in order to obtain the requested measure (a conservatory seizure, in this case):
- fumus boni iuris, i.e. the plausible merits of the claim (the reasonable likelihood, even without full evidentiary assessment, that the right asserted exists);
- periculum in mora, namely the risk of imminent and irreparable harm arising from waiting for the judgment on the merits, such as to make immediate protection necessary.
It was the absence of the first requirement that grounded the court’s refusal: the appellant complained of harm by documenting the fall in turnover of the family’s “historic” companies. In other words, it showed that a prejudice – consisting in a (even substantial) loss of turnover – did in fact exist; but – even when placing it in temporal correlation with the establishment of the new competing business – it failed to prove the causal link between the reduction in turnover and the competitor’s unfair activity.
The reasoning is straightforward: a drop in turnover may be an indication, but by itself it proves neither the certainty of loss in terms of lost profits, nor the causal link between the conduct and the prejudice. According to the Veneto court, it is necessary to assess, also for the purposes of establishing causation, a whole series of further factors (such as the general market trend, the cost of raw materials, and a comparative analysis of the alleged competitor’s sales), which must be the subject of a technical-accounting investigation aimed at estimating what profits would have been achieved in the absence of the complained-of conduct.
Assuming (and without conceding) that the conduct is to be regarded as unfair.
Competition by the former partner: when does it become unfair?
In the case decided by the Venice Court, the business rift between brothers (former partners) translated into an accusation, levelled at the new company incorporated by one of them, of having “played dirty” by free-riding on the other’s commercial identity, exploiting – by way of diversion – customer relationships acquired by virtue of prior shareholding participation, and using confidential business information.
When we speak of unfair competition, the reference point is – as is well known – Article 2598 of the Italian Civil Code.
In summary, the provision identifies three categories of conduct:
- acts of confusion, i.e. those capable of creating confusion with the activity and/or distinctive signs of a competing business;
- denigration and appropriation of merits;
- any other means not in accordance with the principles of professional fairness, capable of harming another’s business.
This last clause serves as a “container” for disputes between businesses when the allegation concerns the performance of broadly unfair practices: diversion of clientele, commercial “free-riding”, opportunistic exploitation of credibility built by others, and so forth.
In the case under comment, the allegations were, in fact, multiple:
- use of signs and indications capable of creating confusion with the other business’s historic name;
- use of a domain name and of assets for communication (graphic signs, logo) perceived as “anchored” to the pre-existing commercial identity because they were similar, contiguous or assonant;
- commercial free-riding and appropriation of credibility built up in the previous corporate relationship, exploiting the continuity perceived by the market;
- diversion (or attempted diversion) of clientele, with particular reference to certain foreign markets identified in the application and in which the greatest drop in turnover had been recorded;
- use of business information and know-how (including customer and supplier lists: Commercial know-how: how to protect it and react in the event of “theft”) acquired in the previous corporate context in order to accelerate market entry and “replicate” relationships and operating methods;
- interference in commercial relationships (having contacted directly customers and suppliers of the original company), so as to divert orders and opportunities.
But even assuming that one or more of these practices can be made out, to obtain a swift decision, such as one at the interim stage, it is necessary to prove that it was precisely those practices that caused the damage.
What must be shown (also) at the interim stage?
The Court acknowledged that there had been a significant drop in turnover; however, it did not consider it sufficient that damage had been shown, without demonstrating – even by way of presumptions – a causal link between the harmful event (the drop in turnover) and the contested conduct.
On the back of a principle already set out by the Supreme Court (Cass. No. 21832 of 2021) in the field of competition, the Veneto judges therefore reiterated that loss of profits is measured by comparing what would have happened without the wrongdoing and what happened with the wrongdoing; that is, by a counterfactual hypothetical assessment of the market’s performance in the absence of the “disturbing factor”.
As it may have been influenced by other factors – such as increased raw material costs, broader market trends, or other independent dynamics – the drop in turnover cannot be regarded as “automatically” attributable to the competitor.
This leads to the decisive point: a drop in turnover can at most be an indication. The causal link cannot be inferred “by deduction” from the mere temporal coincidence between the alleged conduct and a contraction in revenues. So what must be proved?
If a drop in turnover, on its own, does not amount to conclusive proof of the damage caused by the competitor, the question becomes practical: what elements are needed to prove causation in court? The goal is to guide the judge along a linear path: from conduct to damage.
The first thing to do is to define scope and period. The damage must be measured where the wrongdoing truly bites: which products, which channels, which geographic areas and which customers. Without this framework, the risk is to attribute the loss (a drop in turnover, in this case) to fluctuations due to external factors.
The second is to build the counterfactual scenario: to estimate how sales and profit margins would have evolved without the contested conduct. One can start from internal historical reconstructions (over several years, cleansed of anomalous events) and set alongside them reliable external benchmarks (trends in the sector) or other comparative parameters (areas/channels/lines not affected by the competitor’s unlawful behaviour).
The third is to evidence causation with converging indicia. Temporal coincidence between wrongdoing and loss is not enough: documents and indicators are needed that make the linkage coherent and linear between the conduct and the damage suffered (emails and other communications to customers aimed at poaching them, diverted quotation requests, instances of consumer confusion, engineered loss of specific suppliers or distribution channels, and so on).
The proof is a critical issue, including at the interim stage, and it is always advisable to rely on the support of experienced litigators.
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Data di pubblicazione: 3 Febbraio 2026
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Gabriele Rossi
Laureato in giurisprudenza, con esperienza nella consulenza legale a imprese, enti e pubbliche amministrazioni.