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Consider two businesses, "Us LLC" and "Them, Inc." which are both in the field of selling widgets to the general public. The production of these widgets fall under a government regulation that mandates they be, for example, made of a particular material.

"Them, Inc." is selling widgets well below competitive price points because they make theirs out of a non-compliant but significantly cheaper material. "Us LLC" makes compliant widgets, but cannot compete on this unequal footing. The regulatory agency responsible has ignored requests to enforce the regulation on "Them, Inc.", and will not issue a waiver of the regulation to "Us LLC".

Does "Us LLC" have any legal standing to either compel the regulatory agency to enforce the regulation, or to directly compel "Them, Inc." to comply?

Would the noncompliance of the competitor, combined with lack of enforcement by the regulator, hold any defensive merit if "Us LLC" were to start using the non-compliant material?

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  • Who is the customer? The general public or government agencies? What is the purpose of the regulation, safety or some other reason? Are the products made by Them, Inc. advertised?
    – Dave D
    Aug 26 '15 at 13:46
  • Them may be committing false advertising, and I believe the U.S. law against false advertising gives a private right of action, so that Us may be able to sue Them in civil court to force Them to stop. I may not have time to chase down the details but anyone else is welcome to do so and post an answer. Aug 26 '15 at 14:10
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    @NateEldredge, "Private right of action" might be the search term I needed, thanks! - ("plaintiff's ability to bring an action under a statute under a theory of implied right when the statute does not expressly provide for a private right of action")
    – Mitch
    Aug 26 '15 at 18:14
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    Here's a paper that discusses private enforcement mechanisms in public law. You will need to find if the particular regulation, and the law allowing for that regulation, allow for private actions:scholarship.law.wm.edu/cgi/…
    – Dave D
    Aug 26 '15 at 18:37
  • You would have to go through the Administrative agency's appeal process. If you have not gone through their process, you do not have standing.
    – Andrew
    Aug 26 '15 at 20:34
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No, it is no use complaining to the policeman that everyone else was speeding too when he pulled you over.

You have made a complaint to the authorities; prosecution is at their discretion.

If you have solid evidence that your competitor is non-compliant then you can safely use that in your marketing. You could also use the media against your competitor or the regulator. Competition is about more than price.

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  • In general the judiciary defers to the executive in matters of discretion, however my understanding is that under common law one can appeal to the judiciary over abuse of discretion. Also, at least in the United States, there seems to be a substantial custom of suing large regulators like, e.g., the EPA to compel them to act. Those suits often are given standing (though I don't know if that's merely because the questions of law at the federal law are so convoluted that "abuse of discretion" always requires scrutiny...).
    – feetwet
    Aug 26 '15 at 13:12
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The only time you can force a competitor to do anything is if they are interfering with an existing contractual relationship that you already possess. In your scenario, this is not the case. The real question this scenario seems to be asking is "how can the government be required to enforce its own regulations" or more likely, "it's own RFP". You posit that the widget materials requirement appears to be statutory or regulatory under your scenario... At least as I read it.

This would more likely be spelled out in the RFP. A request for proposal (RFP) is a solicitation, through a bidding process, by a government agency, municipal, state, or federal, interested in procurement of a commodity, service or valuable asset, to potential suppliers to submit business proposal. This is typically where you find any materials requirements.

Government procurement law sets forth several requirements to combat against bid rigging with specific oversight mechanisms depending on whether we are discussing local, state or federal contracts. Generally, government agencies do not ignore the requirements that they themselves set forth. These are usually in their bidding procedures and guidelines, such that when they put a job or a contract out for bid ( the RFP), guidelines exist to ensure that the contract award goes to the most qualified, lowest bidder who can meet all requirements of the procurement request. There is oversight built into these strict public procurement laws.

However you seem to suggest, in your hypo, that the government agency is ignoring their own proposal for material requisites, or the regulation that informs those requirements. If this ever occurred, the best you could do is complain first to the head of the agency who put the contract out for bid. If they ignored you and you had legitimate proof their widgets were substandard, you would complain to your government representative for your district, to seek enforcement under whatever statutory or regulatory framework those material requirements would fall under, if not the RFP itself.

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  • I was referring more to a regulatory statue which prevents the sale of a particular item (consider the FHSA or FFA or a similar FDA regulation), rather than a government sale pursuant to an RFP. The buyer is a third party private individual.
    – Mitch
    Aug 26 '15 at 17:53
  • I see what you mean. I think in that case you might gain a greater understanding of the type of product you are referring to that the government regulates the make-up (ex.food products have these types of regs) Generally, if this is the case, you might look to see if the regulation itself gives some sort of compliance protocol. If not, you would have to seek enforcement as described in my last paragraph, likely starting with the governing agency.
    – gracey209
    Aug 26 '15 at 18:27

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