§ 41.16 Misuse of terms "custom-made,” "custom-built," etc.

In the sale, offering for sale, or distribution of industry products, it is an unfair trade practice for an industry member to use the term "custommade," "custom-built," "made-to

order," or any other word or term of similar import, as descriptive of any industry product which has not been made in accordance with specifications as to size, fit, quality, etc., supplied by or on behalf of the consumer-purchaser prior to the manufacture or assembly of the industry product, as distinguished from a product which is a ready-made or stock industry product.

§ 41.17 Guarantees, warranties, etc.

(a) It is an unfair trade practice to represent, in advertising or otherwise, that any industry product, or its installation, is “guaranteed” unless the nature and extent of such guarantee is conjunctively disclosed and without deceptively minimizing the terms and conditions relating to the obligations of the guarantor.

(b) It is also an unfair trade practice to use, or cause to be used, any guarantee in which the obligations of the guarantor are impracticable of fulfillment, or in respect to which the guarantor fails or refuses to observe his liabilities thereunder.

(c) This section shall be applicable not only to guarantees but also to warranties, to purported guarantees and warranties, and to any promise or representation in the nature of a guarantee or warranty.

§ 41.18 Use of the word "free."

In connection with the sale, offering for sale, or distribution of industry products, it is an unfair trade practice to use the word "free," or any word or words of similar import, in advertisements or in other offers to the public, as descriptive of an article of merchandise, or service, which is not an unconditional gift, under the following circumstances:

(a) When all the conditions, obligations, or other prerequisites to the receipt and retention of the "free" article of merchandise or service offered are not clearly and conspicuously set forth at the outset so as to leave no

reasonable probability that the terms of the offer will be misunderstood; and, regardless of such disclosure;

(b) When, with respect to any article of merchandise required to be purchased in order to obtain the "free" article or service, the offerer (1) increases the ordinary and usual price of such article of merchandise, or (2) reduces its quality, or (3) reduces the quantity or size thereof.

NOTE: The disclosure required by paragraph (a) of this section shall appear in close conjunction with the word "free" (or other word or words of similar import) wherever such word first appears in each advertisement or offer. A disclosure in the form of a footnote, to which reference is made by use of an asterisk or other symbol placed next to the word "free," will not be regarded as compliance.

§ 41.19 Deceptive invoicing.

Withholding from or inserting in invoices any statement or information by reason of which omission or insertion a false, inaccurate, or incomplete record is made, which has the capacity and tendency or effect of deceiving purchasers, prospective purchasers, or the consuming public in any material respect, is an unfair trade practice.

§ 41.20 Substitution of products.

It is an unfair trade practice for a member of the industry to make an unauthorized substitution of products, where such substitution has the capacity and tendency or effect of misleading or deceiving purchasers, by:

(a) Shipping or delivering industry products which do not conform to samples submitted, to specifications (in bids or otherwise) upon which the sale is consummated, or to representations made prior to securing the order, without advising the purchaser of the substitution and obtaining his consent thereto prior to making shipment or delivery; or

(b) Falsely representing the reason for making a substitution.

NOTE: Nothing in this section shall be construed as preventing the application of such tolerances as are agreed upon between buyer and seller or are otherwise deemed reasonable and proper and where no misrepresentation or deception of purchasers, is practiced or promoted in relation to the

product or its deviation from samples or specifications.

§ 41.21 Misrepresentation of earnings of salesmen or agents.

It is an unfair trade practice for any member of the industry to make or publish, or cause to be made or published, any advertisement, offer, statement, or other form of representation, which directly or by implication is false, misleading, or deceptive:

(a) Concerning the salary, commission, income, earnings, or other remuneration which agents, canvassers, solicitors, or sales representatives receive or may receive; or

(b) Concerning any conditions or contingencies affecting such remuneration or the opportunities therefor.

§ 41.22 Defamation of competitors or false disparagement of their products.

The defamation of competitors by falsely imputing to them dishonorable conduct, inability to perform contracts, questionable credit standing, or by other false representations, or the false disparagement of competitors' products in any respect, or of their business methods, selling prices, values, credit terms, policies, or services, is an unfair trade practice.

§ 41.23 Unfair threats of infringement suits.

The circulation of threats of suit for infringement of patents or trademarks among customers or prospective customers of competitors, not made in good faith but for the purpose or with the effect of thereby harassing or intimidating such customers or prospective customers, or of unduly hampering, injuring, or prejudicing competitors in their business, is an unfair trade practice.

§ 41.24 Enticing away employees, sales representatives, dealers, or distributors of competitors.

It is an unfair trade practice for any member of the industry wilfully to entice away employees, sales representatives, dealers, or distributors of competitors with the intent and effect of thereby unduly hampering or injuring competitors in their business and destroying or substantially lessening

competition: Provided, That nothing in this section shall be construed as prohibiting employees, sales representatives, dealers, or distributors from seeking more favorable employment or business connections, or as prohibiting industry members from hiring or offering employment or business connections to employees, sales representatives, dealers, or distributors of competitors in good faith and not for the purpose of injuring, destroying, or preventing competition.

§ 41.25 Inducing breach of contract.

(a) Knowingly inducing or attempt. ing to induce the breach of existing lawful contracts between competitors and their customers or their suppliers, or interfering with or obstructing the performance of any such contractual duties or services, under any circumstance having the capacity and tendency or effect of substantially injuring or lessening present or potential competition, is an unfair trade practice.

(b) Nothing in this section is intended to imply that it is improper to solicit the business of a customer of a competing industry member; nor is the section to be construed as in anywise authorizing any agreement, understanding, or planned common course of action by two or more industry members not to solicit business from the customers of either of them, or from customers of any other industry member.

§ 41.26 Procurement of competitors' confidential information.

It is an unfair trade practice for any member of the industry to obtain information concerning the business of a competitor by bribery of an employee or agent of such competitor, by false or misleading statements or representations, by the impersonation of one in authority, or by any other unfair means, and to use the information so obtained so as to injure said competitor in his business or to suppress competition or unreasonably restrain trade.

It is an unfair trade practice for any member of the industry, either directly or indirectly, to engage in any planned common course of action, or to enter into or take part in any understanding, agreement, combination, or conspiracy, with one or more members of the industry, or with any other person or persons, to fix or maintain the price of any goods or otherwise unlawfully to restrain trade; or to use any form of threat intimidation, or coercion to induce any member of the industry or other person or persons to engage in any such planned common course of action, or to become a party to any such understanding, agreement, combination, or conspiracy.

§ 41.28 Prohibited sales below cost.

(a) The practice of selling products of the industry at a price less than the cost thereof to the seller, with the purpose or intent, and where the effect is, or where there is a reasonable probability that the effect will be, to substantially injure, suppress, or stifle competition or tend to create a monopoly, is an unfair trade practice.

(b) This section is not to be construed as prohibiting all sales below cost, but only such selling below the seller's cost as is resorted and pursued with the wrongful intent or purpose

'The inhibitions of this section are subject to Pub. L. 542, approved July 14, 195266 Stat. 632 (the McGuire Act) which provides that with respect to a commodity which bears, or the label or container of which bears, the trade-mark, brand, or name of the producer or distributor of such commodity and which is in free and open competition with commodities of the same general class produced or distributed by others, a seller of such a commodity may enter into a contract or agreement with a buyer thereof which establishes a minimum or stipulated price at which such commodity may be resold by such buyer when such contract or agreement is lawful as applied to intrastate transactions under the laws of the State, Territory, or territorial jurisdiction in which the resale is to be made or to which the commodity is to be transported for such resale, and when such contract or agreement is not between manufacturers, or between wholesalers, or between brokers, or between factors, or between retailers, or between persons, firms, or corporations in competition with each other.

referred to and where the effect is, or where there is reasonable probability that the effect will be, to substantially injure, suppress, or stifle competition or to create a monopoly. Among the situations in which the requisite purpose or intent would ordinarily be lacking are cases in which such sales were: (1) Of seasonal goods near the conclusion of the season; (2) of perishable goods in respect to which deterioration is imminent; (3) of obsolescent goods; (4) made under judicial process; or (5) made in bona fide discontinuance of business in the goods concerned.

on

net

(c) As used in this section, the term "cost" means the respective seller's cost and not an average cost in the industry whether such average cost be determined by an industry cost survey or some other method. It consists of the total outlay or expenditure by the seller in the acquisition, production, and distribution of the products involved, and comprises all elements of cost such as labor, material, depreciation, taxes (except taxes income and such other taxes as are not properly applicable to cost), and general overhead expenses, incurred by the seller in the acquisition, manufacture, processing, preparation for marketing, sale, and delivery of the products. Not to be included are dividends or interest on borrowed or invested capital, or nonoperating losses, such as fire losses and losses from the sale or exchange of capital assets. Operating cost should not be reduced by items of nonoperating income, such as income from investments, and gain on the sale of capital assets.

(d) Nothing in this section shall be construed as relieving an industry member from compliance with any of the requirements of the RobinsonPatman Act.

§ 41.29 Prohibited discrimination. 2

(a) Prohibited discriminatory prices, or rebates, refunds, discounts, credits, etc., which effect unlawful price discrimination. It is an unfair trade prac

2As used in this section, 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

tice for any member of the industry engaged in commerce, in the course of such commerce, to grant or allow, secretly or openly, directly or indirectly, any rebate, refund, discount, credit, or other form of price differential, where such rebate, refund, discount, credit, or other form of price differential, effects a discrimination in price between different purchasers of goods of like grade and quality, where either or any of the purchases involved therein are in commerce, and where the effect thereof may be substantially to lessen competition or tend to create a monoply in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them: Provided, however,

(1) That the goods involved in any such transaction are sold for use, consumption, or resale within any place under the jurisdiction of the United States;

(2) That nothing contained in this paragraph shall prevent differentials which make only due allowance for differences in the cost of manufacture, sale, or delivery resulting from the differing methods or quantities in which such commodities are to such purchasers sold or delivered;

NOTE: "Spingling” of orders. This proviso shall not be construed as permitting the practice of allowing a price differential, whether in the form of a discount, rebate, or other form, through billing as a single order an aggregate of the amounts of two or more orders separately delivered, when such price differential is not justified by savings to the seller which make only due allowance for differences in the cost of manufacture, sale, or delivery resulting from the differing methods or quantities in which such products are to such purchasers sold or delivered.

(3) That nothing contained in this section shall prevent persons engaged in selling goods, wares, or merchandise 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."

in commerce from selecting their own customers in bona fide transactions and not in restraint of trade;

(4) That nothing contained in this paragraph shall prevent price changes from time to time where made in response to changing conditions affecting the market for or the marketability of the goods concerned, such as but not limited to obsolescence of seasonal goods, distress sales under court process, or sales in good faith in discontinuance of business in the goods concerned.

(b) Prohibited brokerage and commissions. It is an unfair trade practice for any member of the industry engaged in commerce, in the course of such commerce, to pay or grant, or to receive or accept anything of value as a commission, brokerage, or other compensation, or any allowance or discount in lieu thereof, except for services rendered in connection with the sale or purchase of goods, wares, or merchandise, either to the other party to such transaction or to an agent, representative, or other intermediary therein where such intermediary is acting in fact for or in behalf, or is subject to the direct or indirect control, of any party to such transaction other than the person by whom such compensation is so granted or paid.

(c) Prohibited advertising or promotional allowances, etc. It is an unfair trade practice for any member of the industry engaged in commerce to pay or contract for the payment of advertising or promotional allowances or any other thing of value to or for the benefit of a customer of such member in the course of such commerce as compensation or in consideration for any services or facilities furnished by or through such customer in connection with the processing, handling, sale, or offering for sale of any products or commodities manufactured, sold, or offered for sale by such member, unless such payment or consideration is available on proportionally equal terms to all other customers competing in the distribution of such products or commodities.

(d) Prohibited discriminatory services or facilities. It is an unfair trade practice for any member of the industry engaged in commerce to discrimi

nate in favor of one purchaser against another purchaser or purchasers of a commodity bought for resale, with or without processing, by contracting to furnish or furnishing, or by contributing to the furnishing of, any services or facilities connected with the processing, handling, sale, or offering for sale of such commodity so purchased upon terms not accorded to all competing purchasers on proportionally equal terms.

(e) Inducing or receiving an illegal discrimination in price. It is an unfair trade practice for any member of the industry engaged in commerce, in the course of such commerce, knowingly to induce or receive a discrimination in price which is prohibited by this section.

(f) Exemptions. The inhibitions of this section shall not apply to purchases of their supplies for their own use by schools, colleges, universities, public libraries, churches, hospitals, and charitable institutions not operated for profit.

NOTE: In complaint proceedings charging discrimination in price or services or facilities furnished, and upon proof having been made of such discrimination, the burden of rebutting the prima facie case thus made by showing justification shall be upon the person charged; and unless justification shall be affirmatively shown, the Commission is authorized to issue an order terminating the discrimination: Provided, however, That nothing contained in this section shall prevent a seller rebutting the prima facie case thus made by showing that his lower price or the furnishing of services or facilities to any purchaser or purchasers was made in good faith to meet an equally low price of a competitor, or the services or facilities furnished by a competitor. See section 2-b, Clayton Act.

§ 41.30 Aiding or abetting use of unfair trade practices.

It is an unfair trade practice for any person, firm, or corporation to aid, abet, coerce, or induce another, directly or indirectly, to use or promote the use of any unfair trade practice specified in §§ 41.0 to 41.29.

PART 46-WORK GLOVE INDUSTRY

Sec.

46.0 Definitions.

46.1 Deception (general).

Sec.

46.2 Misrepresentation as to character of

business.

46.3 Misrepresenting products as conforming to standard.

46.4 Guarantees, warranties, etc. 46.5 Substitution of products.

46.6 Deceptive use or imitation or simulation of trade or corporate names, trademarks, etc.

46.7 False invoicing.

46.8 Defamation of competitors or false disparagement of their products.

46.9 Inducing breach of contract. 46.10 Enticing away employees of competitors.

46.11 Consignment distribution. 46.12 Prohibited sales below cost. 46.13 Tie-in sales; coercing purchase of one product as a prerequisite to the purchase of other products.

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

46.15 Misleading price lists. 46.16 Misuse of terms "close-outs," "discontinued lines," "special bargains," etc. 46.17 Seconds, irregulars, and rejects. 46.18 Prohibited discrimination. 46.19 Aiding or abetting use of unfair trade practices.

AUTHORITY: Secs. 6, 5, 38 Stat. 721, 719; 15 U.S.C. 46, 45, unless otherwise noted.

SOURCE: 24 FR 4135, May 22, 1959, unless otherwise noted.

§ 46.0 Definitions.

As used in this part the terms "industry member" and "industry products" shall have the following meaning:

(a) Industry member. Any person, firm, corporation or organization engaged in the manufacture, sale, offering for sale, or distribution of industry products as defined below.

(b) Industry products. All kinds and types of gloves and mittens which are designed primarily for use in the performance of work or manual effort (such as, but not limited to, gloves which are in whole or in part of canvas, flannel, jersey, or leather composition which are used in the performance of manual labor; welders', electric linemen's, and industrial gloves and gauntlets of any composition; and surgeons' and household gloves of rubber, plastic, or other composition), as distinguished from gloves and mittens which are designed primarily for dress.