of this section. When, in any such proceedings, the issue is limited to the question of whether the price differential involved made only due allowance for differences in cost of manufacture, sale, or delivery resulting from the differing methods or quantities in which the goods were sold and delivered, the Commission may establish a prima facie case in a number of ways, including:

(1) By showing that the buyer paying the lower price knew that the methods by, and quantities in, which the goods were sold and delivered to him by the seller were the same as in the case of the competing buyer or buyers paying the higher price or prices; or (2) By showing, when there is a difference in the methods or quantities in which the goods were sold and delivered by the seller to the buyer than in the case of the competing buyer or buyers paying the higher price or prices, that the buyer paying the lower price or prices knew the nature and extent of such differences and knew or should have known that they could not have resulted in sufficient cost savings of the kind and character specified as to justify the price differential.

(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.

§ 117.23 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 of this part.

Sec.

118.10 Substitution of products. 118.11 Commercial bribery.

118.12 Procurement of competitors' confidential information by unfair means and wrongful use thereof.

118.13 Unfair threats of infringement suits.

118.14 Inducing breach of contract. 118.15 Prohibited forms of trade restraints (unlawful price fixing, etc.).

118.16 Prohibited discrimination. 118.17 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: 27 FR 6213, June 30, 1962, unless otherwise noted.

§ 118.0 Definitions.

As used in these rules the terms "Industry Member" and "Industry Products" shall have the following meaning:

(a) Industry member: Any person, firm, corporation or organization (including manufacturers, wholesalers, jobbers, importers, retailers, etc.) engaged in the manufacture, sale, offering for sale, or distribution of industry products as defined below.

(b) Industry products. All kinds and types of mirrors both utilitarian and decorative.

(c) For the purposes of these rules the following definitions shall apply:

Plate glass: A transparent glass, the two surfaces of which are flat and parallel so that they give clear and undistorted vision and reflection, manufactured either by floating hot glass in ribbon form upon a heated liquid of greater density than that of glass or by grinding and polishing a ribbon of glass formed between two rolls.

Window glass: A transparent glass which has been drawn or rolled, has glossy, fire polished surfaces and a characteristic waviness of its surfaces which is visible when viewed at an acute angle or in reflected light. Window glass is sometimes referred to in the industry as sheet or shock glass.

[27 FR 6213, June 30, 1962, as amended at 37 FR 18448, Sept. 12, 1972]

§ 118.1 Deception (general).

It is an unfair trade practice for any industry member in connection with the sale, offering for sale, or distribution of industry products to use any

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advertisement1

or representation which is false, or which by failure to disclose material facts has the capacity, tendency or effect of misleading purchasers or prospective purchasers with respect to the type, grade, qual ity, quantity, use, size, design, material, finish, strength, backing, silvering, thickness, composition, origin, preparation, manufacture, value, or distribution of any product of the industry, or in any other material respect. [Rule 11]

§ 118.2 Misrepresentation of kind or type of industry products.

It is an unfair trade practice for any member of the industry to sell, offer for sale, or distribute any industry product under any representation or circumstance having the capacity and tendency or effect of misleading or deceiving purchasers or prospective purchasers in any respect with regard to the kind or type of glass contained in any industry product, or the kind or type of backing affixed thereto.

(a) Misrepresentation as to kind or type of glass. (1)(i) It is an unfair trade practice to sell, offer for sale, or distribute any industry product containing "window glass" unless such product is marked, labeled, or stamped so as to reveal that the glass is "window glass."

(ii) The disclosure required by this section must be made on the product and be of such conspicuousness and legibility as to readily come to the attention of the casual observer, and of such permanence, and so affixed, as to remain on the product until consummation of consumer sale thereof. Such disclosure is not required upon industry products 72 square inches or less in size.

(2) In the sale, offering for sale, or distribution of industry products, it is an unfair trade practice to represent that a product contains "crystal" or

"The word "advertisement" as here used includes any written or verbal statement, notice, presentation, illustration, or depiction which directly or indirectly promotes the sale of any industry product, or creates an interest in the purchase of any such product, whether same appears in a newspaper, magazine, catalog, letter, sales promotional literature, radio or television broadcast, or in any other media.

"crystale" glass, when, contrary to the representation, such product contains a different glass, e.g., "plate glass" or "window glass."

(3) In the sale, offering for sale, or distribution of industry products it is an unfair trade practice to represent window glass as "distortion free," or to represent any other kind of glass as "distortion free," when such is not the fact.

(4) In the sale, offering for sale, or distribution of industry products it is an unfair trade practice to describe the glass contained in an industry product as "shatter proof” unless the glass is so constituted or treated so as in fact to prevent, in the event of breakage, the shattering and dispersal of particles of the glass.

(b) Misrepresentation as to backing. (1) In the sale, offering for sale, or distribution of industry products it is an unfair trade practice to represent that an industry product is "copper backed", or is backed with "metallic copper" or has a "copper electroplated" back, or to similarly use any other word, term or legend of like import as descriptive of the backing of an industry product, unless the electroplating of the copper backing is accomplished by an electrolytic process.

NOTE: For the purposes of this part it is established that both the "galvanic," or "contact" method, of electroplating (i.e., the plating method using a self induced electric current), and the method using an external source of current, are truly electroplating processes. Both processes are equally well defined by the definition of Electroplating established by the American Society for Testing Materials, as follows:

"Electroplating: The electro-deposition of an adherent metallic coating upon an electrode for the purpose of securing a surface with properties or dimensions different from those of the basic metal."

No useful purpose can be served by attempting to establish a differentiation between the mirror backing produced by these two methods.

(2) Nothing in this section shall be construed as prohibiting the use of representations that any backing on products of the industry contains copper, which has been applied mechanically or by means other than the use of electric current when such is the fact, provided that a clear and conspicuous disclosure is made in conjunc

tion with such representations as to the manner of application of the back- ing, as for example, "window glass mirror, painted back.'

(3) The disclosure of the kind or type of glass and the kind and type of backing thereof required under this section may be in the form of a stamp, tag, mark or label on or attached to the product and shall be of such size type and so situated that it will come to the attention of the casual observer and be so affixed as to remain on the product until consumption of consumer sale.

(4) The following are examples of the marks, stamps or labels which will be regarded as meeting the requirements of this section: An industry product containing "plate glass," copper backed by an electrolytic process may be marked or described “plate glass-copper electroplated," or "float glass-copper backed"; an industry product containing window glass backed by an electrolytic process may be marked or described "window glasscopper plated back" or "sheet glasscopper plated back," or an article containing plate glass backed with a copper plating which has been applied mechanically or by means other than the use of electric current may be marked or described as "plate glasspainted back." [Rule 2]

[27 FR 6213, June 30, 1962, as amended at 37 FR 18448, Sept. 12, 1972]

§ 118.3 Disclosure of foreign origin.

(a) It is an unfair trade practice to misrepresent the country of manufacture of industry products or their components.

(b) It is also an unfair trade practice to offer for sale, sell, or distribute any industry product manufactured in a foreign country, or any industry product containing a substantial or material part manufactured in a foreign country, without clear and adequate disclosure of such fact, when the failure to make such disclosure has the capacity and tendency or effect of misleading or deceiving purchasers or prospective purchasers.

(c) Disclosure of foreign origin as and when required under paragraphs (a) and (b) of this section, may be in the form of a stamping or marking on the product itself, or on a label or tag

securely attached to the product. Such disclosure shall clearly identify the foreign country in which the product, or part thereof, was manufactured and shall be of such conspicuousness as to be noticeable and readable on casual inspection and of such permanence as to remain on the product until consummation of consumer sale.

NOTE 1: Paragraph (b) of this section is not to be construed as requiring disclosure as to foreign manufacture or processing when, by reason of further manufacturing or processing operations in this country, or merger with another part or other parts, the imported product or part does not retain the appearance and essential characteristics which it possessed at the time of its importation.

NOTE 2: Nothing in this section shall be construed as relieving any member of the industry (or other party) of the necessity of complying with the requirements of the customs laws or regulations, or other applicable provisions of law or regulation, relating to marking of imported articles. [Rule 3]

§ 118.4 Disclosure of fact that products are "rejects," "seconds," etc.

An industry product not equaling the manufacturer's standard for his first quality products shall not be represented as being of first quality and shall be marked or labeled as being a "second" or "reject," or by some other term which adequately makes known the fact that it is not first quality. Such disclosure shall be in the form of a legible stamping or marking on the product itself, or on a label or tag securely attached to the product, and be sufficiently conspicuous as to be likely noticed and read on casual inspection of the product, and be so placed on or affixed to the product as to remain thereon until consummation of consumer sale. Disclosure that such products are "seconds" or "rejects," shall also be made in advertisements, price lists, other sales promotional literature, and radio and television advertisements relating to such products. [Rule 4]

§ 118.5 Misrepresenting products as conforming to standard.

In the same, offering for sale, or distribution of industry products, it is an unfair trade practice to represent,

through advertising or otherwise, that such products conform to any standards recognized in or applicable to the industry when such is not the fact. [Rule 5]

§ 118.6 Deceptive pricing.

It is an unfair trade practice for any member of the industry to represent directly or indirectly in advertising or otherwise that an industry product may be purchased for a specified price, or at a saving, or at a reduced price, when such is not the fact; or otherwise deceive purchasers or prospective purchasers with respect to the price of any product offered for sale; or furnish any means or instrumentality by which others engaged in the sale of industry products may make any such representation.

NOTE: On December 20, 1963 the Commission adopted Guides Against Deceptive Pricing which became effective on January 8, 1964 and which supersede the Guides on this subject as adopted October 2, 1958. Copies of the Guides will be furnished upon request.

[Rule 6]

[29 FR 7670, June 16, 1964]

§ 118.7 Deceptive use or imitation or simulation of trade or corporate names, trade-marks, etc.

It is an unfair trade practice for any member of the industry:

(a) To imitate or simulate the trademarks, trade names, brands, or labels of competitors, with the capacity and tendency or effect of misleading or deceiving purchasers or prospective purchasers; or

(b) To represent by use of any trade name, trade-marks, or other trade designation, that any industry member is a manufacturer, wholesaler or importer when such is not the fact; or

(c) To use any trade name, corporate name, trade-mark, or other trade designation, which has the capacity and tendency or effect of misleading or deceiving purchasers or prospective purchasers as to the name, nature, or origin of any product of the industry, or of any material used therein, or which is false, deceptive, or misleading in any other material respect. [Rule 7]

§ 118.8 False invoicing.

Withholding from or inserting in invoices or sales slips any statements or information by reason of which omission or insertion a false record is made, wholly or in part, of the transactions represented on the face of suich invoices or sales slips, with the capacity and tendency or effect of thereby misleading or deceiving purchasers, prospective purchasers, or the consuming public in any material respect, is an unfair trade practice. [Rule 8]

§ 118.9 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) Guarantees shall not be used which under normal conditions are impractical 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 in true in fact. [Rule 9]

§ 118.10 Substitution of products.

It is an unfair trade practice for a member of the industry to make unauthorized substitutions of products, where such substitutions have 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 substitutions. [Rule 10] § 118.11 Commercial bribery.

It is an unfair trade practice for a member of the industry, directly or indirectly, to give, or offer to give, or permit or cause to be given, money or anything of value to agents, employees, or representatives of customers or prospective customers, or to agents, employees, or representatives of competitors' customers or prospective customers, without the knowledge of their employers or principals, as an inducement to influence their employers or principals to purchase or contract to purchase products imported, manufactured, or sold by such industry member or the maker of such gift or offer, or to influence such employers or principals to refrain from dealing in the products of competitors or from dealing or contracting to deal with competitors. [Rule 11]

§ 118.12 Procurement of competitors' confidential information by unfair means and wrongful use thereof.

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 the impersonation of one in authority, or by any other unfair means, and to use the information so obtained so as substantially to injure a competitor or unreasonably restrain trade. [Rule 12]

§ 118.13 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 and with the effect of harassing or intimidating such customers or prospective customers, or of unduly hampering, injuring, or prejudicing competitors in their business, is an unfair trade practice. [Rule 131

§ 118.14 Inducing breach of contract.

(a) Knowingly inducing or attempting to induce the breach of existing lawful contracts between competitors and their customers, or between competitors and their suppliers, or inter

fering 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 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. [Rule 14]

§ 118.15 Prohibited forms of trade restraints (unlawful price fixing, etc.). 4

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

"The prohibitions of this section are subject to Pub. L. 542, approved July 14, 195266 Stat. 632 (the McGuire Act, commonly referred to as the Fair Trade Amendment) 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.