(b) When equipped with a motor or engine, which will need replacement of a part or parts such as spark plugs, etc., the boat shall not be represented as "maintenance free" unless such motor is clearly excepted from the representation.

NOTE: It is the consensus of the industry that no boat of present manufacture is completely maintenance free under all normal conditions of use.

[Rule 4]

§ 56.5 Deceptive use of wood names.

(a) No representation to the effect that a boat is "(name of wood)" shall be used unless the boat so described is throughout, except for minor braces, etc., solidly of the named wood. When a representation regarding the wood composition of a boat is properly applicable to only certain portions of the boat, such fact shall be clearly stated, e.g., "solid cyprus planking," "teak decks."

(b) The word "Mahogany" shall not be used unqualifiedly to describe any wood other than genuine mahogany (Swietenia). However, the non-mahogany Philippine woods Tanguile, Red Lauan, White Lauan, Tiaong, Almon, Mayapis, and Bagtikan may be called "Philippine Mahogany," and the wood of the genus Khaya may be called "African Mahogany." [Rule 5]

§ 56.6 Deceptive pricing.

(a) Members of the industry shall not make any direct or indirect representation concerning the price at which a boat is offered for sale which has the capacity and tendency or effect of misleading or deceiving purchasers or prospective purchasers in any material respect.

(b) When advertisements picture a boat with equipment (such as engine, anchor, sails, etc.) installed or attached thereto, there shall be clear and conspicuous explanation to to whether such price applies only to the boat, or the boat and only a part of the equipment shown, when such is the case.

(c) Industry members shall not make any statement or representation which has the capacity and tendency or effect of creating a false impression in the minds of purchasers or prospective purchasers that the price at which they are offering to sell a product constitutes a reduction or saving either with respect to their former usual and customary price for the product in their recent, regular course of business, or with re

spect to the usual and customary retail price of the product in the trade area or areas where the statement or representation is made.

(d) When a retailer compares his selling price to a higher price and the higher price is described as being a "manufacturer's list price" or a "manufacturer's suggested retail price" such higher price shall be the current and customary retail price of the product in the trade area or areas where the representation is made. He may, however, compare his selling price with a higher price which has been his usual and customary price for the product in the recent and usual and regular course of his business, and describe such higher price as a "list price" when, in immediate conjuction with such term, there is a clear explanation that such "list price" is his own and not that of the manufacturer, wholesaler or other party.

(e) Members of the industry shall not make or publish any false, misleading, or deceptive representation, through advertising, or otherwise, concerning installment sales contracts to be used in the sale of boats, the terms or conditions of such contracts, the down payment to be required, the rate of interest or the financing cost to be charged, or respecting any other matters relative to such contracts. [Rule 61

§ 56.7 Guarantees, warranties, etc.

(a) Advertising of products shall not contain representations that a product is "guaranteed" without clear and conspicuous disclosure of:

(1) The nature and extent of the guarantee, and

(2) Any material conditions or limitations in the guarantee which are imposed by the guarantor, and

(3) The manner in which the guarantor will perform thereunder, and

(4) The identity of the guarantor.

(b) Representations that a product is "guaranteed for life" or has a "lifetime guarantee" in addition to meeting the above requirements, shall contain a conjunctive and conspicuous disclosure of the meaning of "life" or "lifetime" as used (whether that of the purchaser, the product or otherwise).

(c) Guarantees shall not be used which under normal conditions are impractical of fulfillment or which are for such a period of time or are otherwise of such nature as to have the capacity and tendency of misleading purchasers of

prospective purchasers into the belief that the product so guaranteed has a greater degree of serviceability, durability or performance capability in actual use than is true in fact. [Rule 7] § 56.8 Exclusive deals.

Members of the industry shall not contract to sell or sell industry products or 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 the products of a competitor or competitors of such industry member, where the effect of such sale or contract for sale, or of such condition agreement, or understanding, may be substantially to lessen competition or tend to create a monopoly in any line of commerce. [Rule 8]

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

Members of the industry, either directly or indirectly, shall not engage in any planned common course of action, or 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 industry products or otherwise unlawfully to restrain trade; or use any form of threat, intimidation, or coercion to induce any member of the industry

1 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 trademark, 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.

or other person or persons to engage in any such planned common course of action, or become a party to any such understanding, agreement, combination, or conspiracy. [Rule 9]

§ 56.10 Defamation of competitors or false disparagement of their prod

ucts.

Members of the industry shall not defame competitors by falsely imputing to them dishonorable conduct, inability to perform contracts, questionable credit standing, or by other false representations, nor shall such members falsely disparage the products of competitors in any respect, nor their business methods, selling prices, values, credit terms, policies or services. [Rule 10]

§ 56.11 Prohibited discrimination."

(a) Prohibited discriminatory prices, rebates, refunds, discounts, etc., which effect unlawful price discrimination. 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 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

2 As used in this section, the word "commerce" means "trade or commerce among the several States and with foreign nations, or between the District of Columbia or any Territory of the United States and any State Territory, or foreign nation, or between any insular possessions or other places under the jurisdiction of the United States, or between 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."

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 subparagraph (2) of this paragraph depends upon net savings in cost based on all facts relevant to the transactions under the terms of such subparagraph. 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 competitior.

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 of facilities furnished by a competitor."

(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 indirect 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 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 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.

or

(b) Industry members are producers and suppliers of aluminum from which residential aluminum siding is made, and who promote the sale or distribution of industry products; manufacturers fabricators of residential aluminum siding; jobbers, wholesalers, and retailers of residential aluminum siding; contractors and applicators who sell and install residential aluminum siding; and manufacturers and marketers of prefabricated homes having aluminum siding. Those engaged in the marketing of industry products who are not agents, but who purport to act as agents of manufacturers or suppliers of industry products are to be regarded as industry members. § 57.1 Deception in general.

(a) It is an unfair trade practice to sell, offer for sale, or distribute any industry product, or to promote the sale or distribution thereof under any representation or by any method or under any circumstance, including failure adequately to disclose additional relevant information, which has the capacity and tendency or effect of misleading or deceiving purchasers or prospective purchasers with respect to the construction, composition, installation, design, finish, color or colorfastness, size, origin, manufacturer, value, price, quality, strength, weight, gauge, durability, fit, alignment, ventability, or utility of such product or any part thereof, or the ease of application of such product, or the benefits to be derived from the use thereof; or with respect to the immunity or resistance of such product to weather conditions, fire, corrosion, or sag, or the need for maintenance, repair, or replacement of all or any part of such product, or in any other material respect.

(b) Among practices to be considered as prohibited by paragraph (a) of this section are the following claims:

(1) That industry products require no repainting or repair for the life of the structure, or that the initial cost is the only cost; or

(2) That the colors in which the industry products are finished will remain unchanged or are impervious to the elements or will last a lifetime; or

(3) That industry products, or any part or parts thereof, are everlasting or are made of indestructible materials; or (4) That industry products provide everlasting insulation; or

(5) That the thermal insulating values of aluminum exceed that of any other metal or other material; or

(6) That nothing can damage aluminum siding.

(c) The prohibitions of this section are applicable with respect to every species of advertisement or form of representation, whether oral or in a newspaper or other periodical, telephone directory, sales catalog, sales promotional literature, radio, or television broadcast, or other media, or whether in the form of mark, tag, or label, affixed to or accompany, the product. [Rule 11

§ 57.2 Deceptive use of "model home" representations.

In the sale, offering for sale, or distribution of industry products, it is an unfair trade practice for any member of the industry to represent to any purchaser or prospective purchaser that his dwelling will serve as a so-called model home or advertising job, or to make any other similar representation, if in connection therewith the industry member misleads the purchaser or prospective purchaser into the belief that he will be paid a commission or other compensation for any sale which the industry member may make in the vicinity or within any specified distance from the customer's home, or that the cost of the purchase of any industry product to the customer will thereby be reduced or fully paid. [Rule 2]

§ 57.3 Deceptive pricing.

It is an unfair trade practice for any member of the industry to represent or imply, in advertising or otherwise, that residential aluminum siding may be purchased for a specified price, or at a saving, when such is not the fact; or that such product is being offered for sale at a reduced price when such is not the fact; or otherwise to deceive purchasers or prospective purchasers with respect to the price of such products offered for sale; or to furnish any means or instrumentality by which others engaged in the sale of residential aluminum siding may make any such representation. Among the practices prohibited by this section

are:

(a) Representing or implying in advertising or otherwise that a quoted price, whether determined on the basis of a stated price per square foot or otherwise, is the total cost for a complete installation when in fact the products sold

do not include all costs for labor and all parts and accessories necessary for the proper function and appearance of such installed products (such as starter strips, door and window trim, window head flashing, back-up pieces and corner pieces).

(b) Representing or implying in advertising or otherwise that a specified price for residential aluminum siding is for any size structure (e.g., "installed on your home $____ .") when in fact such price applies only to structures of limited size without adequate and conspicuous disclosure of such limitation (e.g., "$_. installed on your home when area to be covered does not exceed 1,000 square feet” or “installed price $--per square foot").

(c) The use of pictures or illustrations of large houses or structures in connection with specified prices which is likely to mislead purchasers or prospective purchasers as to the cost of the installation of aluminum siding, as when the aluminum siding for the illustrated house would not be installed for the specified price.

[Rule 31

NOTE: On December 20, 1963, the Commission adopted Guides Against Deceptive Pricing which became effective January 8, 1964. Copies thereof will be furnished upon request.

[31 F.R. 11108, Aug. 20, 1966]

§ 57.4 False gift offers in sales promotion plans.

In the sale, offering for sale, or distribution of industry products, it is an unfair trade practice for any member of the industry to make any offer, however disseminated or published, that gift merchandise will be given to persons complying with certain conditions unless. such merchandise is given to the persons complying with such conditions. [Rule 41

§ 57.5 Deceptive claims as to the efficacy of industry products to reduce the effects of outside temperatures in building interiors.

In the sale, offering for sale, or distribution of industry products, it is an unfair trade practice for any member of the industry to make any representation which, directly or by implication, or through failure adequately to disclose additional relevant information, has the capacity and tendency or effect of deceiving purchasers or prospective pur