chasers as to the efficacy of such products to effect fuel savings or other heating costs or to reduce or control temperature in rooms, buildings, etc.

NOTE: As used in this rule the term "relevant information" has reference to the conditions essential to effect the claimed fuel savings or other heating costs or temperature reduction or control, including, but not limited to, the location, construction, elevation and insulation of the building and its exposure to the elements.

[Rule 5]

§ 57.6 Bait advertising.

(a) It is an unfair trade practice for an industry member to offer for sale any industry product when the offer is not a bona fide effort to sell the product so offered.

NOTE: In determining whether there has been a violation of this rule, consideration will be given to acts or practices indicating that the offer was not made in good faith for the purpose of selling the advertised product, but was made for the purpose of contacting prospective purchasers and selling them a product or products other than the product offered. Among the acts or practices which will be considered in making that determination are the following:

(a) The creation, through the initial offer or advertisement, of a false impression of the grade, quality, make, value, currency of model, size, usability, or origin of the product offered.

(b) The refusal to show, demonstrate, or sell the product offered in accordance with the terms of the offer.

(c) The disparagement, by acts or words, of the product offered.

(d) The showing, demonstrating, and in the event of sale, the delivery, of a product which is unusable or impractical for the purpose represented or implied in the offer.

(e) The refusal, in the event of sale of the product offered, to deliver such product to the buyer within a reasonable time thereafter.

(f) The failure to have available a quantity of the advertised product sufficient to meet reasonably anticipated demands.

(g) The use of a sales plan or method of compensation for salesmen or penalizing salesmen designed to prevent or discourage them from selling the advertised product.

(b) It is not necessary that each act or practice set forth above be present in order to establish that a particular offer is violative of this section. [Rule 6] § 57.7 Deception as to nature of sales transactions.

When an industry member sells industry products at both wholesale and at retail in the same establishment, it is

an unfair trade practice for such industry member to sell any such products under circumstances having the capacity and tendency or effect of causing purchasers to believe that they are buying at wholesale prices when such is not the case. [Rule 7]

§ 57.8 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 sale of industry products, to represent, directly or indirectly, that he is a manufacturer of industry products, unless he owns and operates or directly controls a factory wherein such products are made, or in any other manner to misrepresent the character, extent, or type of his business. [Rule 81

§ 57.9 Misuse of terms "custom-made," "custom-built," etc.

In the sale, offering for sale, or distribution of industry products, it is an unfair trade practice for an industry member to use the terms "custom-made," "custom-built," "made-to-order," or any other word or term of similar import, as descriptive of any industry product which has not been made in accordance with specification as to size, fit, quality, etc., supplied by or on behalf of the consumerpurchaser prior to the manufacture or assembly of the industry product, as distinguished from a product which is a readymade or stock industry product. [Rule 91

§ 57.10 Use of the word "free."

In connection with the sale, offering for sale, or distribution of industry products, 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 or service offered are not clearly and conspicuously set forth at the outset so as 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 or size thereof.

NOTE: The disclosure required by páragraph (a) of this section shall appear in close conjunction 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 10] § 57.11

Deception as to agency status and authority.

(a) It is an unfair trade practice for any member of the industry to aid or abet any person in effecting deception of purchasers or prospective purchasers as to his authority to represent and make commitments in behalf of such industry member.

(b) It is also an unfair trade practice for any person engaged in the sale of industry products to represent that he is an agent of, or otherwise affiliated with, a manufacturer or distributor of such products, or that he is in a position to transfer title to industry products, or to assure of the delivery and/or installation of any such products, when such is not the fact. [Rule 111

§ 57.12 Deception as to identity of manufacturer or seller.

In the sale, offering for sale, or distribution of industry products, it is an unfair trade practice for any member of the industry to use any corporate name, trade name, trademark, slogan, or other means of identification, which, by reason of its similarity with the corporate name, trade name, trademark, slogan, or other means of identification used by another party, has the capacity and tendency or effect of deceiving purchasers or prospective purchasers as to the identity of the manufacturer or vendor of any industry product which is sold or offered for sale by the industry member. [Rule 12]

false or which has the capacity and tendency or effect of misleading or deceiving purchasers or prospective purchasers. [Rule 13]

§ 57.14 Deceptive use of seals.

In the sale, offering for sale, or distribution of industry products, it is an unfair trade practice for any industry member to use a seal or insignia of any organization without the authorization of that organization, or to use any seal or insignia which is of such form or design, or contains such wording, as to simulate the seals or insignia which are issued by an organization for use with respect to other products, when the use thereof has the capacity and tendency or effect of deceiving purchasers or prospective purchasers.

NOTE: Seals of approval used by industry members should identify the organization issuing and/or authorizing the use of the seal. Such seal should be based on adequate inspection and tests of the industry member's products and not otherwise contravene the provisions of § 57.1 relating to deception generally.

[Rule 14]

§ 57.15 Misrepresenting products as conforming to standard.

It is an unfair trade practice to represent, through advertising or otherwise, that any product of the industry conforms to any standard recognized in or applicable to the industry when such is not the fact. [Rule 15]

§ 57.16

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. Representations that a product is "guaranteed for life" or has a "lifetime guarantee" in addition to meeting the requirements of subparagraphs (1), (2), (3), and (4) of this paragraph, 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).

(b) 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 or 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 16]

§ 57.17 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.

NOTE: Nothing in this rule shall be construed as preventing the application of such tolerances as are agreed upon between buyer and seller or are otherwise deemed reasonable and proper and where no misrepresentation, or deception of purchasers, is practiced or promoted in relation to the product or its deviation from samples or specifications. [Rule 17]

§ 57.18 Defamation of competitors or false disparagement of their prod

ucts.

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 disparagament of competitors' products in any respect, or of their business methods, selling prices, values, credit terms, policies, or services, is an unfair trade practice. [Rule 18]

§ 57.19 Unfair threats of infringement suits.

Th circulation of threats of suit for infringement of patents or trademarks among customers or prospective customers of competitors, not made in good faith but for the purpose or with the effect of thereby harassing or intimi

86-033-68- -21

dating such customers or prospective customers, or of unduly hampering, injuring, or prejudicing competitors in their business, is an unfair trade practice. [Rule 19]

§ 57.20

Inducing breach of contract.

(a) Knowingly inducing or attempting to induce the breach of existing lawful contracts between competitors and their customers or 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 present or potential competition, is an unfair trade practice.

(b) Nothing in this section is intended to imply that it is improper 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 the customers of either of them, or from customers of any other industry member. [Rule 201

§ 57.21

Procurement of competitors' confidential information.

It is an unfair trade practice for any member of the industry to obtain information concerning the business of a competitor by bribery of an employee or agent of such competitor, by false or misleading statements or representations, by the impersonation of one in authority, or by any other unfair means, and to use the information so obtained so as to injure said competitor in his business or to suppress competition or unreasonably restrain trade. [Rule 211

§ 57.22 Deceptive invoicing, etc.

It is an unfair trade practice for any member of the industry to issue invoices, billings, or sales slips which by reason of misstatements therein or omissions therefrom have the capacity and tendency or effect of deceiving purchasers or prospective purchasers in any material respect. [Rule 22]

§ 57.23 Exclusive deals.

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 monoply in any line of commerce [Rule 23] § 57.24 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 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. 24]

[Rule

(a) Prohibited discriminatory prices, or rebates, refunds, discounts, credits,

1 The prohibitions of this rule 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.

etc., which 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;

(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: "Spindling” of orders. This proviso shall not be construed as permitting the practice of allowing a price differential, whether in the form of a discount, rebate, or other form, through billing as a single order an aggregate of the amounts of two or more orders separately delivered, when such price differential is not justified by savings to the seller 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 products are to such purchasers sold or delivered.

(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.

(b) Prohibited brokage 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.

(c) 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.

(d) 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.

(e) 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.

(f) Exemptions. The prohibitions of this section shall not apply to purchases of their supplies for their own use by schools, colleges, universities, public libraries, churches, hospitals, and charitable institutions not operated for profit.

NOTE: In complaint proceedings charging discrimination in price or services or facilities furnished, and upon proof having been made of such discrimination, the burden of rebutting the prima facie case thus made by showing justification shall be upon the person charged; 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. See section 2(b), Clayton Act.