tomers or prospective customers of competitors, when not made in good faith but for the purpose or with the effect of thereby 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 10] § 35.11 Tie-in sales.

The practice of coercing the purchase of one or more wall coverings as a prerequisite to the purchase of one or more other wall coverings, 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 111

§ 35.12 Deception (general).

(a) It is an unfair trade practice for members of the industry to offer for sale or sell wall coverings under any representations, description, circumstance or condition which has the capacity and tendency or effect of misleading or deceiving purchasers or prospective purchasers thereof, as to the type, kind, grade, quality, quantity, weight, color, substance, durability, serviceability, terms of sale, value, production, manufacture, or distribution of such wall coverings or which has the capacity and tendency or effect of misleading or deceiving the purchasing or consuming public in any other material respect.

(b) The prohibitions of this section are applicable to all forms of advertising, whether written or oral, in periodicals, on the radio or television, and to any form of marking or labeling of industry products or the packages or containers in which they may be shipped, offered for sale or sold. [Rule 12] § 35.13 Misuse of terms "jobs," "closeouts, " "discontinued lines," "special bargains," etc.

It is an unfair trade practice to offer for sale, sell, advertise, describe, or otherwise represent, wall coverings as "Jobs,' "Close-Outs," "Discontinued Lines," or "Special Bargains," by use of such terms, or by words or representations of similar import, when such is not true in fact; or to so offer for sale, sell, advertise, describe, or otherwise represent, industry products where the capacity and tendency or effect thereof is to lead the purchaser or consuming public to believe such products are being offered for sale or sold at greatly reduced

prices, or at so-called "bargain" prices, when such is not the fact. [Rule 13]

§ 35.14

Use of the word "free."

In connection with the sale, offering for sale, or distribution of wall coverings, it is an unfair trade practice to use the word "free" or any other word or words of similar import, in advertisements or in other offers to the public, as descriptive of an article of merchandise, or service, which is not an unconditional gift, under the following circumstances:

(a) When all the conditions, obligations, or other prerequisites to the receipt and retention of the "free" article of merchandise of service offered are not clearly and conspicuously set forth at the outset so at to leave no reasonable probability that the terms of the offer will be misunderstood; and, regardless of such disclosure;

(b) When with respect to any article of merchandise required to be purchased in order to obtain the "free" article or service, the offerer (1) increases the ordinary and usual price of such article of merchandise, or (2) reduces its quality, or (3) reduces the quantity thereof.

NOTE: The disclosure required by paragraph (a) of this section shall appear in close conjuction with the word "free" (or other word or words of similar import) wherever such word first appears in each advertisement or offer. A disclosure in the form of a footnote, to which reference is made by use of an asterisk or other symbol placed next to the word "free," will not be regarded as compliance.

[Rule 14]

§ 35.15 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 savings, 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 furnished 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 15]

[29 F.R. 7669, June 16, 1964]

§ 35.16 Disclosure of foreign origin. (a) It is in an unfair trade practice: (1) To misrepresent the country of manufacture of industry products or their components; or

(2) To fail to make adequate disclosure that an industry product is of foreign origin or manufacture when the failure to make such disclosure has the capacity and tendency or effect of deceiving purchasers or prospective purchasers.

(b) The disclosure required by subparagraph (2) of this paragraph will be deemed adequate when naming the foreign country in the form of a legible marking or stamping on the product, or on a label or tag attached thereto, which is of such degree of permanency as to remain on or attached to the product until consummation of consumer sale thereof, and is of such conspicuousness as to be likely observed by purchasers and prospective purchasers making casual inspection of the product. [Rule 161 § 35.17 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

1 The prohibitions of this section are subject to Public Law 542, approved July 14, 1962-66 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.

86-033-68-15

into or take part in any understanding, agreement, combination, or conspiracy, with one or more members of the industry, or with and other person or persons, to fix or maintain the price of any goods or otherwise unlawfully to restrain trade; except as permitted under the McGuire Act, 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 17]

§ 35.18

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 different methods or quantities in which such commodities are to such purchasers sold or delivered;

2 See note 2 at end of paragraph (e) of this section.

NOTE No. 1: Cost justification to be based on net savings in cost of manufacture, 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 No. 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 No. 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, 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 No. 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 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 NO. 2: In complaint proceedings, justification of price differentials under subparagraphs (2), (4), and (5) of this paragraph is a 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 injury, 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. 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 the goods sold at the lower price are classified by the industry member as "seconds," "secondary line," "rejects," or are otherwise represented by the industry member as inferior, if the goods are in fact of like grade and quality as the goods sold at the higher price.

Example No. 2. Terms of 2%/10 net 60 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% instead of a 2% discount when making payment to the industry member within the time prescribed.

Example No. 3. 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 solely on the fact that the goods sold at the lower price bear the private brand name of customers.

Example No. 4. An industry member invoices goods to all his customers at the same price but supplies additional quantities of such goods at no extra charge to one or more, but not to all, such customers; or supplies other goods or premiums to one or more, but not to all, such customers for which he makes no extra charge and which effects an actual price difference in favor of certain of his customers.

be

NOTE: As previously indicated, the foregoing are examples of practices to considered violative of the prohibitions of paragraph (a) of this section.

(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 made known to and is available un proportionally equal terms to all other customers competing in the distribution of such products or commodities.

NOTES No. 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 purposes. 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 NO 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 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 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 NO. 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 NO 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 No. 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 [Rule 181 provisions of this section.

§ 35.19 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 in the foregoing part. [Rule 191

PART 36-POULTRY HATCHING AND BREEDING INDUSTRY

Sec. 36.0

36.1 36.2

36.3

36.4

36.5

36.6

36.7

36.8

36.9

36.10

36.11

36.12

36.13

36.14

36.15

36.16

36.17

36.18

The industry and its products

defined.

GROUP I

Misrepresentation of products. Deceptive concealment of material facts.

Deceptive claims relating to National

Poultry Improvement Plan or National Turkey Improvement Plan. Misrepresentation concerning a breeder's name, trade name, strain or combination of strains, or other breeding combination, etc. Deceptive claims respecting freedom or immunity from disease. Deceptive representations as to performance, earnings, etc. Misrepresentation as to yields of eggs, as to chicks from hens with purported high egg-laying records, as to chicks from high egg-producing stock, etc.

Misrepresenting chicks as from highperformance stock.

Misrepresentation as to terms "crossbred," "inbred line," "in-crossbred," "hybrid," etc.

Misuse of term "dominant white," etc.

Misrepresentation respecting new breed of poultry.

Deception as to transportation or c.o.d. charges. Misrepresenting offer as "special,"

etc.

Deceptive testimonials.

Defamation of competitors or false disparagement of their products. False or misleading price quotations, etc.

Deception by means of "bogus independents," "chick outlets," etc. Misuse of words "hatchery," "chickery," "chick 99 nursery,' "farm,"

"poultry farm," "breeding farm," and related representations. Guarantees, warranties, etc.

Fictitious prices.

36.19

36.20

36.21

Substitution of products.

36.101 Shipping chicks to fictitious consignees, etc.

AUTHORITY: The provisions of this Part 36 issued under secs. 6, 5, 38 Stat. 721, 719; 15 U.S.C. 46, 45.

SOURCE: The provisions of this Part 36 appear at 26 F.R. 1481, Feb. 22, 1961, unless otherwise noted.

§ 36.0 The industry and its products defined.

Members of the industry to which the rules have application are persons, firms. corporations, and organizations engaged in the marketing of any kind or kinds of live poultry for growing or breeding for egg or meat production, and of poultry eggs for hatching use. The live poultry

mentioned includes, but is not limited to, chicks, poults, goslings, and duckings.

NOTE: As used in these rules, the word "chicks" shall be construed to include all kinds of live poultry.

§ 36.1

GROUP I

Misrepresentation of products. In the sale, offerings for sale, or distribution of industry products, it is an unfair trade practice for any member of the industry to make or publish, or case to be made or published, any statement or representation (whether in the form of advertisement, trade promotional literature, mark, stamp, brand, label, depiction, photograph, illustration, radio or television broadcast, or otherwise) concerning:

(a) The grade, quality, quantity, breed, strain, cross, pedigree, type, sex, sexing, culling, quick maturity, uniform development, livability, vigor, strength, character, price, nature, origin, weight, color, size, egg-producing, meat-producing, disease-resisting, or other qualities of such products; or

(b) The production, sale, distribution, or delivery thereof, including the terms or conditions of sale; or

(c) The supervision, endorsement, or approval of any poultry breeding, hatching, or other operation by Federal, State,