effect unlawful price discrimination. It is an unfair trade practice 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 monopoly 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, and are not purchased by schools, colleges, universities, public libraries, churches, hospitals, and charitable institutions not operated for profit, as supplies for their own use;

(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: Cost justification under the above proviso depends upon net savings in cost based on all facts relevant to the transactions under the terms of subparagraph (2) of this paragraph. For example, if a seller regularly grants a discount based upon the purchase of a specified quantity by a single order for a single delivery, and this discount is justified by cost differences, it does not follow that the same discount can be cost Justified if granted to a purchaser of the same quantity by multiple orders or for multiple deliveries.

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

tween 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."

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;

(5) That nothing contained in this section shall prevent the meeting in good faith of an equally low price of a competitor.

NOTE: Subsection (b) of section 2 of the Clayton Act, as amended, reads as follows: "Upon proof being made, at any hearing on a complaint under this section, that there has been discrimination in price or services or facilities furnished, the burden of rebutting the prima facie case thus made by showing justification shall be upon the person charged with a violation of this section, and unless justification shall be affirmatively shown, the Commission is authorized to issue an order terminating the discrimination: Provided, however, That nothing herein contained 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.

(b) Examples of prohibited price differential practices. 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, 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 the customer's purchases during such period and fails to grant a discount of the same percentage to other customers on their purchases during such period.3

Example No. 2. An 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 or not such discrimination is accomplished by misrepresentation as to the grade and quality of the products sold.'

Example No. 3. A certain percentage discount for payment within a specified time is 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 an additional or larger 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 on the fact that the favored customer or customers warehoused the goods they purchased from the member.

Example No. 5. An industry member makes a sale of industry products to an outlet which is one of two or more outlets jointly owned and/or operated at a price less than the member charges for a like sale to another customer; or gives a rebate on the first mentioned sale to the parent organization owning and/or operating the outlet receiving the products so purchased and does not give such a rebate to the other customer.*

Example No. 6. An industry member makes a sale of industry products to a customer which is affiliated with a buying group at a price less than the member charges for a like sale to another customer which is not affiliated with a buying group;

3 This is to be considered as an example of a practice which is violative of paragraph (a) of this section only when the conditions specified in that part of paragraph (b) of this section which precede Example No. 1 are present.

or gives a rebate on the first mentioned sale to the buying group organization but does not give such a rebate to the other customer.'

Example No. 7. An industry member sells to a customer, which operates as both a warehouse distributor and a jobber, industry products which the customer resells in its capacity as a jobber, and the member charges such customer a lower price therefor than he charges other jobbers for like products. (No inference is to be drawn from this example that the requirements of paragraph (a) of this section are not applicable with respect to sales at a lower price to one purchaser than to another purchaser because such purchasers are in different distributive levels, e.g., warehouse distributors, jobber, retailer, etc.)

Example No. 8, An industry member invoices industry products to all his customers at the same price but supplies additional quantities of such products at no extra charge to one or more, but not all, such customers; or supplies other goods or premiums to one or more, but not all, such customers for which he makes no extra charge and which effects an actual price difference in favor of certain of his customers.'

Example No. 9. An industry member sells industry products to one or more of his customers at a lower price than he charges other customers therefor, basing his justification for the price differences solely on the fact that the favored customer or customers redistribute such products to branches or outlets which such customers own or operate.

Example No. 10. An industry member sells Industry products 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 products sold at the lower price bear the private brand name of customers." "Example No. 11. An industry member uses a graduated percentage rate of discounts or rebates to customers based upon their purchases during a given period. By reason of differing volumes of purchases customers competing in the resale of his products receive unequal rates of discount.

(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.

(e) Prohibited discriminatory services or 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 including, but not limited to, displays. exhibits, and promotional material 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: See subsection (b) of section 2 of the Clayton Act, as amended, which is set forth in the note concluding paragraph (a) 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 section.

§ 48.14 Push money.

It is an unfair trade practice for any industry member to pay or contract to pay anything of value to a salesperson employed by a customer of the industry member, as compensation for, or as an inducement to obtain, special or greater

effort or service on the part of the salesperson in promoting the resale of products supplied by the industry member to the customer:

(a) When the agreement or understanding under which the payment or payments are made or are to be made is without the knowledge and consent of the salesperson's employer; or

(b) When the terms and conditions of the agreement or understanding are such that any benefit to the salesperson or customer is dependent on lottery or chance; or

(c) When any provision of the agreement or understanding requires or contemplates practices or a course of conduct unduly and intentionally hampering sales of products of competitors of an industry member; or

(d) When, because of the terms and conditions of the agreement or understanding, including its duration, or the attendant circumstances, the effect may be substantially to lessen competition or tend to create a monopoly; or

(e) When similar payments are not accorded to salespersons of competing customers on proportionally equal terms in compliance with section 2 (d) and (e) of the Clayton Act.

NOTE: Payments made by an industry member to a salesperson of a customer under any agreement or understanding that all or any part of such payments is to be transferred by the salesperson to the customer, or is to result in a corresponding decrease in the salesperson's salary, are not to be considered within the purview of this section, but are to be considered as subject to the requirements and provisions of section 2(a) of the Clayton Act.

§ 48.15

Deceptive representations as to earnings, etc.

It is an unfair trade practice to make false, misleading, or deceptive statements or representations regarding opportunities for making money, or of actual or probable earnings, by agents, jobbers, dealers, and others, handling products of this industry.

§ 48.16 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.

§ 48.17 Enticing away employees of competitors.

It is an unfair trade practice for any member of the industry wilfully to entice away employees or sales-contact personnel 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 such persons from seeking more favorable employment, or as prohibiting employers from hiring or offering employment to employees of a competitor in good faith and not for the purpose of inflicting injury on such competitor.

The selling of goods below cost with the intent and with the effect of injuring a competitor and where the effect may be to substantially lessen competition or tend to create a monopoly or to unreasonably restrain trade is an unfair trade practice.

§ 49.2 Commercial bribery.

Directly or indirectly to give or permit to be given or offer to give 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 industry products from the maker of such gift or offer, or to influence such employers or principals to refrain from dealing or contracting to deal with competitors, is an unfair trade practice.

§ 49.3 Enticing employees.

Maliciously enticing away the employees of competitors with the purpose and effect of unduly hampering, injuring, or embarrassing competitors in their business is an unfair trade practice. § 49.4 Defamation of competitors.

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 the grade or quality of their goods with the tendency and capacity to mislead or deceive purchasers or prospective purchasers is an unfair trade practice.

Securing information from competitors concerning their businesses by false or misleading statements or representations or by false impersonations of one in authority and the wrongful use thereof to unduly hinder or stifle the competition of such competitor, is an unfair trade practice.

§ 49.8 Deceptive selling methods.

The sale or offering for sale of any product of the industry by any false means or device which has the tendency and capacity to mislead or deceive customers or prospective customers as to the quantity, quality, substance, or size of such product, is an unfair trade practice. § 49.10 Inducing breach of contract.

Maliciously inducing or attempting to induce the breach of existing contracts between competitors and their customers by any false or deceptive means whatsoever, or interfering with or obstructing the performance of any such contractual duties or services by any such means, with the purpose and effect of unduly hampering, injuring, or embarrassing competitors in their businesses, is an unfair trade practice.

§ 49.11 Misrepresenting character of business.

To represent in advertisements or otherwise that a concern is a manufacturer and owner or operator of a mill or producing company making an article of commerce, when in fact such concern does not own, operate, or possess such a mill or producing company manufacturing such article, with the effect of misleading or deceiving purchasers, is an unfair trade practice.

50.19

Prohibited discrimination.

50.20 Aiding or abetting use of unfair trade practices.

AUTHORITY: The provisions of this Part 50 issued under secs. 6, 5, 38 Stat. 721, 719; 15 U.S.C. 46, 45.

SOURCE: The provisions of this Part 50 appear at 23 F.R. 5630, July 25, 1958, unless otherwise noted.

§ 50.0 The industry and its products.

(a) Products of the industry as covered by the rules in this part consist of cut tacks and wire tacks. (Thumb tacks are not included.)

(b) Members of the industry are persons, firms, corporations, and organiza