methods, selling prices, values, credit terms, policies, or services, is an unfair trade practice. [Rule 6]

§ 105.7 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 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 71 § 105.8 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 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 competition, is an unfair trade practice.

(b) Nothing in this section is intended to imply that it is improper for any industry member 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, or to sell to, the customers of either of them, or customers of any other industry member. [Rule 8] § 105.9

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 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. [Rule 91

§ 105.10 Prohibited discrimination.

(a) Prohibited discriminatory prices, rebates, discounts, etc. No member of the industry engaged in commerce, in the course of such commerce, shall 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 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 1: 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 rébutting 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."

NOTE 2: Nothing in this section should be construed as prohibiting the granting of different prices which are not otherwise violative of the foregoing provisions of this section, to customers in different functional categories. For example, a seller may grant a lower price to wholesalers than to retailers to the extent that such wholesalers resell to retailers. If such wholesalers also sell at retail in competition with their customers they may not properly be granted a price lower than the prices granted to competing retailers on that portion of the goods they sell at retail.

(b) Prohibited brokerage and commissions. No member of the industry engaged in commerce, in the course of such commerce, shall pay or grant, or 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 in

direct 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. No member of the industry engaged in commerce shall 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 made known to and 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. No member of the industry engaged in commerce shall 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 processing, handling, 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.

§ 105.11 Prohibited forms of trade restraints (unlawful price fixing, etc.).1

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. [Rule 11] § 105.12

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 prohibited by this part. [Rule 12]

1 The prohibitions of this section are subject to Public Law 542, approved July 14, 1952-66 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.

Sec.

108.4

108.5

108.6

Misrepresentation in general. Defamation of competitors. Inducing breach of contract. False price quotations. 108.10 Commercial bribery. Threats of suit.

108.7

108.11
108.12
108.13 False invoicing.

Coercing purchases.

108.14 Sales through "bogus" independent. AUTHORITY: The provisions of this Part 108 issued under secs. 6(g), 5, 38 Stat. 722, 719; 15 U.S.C. 46(g), 45.

SOURCE: The provisions of this Part 108 contained in trade practice rules, Paper Drinking Straw Manufacturing Industry, FTC, July 3, 1936, unless otherwise noted. § 108.1 Sales below cost.

The practice of selling goods below the seller's 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 unreasonably restrain trade, is an unfair trade practice; all elements recognized by good accounting practice as proper elements of such cost shall be included in determining cost under this section.

§ 108.2 False marking or branding.

The false marking or branding of products of the industry, with the tendency, capacity or effect of misleading or deceiving purchasers with respect to the grade, quality, quantity, substance, character, nature, origin, size or preparation, or in any other material respect of the goods purchased, is an unfair trade practice.

§ 108.3 Imitation of trademarks, etc.

The imitation of the trademarks, trade names, brands, labels, or other marks of identification of competitors, having the tendency, capacity, or effect of misleading or deceiving purchasers or prospective purchasers, is an unfair trade practice.

§ 108.4

Misrepresentation in general.

The making, or causing or permitting to be made, of published, of any false, untrue, or deceptive statement or representation, by way of advertisement or otherwise, concerning the grade, quality, quantity, substance, character, nature, origin, size, or preparation, or in any other material respect of any product of the industry sold or offered for sale, having the tendency, capacity, or effect of misleading or deceiving purchasers or prospective purchasers, is an unfair trade practice.

§ 108.5

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, capacity, or effect of misleading or deceiving purchasers or prospective purchasers, or with the tendency, capacity or effect of unduly hampering, injuring or prejudicing such competitors in the conduct of their business, is an unfair trade practice.

§ 108.6 Inducing breach of contract.

Willfully inducing or attempting to induce the breach of existing contract or contracts between competitors and their customers or their suppliers by any false or deceptive means whatsoever, or willfully 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, injuries or prejudicing competitors in their businesses, is an unfair trade practice.

§ 108.7 False price quotations.

The publishing or circulating by any member of the industry of false or misleading price quotations, price lists, terms of sale or discounts, having the tendency, capacity, or effect of misleading or deceiving purchasers or prospective purchasers, is an unfair trade practice. § 108.10 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.

$108.11 Threats of suit.

The circulation of threats of suit for infringement of patent or trademark among customers or prospective cus

§ 108.13 False invoicing.

Withholding from or inserting in the invoice statements which make the invoice a false record, wholly or in part, of the transaction represented on the face thereof, with the purpose or effect of misleading or deceiving purchasers or prospective purchasers, is an unfair trade practice.

§ 108.14 Sales through "bogus" independent.

The practice by a member of the industry of selling or marketing industry products through a pretended independent concern to induce the purchasing public to believe such concern is independent and in competition with the said member of the industry owning or controlling such concern, when such is not the fact, with the tendency or capacity to mislead or deceive purchasers, prospective purchasers or the consuming public, is an unfair trade practice.

It is an unfair trade practice for any industry member, in connection with the offering for sale, sale, or distribution of industry products, to use, or cause or promote the use of, any trade promotional literature, advertising matter, guarantee, warranty, mark, brand, label, trade name, picture, design or device, designation, or other type of oral or written representation, however disseminated or published, or to fail to disclose any material fact, when such representation or failure to disclose has the capacity and tendency or effect of misleading or deceiving purchasers or prospective purchasers with respect to the type, grade, quality, quantity, use, size or size symbol, material, finish, strength, thickness, composition, origin, preparation, manufacture, or distribution of any product of the industry, or in any other material respect.

§ 109.2 Misrepresentation as to character of business.

It is an unfair trade practice for any industry member, in the course of or in connection with the offering for sale, sale

It is an unfair trade practice for any industry member, in the course of or in connection with the offering for sale, sale, or distribution of industry products, to represent, through advertising, personal solicitation, or otherwise, that such products conform to any standard or standards recognized in or applicable to the industry when such is not the fact.

§ 109.4 False and misleading price quotations, etc.

It is an unfair trade practice for any industry member, in the course of or in connection with the offering for sale, sale, or distribution of industry products, to publish or circulate false or misleading price quotations, price lists, or terms or conditions of sale, which have the capacity and tendency or effect of misleading or deceiving purchasers or prospective purchasers, or the consuming public, in any material respect.

§ 109.5 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.

§ 109.6 Substitution of products.

"It is an unfair trade practice for any Industry member, in the course of or in connection with the sale or distribution of industry products, to make an unauthorized substitution of products, where such substitution has the capacity and tendency or effect of misleading or deceiving purchasers or the consuming public, 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