which will enable it to make this determination.

(3) It is taking this action in view of representations made by interested parties, including the Cost of Living Council.

(4) It is of the view that questions probably would not arise under the laws it administers if sellers, using valid uniform, zone delivered pricing systems, offer to all customers, on a nondiscriminatory basis, in lieu of a delivered price, the option of purchasing at a true f.o.b. shipping point price.

[39 FR 1260, Jan. 7, 1974; 39 FR 6696, Feb. 22, 1974]

The Commission issued an advisory opinion on December 19, 1973 (743 7002), to the effect that a debt collection agency properly could locate its offices on or adjacent to the premises of its clients. Since the agency would make every effort to disclose its separate identity by placing its corporate name on the entrances to the office, notices sent and stationery used, the Commission concluded that its Guides Against Debt Collection Deception (16 CFR 237) would be observed and that debtors would not be deceived.

[39 FR 21046, June 18, 1974]

§ 15.486 Averaging individual profit and loss statements in reports to association members.

The Commission issued an advisory opinion on February 22, 1974 (743 7003), to the effect that an accountant for a group of about fifteen companies

properly could compile and distribute an average profit and loss statement for the companies provided the individual firms' reporting data was kept strictly confidential and only disclosed as a part of the average figures. The Commission added that the plan must not be used to secure adherence to prices, quotas of production, quotas of sales or to create other unlawful trade restraints.

[39 FR 21046, June 18, 1974]

§ 15.487 Collecting and reporting statistical information from members of an

association.

The Commission issued an advisory opinion on March 7, 1974 (743 7004), to the effect that an association properly could collect data and report aggregate figures on production, purchases, shipments, inventory, and unfilled or open orders, provided the collection was handled by an independent accounting firm. Individual firm's data would not be disclosed and no data on prices, future projections or estimates Iwould be collected. The Commission commented that the program must not be used to secure adherence to prices, quotas or production, quotas of sales or to create other unlawful trade restraints.

[39 FR 21046, June 18, 1974]

§ 15.488 Association by-laws regarding membership may not be arbitrary or discriminatory.

The Commission issued an advisory opinion on March 8, 1974 (743 7005), to the effect that an association's constitution and by-laws should not provide for arbitrary or discriminatory bars to membership to a qualified applicant or to arbitrary or discriminatory dismissal of a member. Membership in the association might be a vital competitive factor in the industry.

[39 FR 21046, June 18, 1974]

§ 15.489 Refund must be offered to subscribers to discontinued magazine. The Commission issued an advisory opinion on March 4, 1974 (743 7006), to the effect that subscribers to a discontinued magazine should be notified by letter and allowed at least three

weeks to choose between a refund and a subscription to a substitute magazine. The Commission added that those who made no choice should be deemed to have elected to receive a refund.

[39 FR 21046, June 18, 1974]

§ 15.490 Drop shipments proper when warehouse distributor does not stock item.

The Commission issued an advisory opinion on April 1, 1974 (Dkt. 6889), to the effect that the utilization of drop shipments for initial stock orders and very heavy equipment would not be violative of the cease and desist order provided the products are not normally stocked by warehouse distributors. The Commission added that drop shipments would not be permissible if the items normally were stocked by warehouse distributors.

[39 FR 21046, June 18, 1974]

§ 15.491 Association may prepare dealer's catalog provided no price information is included.

The Commission issued an advisory opinion on April 5, 1974 (Dkt. 5979), to the effect that sponsorship by an association of individualized catalogs to be used by dealer members of the association showing products, the name of the manufacturer, a description of the product and a number for ordering purposes would not be violative of the cease and desist order. A dealer would select the pages for his catalogs, could have his name printed on the cover and overprints on pages to show his name, address and phone number. No price information would be in the catalogs; any manufacturer could arrange to have pages printed for his products; and the catalog also could be ordered by nonmembers of the association.

[39 FR 21046, June 18, 1974]

Sec.

PART 17-APPLICATION AND DEFINITIONS

17.1 Application of guides and trade practice rules in preventing unlawful competitive restraints.

17.2 Definition of "commerce." 17.3 Definition of Group I rules. 17.4 Definition of Group II rules.

AUTHORITY: Sec. 6(g), 38 Stat. 722; 15 U.S.C. 46(g), unless otherwise noted.

SOURCE: Part 17 is derived from the Trade Practice Conference rules in this subchapter.

§ 17.1 Application of guides and trade practice rules in preventing unlawful competitive restraints.

(a) Industry guides are administrative interpretations of laws administered by the Commission for the guidance of the public in conducting its affairs in conformity with legal requirements. They provide the basis for voluntary and simultaneous abandonment of unlawful practices by members of industry. Failure to comply with the guides may result in corrective action by the Commission under applicable statutory provisions. Guides may relate to a practice common to many industries or to specific practices of a particular industry.

(b) Trade practice rules promulgated by the Commission are designed to foster and promote the maintenance of fair competitive conditions in the interest of protecting industry, trade, and the public. It is to this end, and to the exclusion of any act or practice which suppresses competition, restrains trade, fixes or controls price through combination or agreement, or which otherwise injures, destroys, or prevents competition, that the rules are to be applied.

[32 FR 15540, Nov. 8, 1967]

§ 17.2 Definition of "commerce."

As used in the sections of the rules on the subject of discrimination, the word "commerce" means "trade or commerce among the several States and with foreign nations, or between

the District of Columbia or any Territory of the United States and any State, Territory, or foreign nation, or between any insular possessions or other places under the jurisdiction of the United States, or between any such possession or place and any State or Territory of the United States or the District of Columbia or any foreign nation, or within the District of Columbia or any Territory or any insular possession or other place under the jurisdiction of the United States." § 17.3 Definition of Group I rules.

The unfair trade practices embraced in the Group I rules herein are considered to be unfair methods of competition, unfair or deceptive acts or practices, or other illegal practices, prohibited under laws administered by the Federal Trade Commission; and appropriate proceedings in the public interest will be taken by the Commission to prevent the use, by any person, partnership, corporation, or other organization subject to its jurisdiction, of such unlawful practices in commerce.

§ 17.4 Definition of Group II rules.

Compliance with trade practice provisions in Group II rules is considered to be conducive to sound business methods and is to be encouraged and promoted individually or through voluntary cooperation exercised in accordance with existing law. Nonobservance of such rules does not per se constitute violation of law. Where, however, the practice of not complying with any such Group II rules is followed in such manner as to result in unfair methods of competition, or unfair or deceptive acts or practices, corrective proceedings may be instituted by the Commission as in the case violation of Group I rules.

Sec.

23.4 Deceptive pricing.

23.5 Misuse of terms "close-outs," "discontinued lines," "special bargains," etc. 23.6 Substitution of products.

23.7 Use of the word "free." 23.8 Guarantees, warranties, etc. 23.9 Misuse of term "certified," etc. 23.10 Misrepresentation as to origin and disclosure of foreign origin.

23.11 Misuse of terms "hand-made," "hand-polished," etc.

23.12 Deceptive use and imitation of trade or corporate names, trade-marks, etc. 23.13 Commercial bribery. 23.14 Consignment distribution. 23.15 Inducing breach of contract. 23.16 Defamation of competitors or false disparagement of their products.

23.17 Enticing away employees of competitors.

23.18 Push money.

23.19 Prohibited forms of trade restraints (unlawful price fixing, etc.).

23.20 Prohibited sales below cost. 23.21 Prohibited discrimination. 23.22 Misrepresentation as to gold content. 23.23 Misrepresentation as to silver content.

23.24 Misuse of words

“iridum," "palladium,"
"rhodium," and "osmium.❞

"platinum," "ruthenium,"

23.25 Additional requirements relating to quality marks.

23.26 Misuse of the word "diamond." 23.27 Misuse of word "perfect," etc. 23.28 Misuse of term "blue white."

23.29 Misuse of the term "properly cut," etc.

23.30 Misuse of the words "brilliant" and "full cut."

23.31 Misuse of term "clean," etc.

23.32 Misrepresentation of weight, "total

weight."

23.33 Misuse of word "pearl."

23.34 Misuse of terms "cultured pearl," "cultivated pearl," "seed pearl," "Oriental pearl," "Oriental," "natura," and "kultured."

23.35 Misrepresentation

pearls.

as to cultured

23.36 Deception as to precious and semiprecious stones.

23.37 Misuse of words "ruby," "sapphire," "emerald," "topaz," "stone," "birthstone," etc.

23.38 Misuse of words "real," "genuine," "natural," etc.

23.39 Misuse of words "gem," "reproduction," "replica," "synthetic," etc. Appendix-Listing and classification of rules for convenient reference by industry members.

AUTHORITY: Secs. 6, 5, 38 Stat. 721, 719; 15 U.S.C. 46, 45, unless otherwise noted. SOURCE: 22 FR 4568, June 28, 1957, unless otherwise noted.

§ 23.0 Definitions.

As used in the rules in this part, the terms hereinafter set forth shall be understood to have the following meanings:

(a) Diamond. A diamond is a natural mineral consisting essentially of pure carbon crystallized in the isometric system and is found in many colors. Its hardness is 10; its specific gravity approximately 3.52; and it has a refractive index of 2.42.

(b) Pearl. A calcareous concretion consisting essentially of alternating concentric layers of carbonate of lime and organic material formed within the body of certain mollusks, the result of an abnormal secretory process caused by an irritation of the mantle of the mollusk consequent on the intrusion of some foreign body inside the shell of the mollusk, or due to some abnormal physiological condition in the mollusk, neither of which has in any way been caused or induced by man.

(c) Cultured pearl. The composite product created when a nucleus (usually a sphere of calcareous mollusk shell) planted by man inside the shell or in the mantle of a mollusk is coated with nacre by the mollusk.

(d) Imitation pearl. A manufactured product composed of any material or materials which stimulates in appearance a pearl or cultured pearl.

§ 23.1 Deception (general).

(a) It is an unfair trade practice for an industry member to sell or offer for sale any industry product under any representation, description, circumstance, or condition having the capacity and tendency or effect of deceiving purchasers or prospective purchasers thereof as to the type, kind, grade, quality, quantity, metallic content, size, weight, cut, color, character, substance, durability, serviceability, origin, price, value, preparation, production, manufacture or distribution of such industry product or which has the capacity and tendency or effect of misleading or deceiving the purchasing or consuming public in any other material respect.

(b) The inhibitions of this section are applicable to all forms of advertising, whether in periodicals, on the

radio or television, and whether written or oral, and to any form of marking or labeling of products or their containers.

§ 23.2 Misleading illustrations.

It is an unfair trade practice, in connection with the offering for sale, sale, or distribution of industry products, to use, as part of any packaging material, label, advertisement, or other sales promotion matter, any visual representation, picture, illustration, diagram, or other depiction which, either alone or in conjunction with any accompanying words or phrases, has the capacity and tendency or effect of misleading or deceiving purchasers or prospective purchasers concerning the type, kind, grade, quality, quantity, metallic content, size, weight, cut, color, character substance, durability, serviceability, origin, preparation, production, manufacture, or distribution of any industry product, or which has the capacity and tendency or effect of misleading or deceiving the purchasing or consuming public in any material respect.

NOTE: Among practices inhibited by this section are illustrations and depictions of diamonds in greater than actual size without a clear and conspicuous disclosure of the fact that the illustrations or depictions are enlargements, when the failure to make such disclosure has the capacity and tendency or effect of deceiving purchasers or prospective purchasers of such diamonds or any products containing same.

§ 23.3 Misrepresentation as to character of

business.

It is an unfair trade practice for any member of the industry to represent, directly or indirectly, through the use of any word or term in his corporate or trade name, in his advertising, or otherwise, that he is a producer, manufacturer, processor, wholesaler, or importer of products of the industry, or that he owns or controls a factory making or processing such products, or has connections abroad through which imports are secured, or maintains offices abroad, when such is not the fact, or in any other manner to misrepresent the character, extent, volume, or type of his business.

§ 23.4 Deceptive pricing.

(a) It is an unfair trade practice for any member of the industry to represent, directly or indirectly, in advertising or otherwise, that the price of an industry product has been reduced from what is in fact a fictitious price, or that such price is a reduced or a special price when it is in fact the regular selling price of such product, or that the regular price thereof is higher when such is not the fact, or otherwise falsely or deceptively to represent the past or current price of an industry product.

(b) It is an unfair trade practice for any member of the industry, directly or indirectly, to use or to supply to dealers, or to aid or assist in the use of, price tags, labels, or similar devices which are false or fictitious, or which such member has reason to believe are intended to be used or will be used by dealers or salesmen for the purpose of misleading or deceiving the purchasing or consuming public in regard to price, or in any other material respect.

(c) It is an unfair trade practice for any member of the industry to distribute catalogs to retail outlets in which retail prices for products are specified, or in which any figures, words, letters, or symbols appear in conjunction with the catalog presentation of products which likely would be construed by consumer-purchasers or prospective consumer-purchasers as retail prices specified by the industry member or which would be subject to use by the retail outlet to create such an impression in the minds of consumer-purchasers or prospective consumer-purchasers, when the industry member knows, or has good reason to believe, that such products customarily will be sold by such retail outlets at lower prices with consequent deception of the consumer-purchasers or prospective consumer-purchasers as to the usual retail price for such products.

NOTE: Except under the limitations and conditions prescribed by the McGuire Act (see footnote to § 23.19), any arrangement between an industry member and others, including retailer-customers of the industry member, whereby resale prices for products are fixed, maintained, or enhanced, is an unlawful restraint of trade violative of section 5 of the Federal Trade Commission Act.