or (3) reduces the quantity or size thereof.

NOTE: The disclosure required by paragraph (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 ordinarily be regarded as compliance.

[Rule 25]

§ 67.26 Deceptive pricing.

Members of the industry shall not represent directly or indirectly in advertising or otherwise that an industry product may be purchased for a specified price, or at a saving, 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 furnish any means or instrumentality by which others engaged in the sale of industry products may make any such representation.

NOTE: The Commission promulgated Guides Against Deceptive Pricing effective January 8, 1964, superseding the Guides adopted October 2, 1958. The 1964 Guides are appended to these rules for additional guidance with respect to price savings representations.

[Rule 26]

§ 67.27 Misbranding, misrepresentation, and deceptive selling methods. Members of this industry, in the course of the marketing or distribution of industry products, shall not:

(a) Use, or cause or promote the use of, any trade promotional literature, advertising matter, mark, brand, label, designation, depiction, or other type of oral or written representation, however disseminated or published, which directly or by implication, or through failure to disclose material information, has the capacity and tendency or effect of misleading or deceiving purchasers or prospective purchasers with respect to―

(1) the type, grade, quality, quantity, use, size, weight, nature, condition, durability, performance, serviceability, origin, manufacture, distribution, or price of any industry product; or,

(2) the identity of a performing artist as to either part or all of a recording, the recorded content of any recording, the name or commonly known title of a

(a) Industry member. Any person, firm, corporation, or organization engaged in the manufacture, sale, or distribution of industry products as hereinafter defined.

(b) Industry products. Braided Rugs, Tubular Braided Rugs and Tubular Wrap-A-Round Rugs, made in the following manner, irrespective of composition:

(1) Braided rugs, formed by sewing together flat braids or plaits into desired shapes;

(2) Tubular braided rugs, formed by braiding yarn around a core to form a sheath, or tube, for the core and thereafter sewing the same into desired shapes;

(3) Tubular wrap-a-round rugs, formed by wrapping yarn or thread around a core of filler material in a spiral fashion without interlocking and thereafter sewing such wrapped cores into desired shapes.

§ 71.1 Deception (general).

(a) It is an unfair trade practice for members of the industry to offer for sale or sell industry products 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, size, kind, grade, quality, weight, durability, serviceability, terms of sale, value, production, method of manufacture, fabrication or distribution of such industry products 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 in which they may be shipped, offered for sale or sold.

(c) Under this section it is an unfair trade practice to represent any industry product as a "braided rug" unless made in the manner described in § 71.0(b) (1).

(d) Rugs made in conformity with § 71.0(b) (2) may be designated as "tubular braided rugs," and rugs of the construction described in § 71.0(b) (3) may be designated as "tubular wrap-a-round rugs", but not as woven or braided. [Rule 1]

§ 71.2 Misrepresentation as to the origin of industry products.

It is an unfair trade practice to represent, directly or by implication, that a product manufactured in a foreign country was made in the United States. Under this section, distinctively American names may not be used to identify products imported from a foreign country unless in close conjunction with any such name clear and conspicuous disclosure is made of the country of origin of the product.

NOTE: The marking of imported articles to show their country of origin is a responsibility of the Bureau of Customs, Department of the Treasury, under the provisions of statutes administered by it. Action may be taken by the Commission under the Federal Trade Commission Act in the case of deceptive nondisclosure of foreign origin in matters within its jurisdiction, when such action is necessary in the public interest. [Rule 2]

§ 71.3 Misrepresentation as to the size of industry products.

It is an unfair trade practice in referring to the size of an industry product to use any size representation which does not accurately reflect the actual size of the product.

NOTE: Nothing in this section shall be construed as preventing an industry member from stating the "approximate size" of a group of rugs offered for sale, provided that no rug in the group varies in size from the stated approximate size by more than 12. percent in any dimension (length or width). [Rule 3]

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 to represent that he is a wholesaler of industry products when such is not the fact, or in any other manner to misrepresent the character, extent, or type of his business. [Rule 4]

§ 71.5 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 saving, 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 furnish 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 5]

§ 71.6 Misrepresenting industry products as "Hand Braided" or "Hand Made."

(a) It is an unfair trade practice to represent an industry product as "hand braided" unless such product is composed of strands which were in fact braided by hand.

Sec.

PART 74 FRESH FRUIT AND

VEGETABLE INDUSTRY

74.0 The industry and its products defined. 74.1 Prohibited price discrimination. 74.2 Prohibited brokerage.

AUTHORITY: The provisions of this Part 74 issued under sec. 2, 49 Stat. 1526; sec. 6, 38 Stat. 721; 15 U.S.C. 13, 46.

SOURCE: The provisions of this Part 74 appear at 30 F.R. 5331, Apr. 15, 1965, unless otherwise noted.

§ 74.0 The industry and its products defined.

(a) Members of the industry are persons, firms, corporations and organizations engaged in selling, marketing or distributing in commerce any of the products or goods of the industry as defined in paragraph (b) of this section.

(b) Products or goods of this industry consist of all varieties of fresh fruits and vegetables grown in the United States or imported from other countries.

§ 74.1 Prohibited price discrimination.

(a) It is unlawful 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;

NOTE: Purchases by US Government: In an opinion submitted to the Secretary of War under date of December 26, 1936, the U.S. Attorney General advised that the

Robinson-Patman Antidiscrimination Act "is not applicable to Government contracts for supplies." (38 Opinions, Attorney General 539.)

(2) That nothing contained in this paragraph (a) shall prevent differentials which make only due allowance for differences in the cost of production, sale, or delivery resulting from the differing methods or quantities in which industry products are sold or delivered to different purchasers;

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 proviso (a) (2). 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 section 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 limiited to actual or imminent deterioration of perishable goods, obsolescence of seasonal goods, distress sales under court process, or sales in good faith in dicontinuance 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 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, justification of price differentials under subparagraphs (2), (4), and (5) of paragraph (a) of this section is a matter of affirmative defense to be established by the person or concern charged with price discrimination.

NOTE 3: 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 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) 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. An industry member sells goods to one or more of his customers at a higher price than he charges other customers for merchandise of like grade and quality. It is immaterial whether or not such discrimination is accomplished by mis

representation as to the grade and quality of the products sold.

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 merchandise of like grade and quality in like containers. It is immaterial whether or not such discrimination is accomplished by misrepresentation as to the type or cost of the containers in which the products are packaged.

Example No. 3. Several buyers reserve a specified quantity of a particular grade and quality of fresh fruits and vegetables for current delivery. At the time of routing, ordering accessorial services and billing, one of such buyers refuses to accept the shipment at the price charged other current buyers for such goods of like grade and quality and will accept delivery only at a reduced price. If the seller accedes to the buyer's demands for a reduced price and all the conditions set forth above immediately preceding Example No. 1 are present, the resulting price discrimination would be violative of paragraph (a) of this section. Similarly, if the buyer knowingly induced or received such illegal discrimination in price, he would have violated paragraph (d) of this section.

(c) The following examples are intended to illustrate practices in the Fresh Fruit and Vegetable Industry which, although possibly giving raise to a price differential among buyers, do not violate paragraph (a) of this section under conditions set forth in such examples:

Example No. 1. A buyer enters into a binding and enforceable agreement with a seller to purchase at a stated price a specified quantity of fresh fruits or vegetables, shipment to take place at such time in the future so that the transaction is not considered a sale for current delivery.

The agreed upon price may be lower or higher than such seller is selling goods of like grade and quality to other buyers as to sales for current delivery on the date the agreement is made. By iike token, the price paid may be lower or higher than prices paid by other buyers as to sales for current delivery on the day specified for shipment.

In agreeing to buy now for future shipment, the buyer is faced with the risk of a future declining market. The opportunity to make such future purchases is made available at the same price by the seller to all his customers.

In order for this example to be applicable, sufficient time must elapse under the contract between the agreement and the delivery so as to constitute the assumption by the buyer and the seller of an actual market risk. The foregoing is to be determined from the facts and circumstances of each case. This example may not be relied upon as a subterfuge for paying or granting discriminatory prices.