The Code of Federal Regulations of the United States of America

(a) To falsely represent or imply that any of such products conform to the requirements of any standard or specification, whether established or recognized by a department or unit of a city or state government, or of the Federal Government, by trade practice, or otherwise.

(b) To represent or imply that any of such products conform to the requirements of any standard or specification without clearly disclosing the identity of the standard or specification to which reference is made. Such disclosure shall be by reference to the standard or specification on all labels, invoices, sales literature, and other advertising containing such representation or implication.

(c) For any member of the industry to claim or imply that any product conforms to any standard or specification which is inapplicable or which has been rescinded, revised, superseded, or amended, and thereby mislead or deceive purchasers or prospective purchasers. § 27.5 Deception as to composition.

(a) It is an unfair trade practice to sell, offer for sale, or distribute any product of this industry under any designation or representation which has the capacity and tendency or effect of deceiving purchasers or prospective purchasers as to the composition of said product.

(b) Under this section no products of the industry shall be designated as "brick," "tile," or "structural tile," unless:

(1) The composition thereof is primarily of clay or shale or mixtures thereof; and

(2) The ingredients thereof have been fused together as a result of the application of heat:

Provided, however, That such designations may be used for products not meeting the requirements in this section when so qualified as to denote the basic composition thereof (as, for example, “concrete brick," "coral brick," "plaster brick," "sand-lime brick," "concrete structural tile," etc.), or when, in immediate conjunction with the designations, disclosure is made of the fact that the products are not ceramic products. (See also note to § 27.8.)

does not make reasonable disclosure of the terms, conditions, and limitations of such guarantee, or which contains statements, representations, or assertions which have the capacity and tendency or effect of misleading or deceiving in any material respect, or which are of such form, text, or character as to represent or imply that the guarantee is broader than is in fact true.

(b) It is an unfair trade practice for the guarantor to fail to observe scrupulously his obligation under the guarantee by him used or caused to be used.

(d) It is also an unfair trade practice to represent any industry product as being "guaranteed" unless the nature and extent of the undertaking, and the identity of the guarantor, are conjunctively disclosed.

§ 27.7 Substitution of products.

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

(a) Shipping or delivering industry products which do not conform to samples submitted, to specifications 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.

§ 27.8 Deceptive use of trade or corporate names, trade-marks, etc.

The use of any trade name, corporate name, trade-mark, or other trade designation, which has the capacity and tendency or effect of misleading or deceiving the purchasing or consuming public as to the name, nature, or origin of any product of the industry, or of any material used therein, or which is false or misleading in any other material respect, is an unfair trade practice.

NOTE: Nothing in this section is to be construed as prohibiting:

(a) The use of the word "brick” as a part of the name of a corporation or business concern which manufactures or distributes brick of any type or composition, or

(b) The use of the word "tile” or the words "structural tile" as a part of the name of a corporation or business concern which manufactures or distributes structural tile of any type or composition;

Provided, however, That descriptions or references to any non-ceramic industry products contained in advertising, sales promotional literature or invoices of said corporations or concerns are in accord with the requirements of § 27.5.

§ 27.9 Imitation or simulation of trademarks, trade names, etc.

The imitation or simulation of the trade-marks, trade names, brands, or labels of competitors, or of the exclusively owned designs of competitors which have not been directly or by operation of law dedicated to the public, with the capacity and tendency or effect of misleading or deceiving purchasers or prospective purchasers, is an unfair trade practice.

§ 27.10 False invoicing.

Withholding from or inserting in invoices or sales tickets 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 such invoices or sales tickets, with the capacity and tendency or effect of thereby misleading or deceiving purchases, prospective purchasers, or the purchasing public, is an unfair trade practice.

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 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. § 27.15 Procurement of 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 substan

tially to injure competition or unreasonably restrain trade.

§ 27.16

Tie-in sales; coercing purchase of one product as a prerequisite to the purchase of other products. The practice of coercing the purchase of one or more products of the industry as a prerequisite to the purchase of one or more other products, where the effect may be substantially to lessen competition or tend to create a monopoly or unreasonably to restrain trade, is an unfair trade practice.

§ 27.17 Arrangements to exclude sales of competitors' products.

It is an unfair trade practice for any member of the industry to sell or contract for the sale of any industry products for use or resale, or to 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 new or used products of a competitor or competitors of such industry member, where the effect of such sale or contract for sale, or such condition, agreement, or understanding, may be to substantially lessen competition or tend to create a monopoly in any line of commerce.

§ 27.18 Prohibited forms of trade restraints (unlawful price fixing, etc.).3

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.

§ 27.19 Unlawful interference with competitors' purchases or sales. It is an unfair trade practice for any industry member, by means of any mo

3 The inhibitions of this section are subject to Public Law 542, approved July 14, 1952, 66 Stat. 632 (the McGuire Act).

nopolistic practice or through combination, conspiracy, coercion, boycott, threats, or any other unlawful means, directly or indirectly, to interfere with a competitor's right to purchase his raw materials and supplies from whomsoever he chooses, or to sell his product to whomsoever he chooses.

§ 27.20 Consignment distribution.

(a) It is an unfair trade practice for any member of the industry to employ the practice of shipping industry products on consignment without the express request or prior consent of the purchasers.

(b) It is an unfair trade practice for any member of the industry to employ the practice of shipping industry products on consignment or pretended consignment for the purpose and with the effect of artificially clogging or closing trade outlets and unduly restricting competitors' use of said trade outlets in getting their products to purchasers through regular channels of distribution, thereby injuring, destroying, or preventing competition or tending to create a monopoly or unreasonably to restrain trade.

(c) Nothing in this section shall be construed to authorize any understanding or agreement, combination or conspiracy, or planned common course of action. by and between industry members, mutually to conform or restrict their practice of shipping goods on consignment with the intent or effect of lessening competition.

§ 28.1 Deception (general).

It is an unfair trade practice to sell, offer for sale, or distribute any industry product, or promote the sale or distribution thereof, under any representation or by any method or under any circumstance or condition which has the capacity and tendency or effect of misleading or deceiving purchasers or prospective purchasers:

(a) With respect to the construction composition, design, strength, or durability of any industry product; or

(b) With respect to a process or technique used in the preparation, fabrication, or coating of any industry product;

(d) Which is false, misleading, or deceptive in any other material respect.

NOTE: Illustrative of the type of misrepresentation inhibited by this section is the practice of an industry member advertising or otherwise claiming that a paper contains a certain percentage of rag, or is of a certain basis weight, when such is not the fact. § 28.2 False and misleading price quotations, etc.

The publishing or circulating to purchasers or prospective purchasers by any member of the industry of false or misleading price quotations, price lists, or terms or conditions of sale, with the capacity and tendency or effect of thereby misleading or deceiving purchasers or prospective purchasers, is an unfair trade practice.

§ 28.3 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.

§ 28.4 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 the purchasing or consuming public, by:

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

§ 28.5 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 to and pursued with the wrongful intent or purpose 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.

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 on net 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 Robinson-Patman Act. § 28.6

Commercial bribery.

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

It is an unfair trade practice:

(a) To defame competitors by falsely imputing to them dishonorable conduct, inability to perform contracts, questionable credit standing, or by other false representations; or

(b) To falsely disparage a competitor's products, business methods, selling prices, values, credit terms, policies, or services.

Knowingly enticing away employees or sales representatives of competitors under any circumstance having the capacity and tendency or effect of substantially injuring or lessening present or potential competition is an unfair trade practice: Provided, That nothing in this section shall be construed as prohibiting employees from seeking more favorable employment, or as prohibiting employers from hiring or offering employment to employees of competitors in good faith and not for the purpose of injuring, destroying, or preventing competition. § 28.10 Prohibited forms of trade re

straints (unlawful price fixing, etc.).1 It is an unfair trade practice for any member of the industry, either directly

'The inhibitions of this section are subject to Public Law 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 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.

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