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Category: Business Law
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I am part owner of a business that contracts with agencies

Resolved Question:

I am part owner of a business that contracts with agencies to provide a needed service and then subcontracts with providers of that service to provide it, through us, to our client agencies. There are a number of other businesses whose model is similar to our.

My partners want to have a better understanding of the rates our competitors charge to agencies and the rates they pay to subcontractors. They propose to obtain that information by making calls to competing businesses and posing as prospective customer agencies to find out what they can about competitors' rates, services and similar items. They also propose to make calls to competitors posing as prospective subcontractors to find out what rates our competitors pay and other aspects of their terms of subcontracting.

I object to this sort of think on ethical grounds. I am also wondering if it might be seen as illegal or tortious (e.g., theft of intellectual property, fraudulent, etc)? Not looking for legal advise here, just an informed opinion. Thank you.
Submitted: 1 year ago.
Category: Business Law
Expert:  WiseOwl58 replied 1 year ago.

I see how you would find this kind of behavior objectionable, but, truth be told, it happens all the time.

 

The actions would not be seen as theft of intellectual property unless you copied materials or some other proprietary information from your competitors. Similarly, it would not be fraud unless you fraudulently required the competitor to go to some expense or do some work for you with the intent of not paying them.

 

As to finding out their prices, essentially what you are doing is "mystery shopping," which is when someone posing as a shopper comes in to get information about a store or business. Shopping the competitors rates would not be considered illegal if it was just to gather information used to understand how your prices compared to the prices the competitors were charging.

 

Good luck to you. I wish you all the best.

WiseOwl58, Attorney
Category: Business Law
Satisfied Customers: 2648
Experience: Experienced business lawyer.
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