NOTE 2: In complaint proceedings, justification of price differentials under paragraphs (a)(2), (4) and (5) of this section is a matter of affirmative defense to be established by the person or concern charged with price discrimination.

(b) The following are examples of price differential practices to be considered as subject to the prohibitions of paragraph (a) of this section when involving goods of like grade and quality which are sold for use, consumption, or resale within any place under the jurisdiction of the United States, and which are not purchased by schools, colleges, universities, public libraries, churches, hospitals, and charitable institutions not operated for profit, as supplies for their own use, 3 and when:

(1) The commerce requirements specified in paragraph (a) of this section are present; and

(2) The price differential has a reasonable probability of substantially lessening competition or tending to create a monopoly in any line of commerce, or of injuring, destroying, or preventing competition with the industry member or with the customer receiving the benefit of the price differential, or with customers of either of them; and

(3) The price differential is not justified by cost savings (see paragraph (a)(2) of this section); and

(4) The price differential is not made in response to changing conditions affecting the market for or the marketability of the goods concerned (see paragraph (a)(4) of this section); and

(5) The lower price was not made to meet in good faith an equally low price of a competitor (see paragraph (a)(5) of this section):

Example No. 1. At the end of a given period an industry member grants a discount to a customer equivalent to a fixed percentage of the total of such customer's purchases during the period and fails to grant a discount of the same percentage to all other customers during such period.

Example No. 2. Ar industry member sells goods to one or more of his customers at a higher price than he charges other customers for like merchandise. It is immaterial whether the goods sold at the lower price are classified by the industry member as "seconds," "secondary line," "rejects," or

'See also note under paragraph (a)(1) of this section.

are otherwise represented by the industry member as inferior, if the goods are in fact of like grade and quality as the goods sold at the higher price.

Example No. 3. Terms of 2%/20 net 40 are granted by an industry member to some customers on goods purchased by them from the industry member. Another customer or customers are, nevertheless, allowed to take a 5 percent instead of a 2 percent discount when making payment to the industry member within the time prescribed.

Example No. 4. An industry member sells goods to one or more of his customers at a lower price than he charges other customers therefor, basing his justification for the price difference solely on the fact that the goods sold at the lower price bear the private brand name of customers.

Example No. 5. An industry member invoices goods to all his customers at the same price but supplies additional quantities of such goods at no extra charge to one or more, but not to all, such customers; or supplies other goods or premiums to one or more, but not to all, such customers for which he makes no extra charge and which effects an actual price difference in favor of certain of his customers.

NOTE: As previously indicated, the foregoing are examples of practices to be considered violative of the prohibitions of paragraph (a) of this section when involving goods of like grade and quality and when not subject to the other exemptions, exclusions, or defenses set forth in this paragraph.

(c) 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.

(d) 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.

NOTE 1: Industry members giving allowances for advertising or sales promotion must, in addition to according same to all competing customers on proportionally equal terms, exercise precaution and diligence in seeing that all such allowances are used by the customers for such purpose. Customers receiving such allowances must not use same for any other purpose.

When an allowance is made ostensiby for advertising or sales promotion of products and is not in fact used for that purpose the practice may constitute a price discrimination. In such case, the party giving the allowance may violate paragraph (a) of this section and the party receiving same may violate paragraph (f) of this section.

NOTE 2: When an industry member gives allowances to competing customers for advertising in a newspaper or periodical, the fact that a lower advertising rate for equivalent space is available to one or more, but not all, such customers, is not to be regarded by the industry member as warranting the retention by such customer or customers of any portion of the allowance for his or their personal use or benefit.

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

NOTE 1: See subsection (b) of section 2 of the Clayton Act, as amended, which is set

forth in Note 1 to paragraph (a)(5) of this section.

or

NOTE 2: Among the practices inhibited by section V of this rule is that of an industry member according to one or more customers the privilege of returning for credit refund any or all of the goods purchased by them and failing to accord the same privilege to another or other competing customers on proportionally equal terms. In this connection see also NOTE 2 under cost justification proviso (2) (paragraph (a)(2) of this section.)

(f) 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 the foregoing provisions of this rule.

NOTE: Section 46.18 is based on the provisions of section 2 of the Clayton Act as amended by the Robinson-Patman Act.

§ 46.19 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 the foregoing sections.

(Secs. 6(g), 5, 38 Stat. 722, 719; 15 U.S.C. 46(g), 45.)

GROUP II

§ 54.101 Standards of nomenclature.

The present commercially used species of "walnut" should be designated with a qualifying adjective indicating the species, variety or place of origin, and the following names shall be the accepted trade names for use in the United States:

Juglans nigra, to be called "American

Walnut" or "Black Walnut”. Juglans cinerea, to be called "White Walnut" or "Butternut". Juglans regia, to be called "Royal" or "Persian Walnut”.

From England, to be called "English Walnut".

From France, to be called "French Walnut".

From Italy, to be called "Italian Walnut".

From Turkey, to be called "Turkish Walnut".

From Russia, to be called "Russian Walnut", or "Caucasian Walnut" or "Circassian Walnut".

From Spain, to be called "Spanish Walnut".

Juglans sieboldiana, to be called “Japanese Walnut".

Juglans boliviana, to be called "Bolivian Walnut".

(Secs. 6(g), 5, 38 Stat. 722, 719; 15 U.S.C. 46(g), 45.)

SOURCE: 26 FR 7012, Aug. 4, 1961, unless otherwise noted.

§ 56.0 The industry and its products defined.

Members of this industry are persons, firms, corporations, and organizations engaged in the manufacture, sale or distribution of pleasure boats. Products of the industry consists of pleasure boats of all types (row boats, motor boats, sail boats, etc.), the length of which does not exceed 65 feet, and equipment therefor, such as engines, propellers, rigging and tanks, which are installed on such boats when the boats are sold or offered for sale. Such equipment, when not installed on pleasure boats is not to be considered a product of the industry.

§ 56.1 Deception (general).

Boats and equipment thereof, shall not be sold or offered for sale by an industry member under any representation or circumstance (including failure to adequately disclose relevant facts) having the capacity and tendency or effect of misleading or deceiving purchasers or prospective purchasers with respect to size, weight, accommodations, load capacity, speed, horsepower, durability, maintenance, construction, proof against, or resistance to, leakage, resistance or immunity to fire or flame, flotation, safety, or fuel consumption; or having the capacity and tendency or effect of misleading or deceiving purchasers or prospective purchasers in any other material respect.

NOTE: Among the practices to which the prohibitions of this section are applicable, are pictorial and other representations, either direct or indirect, which create a false impression as to the safe passenger and/or property load capacity of a boat, and/or the maximum weight and horsepower of motor or motors with which it may be safely equipped.

[Rule 1]

§ 56.2 Deception as to length.

Any representation as to the length of a boat, either direct, or indirect as by the use of model numbers suggesting length, or otherwise, must state the exact distance measured end to end over the deck of such boat, excluding sheer. If in addition a representa

tion of the length of a boat measured by any other method (as for example at the water line or on the gunwale) is made, the nature of such measurement must be conspicuously disclosed. [Rule 2]

§ 56.3 Deceptive speed claims.

(a) Claims that a boat is capable of a specified speed by the use of such terms as "up to X miles per hour" or by similar representation, shall not be used unless such boat will attain the specified speed under usual conditions or as represented. If a boat is capable of attaining the claimed specified speed only under conditions such as when not having usual tools, or a reasonable quantity of water or fuel on board or under ideal water or weather conditions such as with a favorable wind or current, such speed claims shall be accompanied by conspicuous disclosure of the conditions which must be present to achieve the claimed speed.

(b) In the case of speed claims made for boats which are not equipped with engines, such claims shall be accompanied by conspicuous disclosure of the horsepower of the engine which must be used in such boat to customarily achieve the claimed speed. [Rule 3]

§ 56.4 Deception as to maintenance.

(a) No representation to the effect that a boat is "maintenance free" shall be used unless the boat so described, including installed components such as its propulsion machinery, sails, etc., will not rot, rust or otherwise deteriorate during the expected life of such boat, and will require no sanding, scraping, painting, patching, or other repair, except for accidental damage sustained, and will require no replacement of a part or parts as a result of wear during the life expectancy of such boat.

(b) When equipped with a motor or engine, which will need replacement of a part or parts such as spark plugs, etc., the boat shall not be represented as "maintenance free" unless such motor is clearly excepted from the representation.

NOTE: It is the consensus of the industry that no boat of present manufacture is com

pletely maintenance free under all normal conditions of use.

[Rule 4]

§ 56.5 Deceptive use of wood names.

(a) No representation to the effect that a boat is "(name of wood)" shall be used unless the boat so described is throughout, except for minor braces, etc., solidly of the named wood. When a representation regarding the wood composition of a boat is properly applicable to only certain portions of the boat, such fact shall be clearly stated, e.g., "solid cyprus planking," "teak decks."

(b) The word "Mahogany” shall not be used unqualifiedly to describe any wood other than genuine mahogany (Swietenia). However, the non-mahogany Philippine woods Tanguile, Red Lauan, White Lauan, Tiaong, Almon, Mayapis, and Bagtikan may be called "Philippine Mahogany," and the wood of the genus Khaya may be called "African Mahogany." [Rule 5]

§ 56.6 Deceptive pricing.

(a) Members of the industry shall not make any direct or indirect representation concerning the price at which a boat is offered for sale which has the capacity and tendency or effect of misleading or deceiving purchasers or prospective purchasers in any material respect.

(b) When advertisements picture a boat with equipment (such as engine, anchor, sails, etc.) installed or attached thereto, there shall be clear and conspicuous explanation as to whether such price applies only to the boat, or the boat and only a part of the equipment shown, when such is the case.

(c) Industry members shall not make any statement or representation which has the capacity and tendency or effect of creating a false impression in the minds of purchasers or prospective purchasers that the price at which they are offering to sell a product constitutes a reduction or saving either with respect to their former usual and customary price for the product in their recent, regular course of business, or with respect to the usual and customary retail price of the product

in the trade area or areas where the statement or representation is made.

(d) When a retailer compares his selling price to a higher price and the higher price is described as being a "manufacturer's list price" or a "manufacturer's suggested retail price" such higher price shall be the current and customary retail price of the product in the trade area or areas where the representation is made. He may, however, compare his selling price with a higher price which has been his usual and customary price for the product in the recent and usual and regular course of his business, and describe such higher price as a “list price" when, in immediate conjunction with such term, there is a clear explanation that such “list price” is his own and not that of the manufacturer, wholesaler or other party.

(e) Members of the industry shall not make or publish any false, misleading, or deceptive representation, through advertising, or otherwise, concerning installment sales contracts to be used in the sale of boats, the terms or conditions of such contracts, the down payment to be required, the rate of interest or the financing cost to be charged, or respecting any other matters relative to such contracts. [Rule 6]

§ 56.7 Guarantees, warranties, etc.

(a) Advertising of products shall not contain representations that a product is "guaranteed" without clear and conspicuous disclosure of:

(1) The nature and extent of the guarantee, and

(2) Any material conditions or limitations in the guarantee which are imposed by the guarantor, and

(3) The manner in which the guarantor will perform thereunder, and

(4) The identity of the guarantor. (b) Representations that a product is "guaranteed for life" or has a "lifetime guarantee" in addition to meeting the above requirements, shall contain a conjunctive and conspicuous disclosure of the meaning of "life" or "lifetime" as used (whether that of the purchaser, the product or otherwise).

(c) Guarnatees shall not be used which under normal conditions are im

practical of fulfillment or which are for such a period of time or are otherwise of such nature as to have the capacity and tendency of misleading purchasers or prospective purchasers into the belief that the product so guaranteed has a greater degree of serviceability, durability or performance capability in actual use than is true in fact. [Rule 7]

§ 56.8 Exclusive deals.

Members of the industry shall not contract to sell or sell industry products or fix a price charged therefor, or discount from, or rebate upon, such price, on the condition, agreement, or understanding that the purchaser thereof shall not use or deal in the products of a competitor or competitors of such industry member, where the effect of such sale or contract for sale, or of such condition agreement, or understanding, may be substantially to lessen competition or tend to create a monopoly in any line of commerce. [Rule 8]

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

1

Members of the industry, either directly or indirectly, shall not engage in any planned common course of action, or enter into or take part in any understanding, agreement, combination, or conspiracy, with one or more mem

'The inhibitions of this section are subject to Pub. L. 542, approved July 14, 1952– 66 Stat. 632 (the McGuire Act) which provides that with respect to a commodity which bears, or the label or container of which bears, the trademark, 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.