substitutions, and with the effect of deceiving or misleading purchasers and the tendency to injuriously affect the business of competitors, is an unfair trade practice. § 64.6

Substitution in installation.

The practice of using materials or methods of installation not in accordance with the applicable governmental laws, rules, and regulations obtaining in the territory affected, with the tendency to injuriously affect the business of competitors, is an unfair trade practice.

§ 64.8 Aiding or abetting use of unfair trade practices.

For any person, firm, or corporation knowingly to aid or abet another in the use of unfair trade practices is an unfair trade practice.

The inducing or attempting to induce an architect, owner, or builder to reveal to any bidder on a competitive job information relative to bids already received, which information would give the favored bidder an advantage in the preparation of his own bid, is condemned by the industry.

§ 64.103 Solicitation of information with a view to price cutting.

To induce or attempt to induce an architect, owner, or builder to reveal to a bidder the amounts and conditions of any bid received on a competitive job, with a view of giving the favored concern an opportunity to meet or cut below the lowest bid, whether the favored concern was one of the original bidders or not, is condemned by the industry.

§ 64.104 Deception in bidding.

To mislead or deceive any bidder as to the amounts and conditions of other bids or with any other false information for the purpose of inducing him to cut his own is condemned by the industry.

Surreptitiously obtaining information relative to competitors' bids in the preparation of one's own bid is condemned by the industry.

§ 64.106 Fictitious bids.

The industry approves of the "one-bid" policy and condemns fake or fictitious bids made for the purpose of deceiving competitors and securing undue advantage. If plans and specifications are changed and new bids called for after the original bids have been submitted and opened, the same fairness should obtain as with the original bid.

§ 64.107 Bid "shopping" condemned.

It is a frequent practice for electrical contractors to submit bids to general contractors who in turn use the lowest acceptable price from the several trades in making up their bids on a general contract. Many general contractors after securing the general contract then reopen the bidding for the same operation, commonly known as "shopping", which practice involves deception and misrepresentation, lowering the standard and quality of electrical installation and building construction. Such practice

is condemned by the industry.

§ 64.108 Standards of calls for bids.

The industry favors the adoption of the following rules for calling for bids:

(a) In all cases where competitive bids are requested, no one should be invited to bid to whom the contract would not be willingly awarded in the case his bid is the most acceptable in itself.

(b) Where accurate estimates are desired for information only, a reasonable fee or fees should be paid to the parties preparing them.

(c) Plans and specifications should be sufficiently complete to enable competent bidders to estimate accurately the amount of material and labor required.

(d) Invited bidders, provided they actually submit bids, should not be required to pay for the use of plans and specifications.

(e) A reasonable time should be allowed for preparation of estimates. § 64.109 Identical information to all bidders.

Where a bidder requests an interpretation of some feature of the specifications

from the buyer or his representative before submitting his bid, which would materially affect the cost of the work the same information should be submitted to all other bidders by the buyer or his representative.

§ 64.110 Publication of price lists and terms of sale.

(a) The industry approves the practice of each individual member of the industry and independently publishing and circulating to the purchasing trade its own price lists.

(b) The industry approves the practice of making the terms of sale a part of all published price schedules.

The industry hereby records its approval of the definition of a qualified wholesale distributor to be one whose principal business is selling to the retail distributor.

§ 64.112 Cost accounting.

It is the judgment of this industry that an accurate knowledge of cost is indispensable to intelligent and fair competition, and the adoption of accurate methods of cost finding and estimating is recommended by the industry.

§ 64.113 Arbitration.

The industry approves the practice of handling disputes in a fair and reasonable manner, coupled with a spirit of moderation and good will, and every effort should be made by the disputants themselves to arrive at an agreement. If unable to do so they should agree, if possible, upon arbitration under some one of the prevailing codes.

COMMITTEE ON TRADE PRACTICES

§ 64.201 Industry committee.

The provisions of § 16.1 of this subchapter shall be applicable to an industry committee established under this part. [21 F.R. 1174, Feb. 21, 1956]

(a) Member of the industry: Any persons, firms, corporations, or organizations, including manufacturers, wholesalers, jobbers, distributors, importers and retailers, engaged in the sale, offering for sale, or distribution, in commerce, of industry products as defined in this part.

(b) Industry products: Products of the industry are any kosher food products or nonfood products which are represented in any manner as having been prepared in accordance with orthodox Hebrew religious requirements. Such representations include the use of the word "kosher" in any language, and the use of the six-pointed star or other symbol or representation of similar implication.

(c) Not included as products of the industry are meat and meat products and poultry and poultry products. § 65.1 Prohibited discrimination.

(a) Prohibited discriminatory prices, rebates, discounts, etc. 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 1: Cost justification to be based on net savings in cost of manufacturer, sale, or delivery. 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.

NOTE 2: Credit or refund for returned goods. In determining whether a price differential based on cost savings under the above proviso is warranted there shall be taken into account any portion of the goods involved which are returned by the customerpurchaser to the seller for credit or refund. See also Note 2 under paragraph (e) of this section.

(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, actual or imminent deterioration of perishable 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 affirmstively 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."

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

(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 purchasers during such period and fails to grant the discount to other customers under like conditions.

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. An industry member makes a sale of industry products to a purchaser under an arrangement whereby the products are shipped by the industry member's supplier directly to such purchaser and charges a lower price than that charged other purchasers under similar circumstances, or a price which, when compared with the price charged purchasers on sales made out of the stock of the industry member, constitutes a discount greater than can be justified by the difference in costs resulting from the differing quantities or method of sale or delivery.

Example No. 4. An industry member sells to some customers industry products at prices of drop shipments when in fact such transactions are out-of-stock sales which are made to other customers at higher prices, even though the quantities involved are large enough to be delivered on a direct shipment basis. (As here used an "out-of-stock" sale is one from the industry member's stock on hand and a "drop shipment" sale is one in which the industry member arranges to have the goods shipped by the industry member's supplier directly to the industry member's customer.)

Example No. 5. Terms of 2/10th prox. 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.

(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 any 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 made known to and 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 ostensibly 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 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: Subsection (b) of section 2 of the Clayton Act, as amended, which is set forth in the note concluding paragraph (a) of this section is applicable to paragraph (e) of this section.

NOTE 2: Among the practices prohibited by paragraph (e) of this section is that of an industry member according to one or more customers the privilege of returning for credit or 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 paragraph (a) (2) of this section.

(f) Inducing or receiving an illegal discrimination in price, advertising, or promotional allowances, or services or facilities. 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, advertising or promotional allowances, or services or facilities, prohibited by the foregoing provisions of this section.

NOTE: Paragraph (f) of this section is a restatement of section 2(f) of the Clayton Act as amended. In a complaint proceeding under this section, in order to make out a prima facie violation, the Commission must show that the favored buyer induced or received the lower price knowing, or knowing facts from which he should have known, that such price was violative of section 2(a) of said Act and not justified under paragraph (a) (2), (4), or (5) of this section. When, in any such proceeding, 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.

[Rule 1]

§ 65.2 Exclusive dealing.

(a) It is an unfair trade practice for any member of the industry engaged in commerce, in the course of such commerce, to lease or make a sale or contract for sale of any industry product, for use, consumption, or resale within any place under the jurisdiction of the United States, or fix a price charged therefor, or discount from, or rebate upon, such price, on the condition, agreement, or understanding that the lessee or purchaser thereof shall not use or deal in the goods of a competitor or competitors of the lessor or seller, where the effect of such lease, 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. [Rule 2] § 65.3 Push money.

It is an unfair trade practice for an 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