action 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 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. 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 processing, handling, 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: 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 (d) of this section. (e) Inducing or receiving an illegal discrimination in price, advertising or promotional allowances, or services or facilities. No member of the industry engaged in commerce, in the course of such commerce, shall knowingly induce or receive a discrimination in price, advertising or promotional allowances, or services or facilities, which is prohibited by the foregoing provisions of this section. [Rule 101 [27 F.R. 6211, June 30, 1962, as amended at 29 F.R. 9369, July 9, 1964] § 105.11 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 or 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. [Rule 11] § 105.12 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 by this part. [Rule 12] 1 The prohibitions of this section are subject to Public Law 542, approved July 14, 1952-66 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. Sec. 108.4 108.5 108.6 108.7 108.10 108.11 108.12 Misrepresentation in general. Threats of suit. Coercing purchases. 108.13 False invoicing. 108.14 Sales through "bogus" independent. AUTHORITY: The provisions of this Part 108 issued under secs. 6(g), 5, 38 Stat. 722, 719; 15 U.S.C. 46(g), 45. SOURCE: The provisions of this Part 108 contained in trade practice rules, Paper Drinking Straw Manufacturing Industry, FTC, July 3, 1936, unless otherwise noted. § 108.1 Sales below cost. The practice of selling goods below the seller's cost, with the intent and with the effect of injuring a competitor and where the effect may be to substantially lessen competition or tend to create a monopoly or unreasonably restrain trade, is an unfair trade practice; all elements recognized by good accounting practice as proper elements of such cost shall be included in determining cost under this section. § 108.2 False marking or branding. The false marking or branding of products of the industry, with the tendency, capacity or effect of misleading or deceiving purchasers with respect to the grade, quality, quantity, substance, character, nature, origin, size or preparation, or in any other material respect of the goods purchased, is an unfair trade practice. § 108.3 Imitation of trade-marks, etc. The imitation of the trade-marks, trade names, brands, labels, or other marks of identification of competitors, having the tendency, capacity, or effect of misleading or deceiving purchasers or prospective purchasers, is an unfair trade practice. § 108.4 Misrepresentation in general. The making, or causing or permitting to be made, of published, of any false, untrue, or deceptive statement or representation, by way of advertisement or otherwise, concerning the grade, quality, quantity, substance, character, nature, origin, size, or preparation, or in any other material respect of any product of the industry sold or offered for sale, having the tendency, capacity, or effect of misleading or deceiving purchasers or prospective purchasers, is an unfair trade practice. § 108.5 Defamation of competitors. 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 disparagement of the grade or quality of their goods, with the tendency, capacity, or effect of misleading or deceiving purchasers or prospective purchasers, or with the tendency, capacity or effect of unduly hampering, injuring or prejudicing such competitors in the conduct of their business, is an unfair trade practice. § 108.6 Inducing breach of contract. Willfully inducing or attempting to induce the breach of existing contract or contracts between competitors and their customers or their suppliers by any false or deceptive means whatsoever, or willfully interfering with or obstructing the performance of any such contractual duties or services by any such means, with the purpose and effect of unduly hampering, injuring or prejudicing competitors in their businesses, is an unfair trade practice. § 108.7 False price quotations. The publishing or circulating by any member of the industry of false or misleading price quotations, price lists, terms of sale or discounts, having the tendency, capacity, or effect of misleading or deceiving purchasers or prospective purchasers, is an unfair trade practice. § 108.10 Commercial bribery. Directly or indirectly to give, or permit to be given, or offer to give, money or anything of value to agents, employees, or representatives of customers or prospective customers, or to agents, employees, or representatives of competitors' customers or prospective customers, without the knowledge of their employers or principals, as an inducement to influence their employers or principals to purchase or contract to purchase industry products from the maker of such gift or offer, or to influence such employers or principals to refrain from dealing or contracting to deal with competitors, is an unfair trade practice. § 108.11 Threats of suit. The circulation of threats of suit for infringement of patent or trade-mark among customers or prospective customers of competitors, not made in good faith but for the purpose or with the effect of harassing or intimidating customers or prospective customers, or of unduly hampering, injuring or prejudicing competitors in their businesses, is an unfair trade practice. § 108.12 Coercing purchases. The practice of coercing the purchase of one or more products as a prerequisite to the purchase of one or more other products, where the effect may be to substantially lessen competition or tend to create a monopoly or to unreasonably restrain trade, is an unfair trade practice. § 108.13 False invoicing. Withholding from or inserting in the invoice statements which make the invoice a false record, wholly or in part, of the transaction represented on the face thereof, with the purpose or effect of misleading or deceiving purchasers or prospective purchasers, is an unfair trade practice. § 108.14 Sales through "bogus" independent. The practice by a member of the industry of selling or marketing industry products through a pretended independent concern to induce the purchasing public to believe such concern is independent and in competition with the said member of the industry owning or controlling such concern, when such is not the fact, with the tendency or capacity to mislead or deceive purchasers, prospective purchasers or the consuming public, is an unfair trade practice. Sec. 109.10 109.11 109.12 109.13 109.14 Procurement of competitors' confdential information by unfair means and wrongful use thereof. Commercial bribery. Prohibited forms of trade restraints (unlawful price fixing, etc.). Prohibited discrimination. Aiding or abetting use of unfair trade practices. COMMITTEE ON TRADE PRACTICES 109.201 Industry committee. AUTHORITY: The provisions of this Part 109 issued under secs. 6, 5, 88 Stat. 721, 719; 15 U.S.C. 46, 45. SOURCE: The provisions of this Part 109 appear at 22 F.R. 4497, June 27, 1957, unless otherwise noted. (a) Industry members. Persons, firms, corporations, and organizations engaged in the manufacture and sale of industry products as defined in paragraph (b) of this section: (b) Industry products. Buffs and contact and polishing wheels which are constructed substantially of any textile or other nonrigid material and used for wiping, cleaning, oiling, or, with or without abrasives, for surface finishing. § 109.1 Misrepresentation and deception (general). It is an unfair trade practice for any industry member, in connection with the offering for sale, sale, or distribution of industry products, to use, or cause or promote the use of, any trade promotional literature, advertising matter, guarantee, warranty, mark, brand, label, trade name, picture, design or device, designation, or other type of oral or written representation, however disseminated or published, or to fail to disclose any material fact, when such representation or failure to disclose has the capacity and tendency or effect of misleading or deceiving purchasers or prospective purchasers with respect to the type, grade, quality, quantity, use, size or size symbol, material, finish, strength, thickness, composition, origin, preparation, manufacture, or distribution of any product of the industry, or in any other material respect. § 109.2 Misrepresentation as to charac ter of business. It is an unfair trade practice for any industry member, in the course of or in connection with the offering for sale, sale, or distribution of industry products, to misrepresent the character, extent, volume, or type of his business. § 109.3 Misrepresenting products as conforming to standard. It is an unfair trade practice for any industry member, in the course of or in connection with the offering for sale, sale, or distribution of industry products, to represent, through advertising, personal solicitation, or otherwise, that such products conform to any standard or standards recognized in or applicable to the industry when such is not the fact. § 109.4 False and misleading price quotations, etc. It is an unfair trade practice for any industry member, in the course of or in connection with the offering for sale, sale, or distribution of industry products, to publish or circulate false or misleading price quotations, price lists, or terms or conditions of sale, which have the capacity and tendency or effect of misleading or deceiving purchasers or prospective purchasers, or the consuming public, in any material respect. § 109.5 Deceptive invoicing. Withholding from or inserting in invoices any statement or information by reason of which omission or insertion a false, inaccurate, or incomplete record is made, which has the capacity and tendency or effect of deceiving purchasers, prospective purchasers, or the consuming public in any material respect, is an unfair trade practice. § 109.6 Substitution of products. It is an unfair trade practice for any industry member, in the course of or in connection with the sale or distribution of industry products, to make an unauthorized substitution of products, where such substitution has the capacity and tendency or effect of misleading or deceiving purchasers or the consuming public, by (a) Shipping or delivering industry products which do not conform to samples submitted, to specifications 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 section shall be construed as preventing, in the substitution of products, the application of such tolerances as are agreed upon between buyer and seller or are otherwise deemed reasonable and proper and where the misrepresentation or deception of purchasers is practiced or promoted in relation to the product or its deviation from samples or specifications. § 109.7 Prohibited sales below cost. (a) The practice of selling products of the industry at a price less than the cost thereof to the seller, with the purpose or intent, and where the effect is, or where there is a reasonable probability that the effect will be, to substantially injure, suppress, or stifle competition or tend to create a monopoly, is an unfair trade practice. (b) This section is not to be construed as prohibiting all sales below cost, but only such selling below the seller's cost as is resorted to and pursued with the wrongful intent or purpose referred to and where the effect is, or where there is reasonable probability that the effect will be, to substantially injure, suppress, or stifle competition or to create a monopoly. Among the situations in which the requisite purpose or intent would ordinarily be lacking are cases in which such sales were: (1) of obsolescent goods; (2) made under judicial process; or (3) made in bona fide discontinuance of business in the goods concerned. (c) As used in paragraphs (a) and (b) of this section, the term "cost" means the respective seller's cost and not an average cost in the industry whether such average cost be determined by an industry cost survey or some other method. It consists of the total outlay or expenditure by the seller in the acquisition, production, and distribution of the products involved, and comprises all elements of cost such as labor, material, depreciation, taxes (except taxes on net income and such other taxes as are not properly applicable to cost), and general overhead expenses, incurred by the seller in the acquisition, manufacture, processing, preparation for marketing, sale, and delivery of the products. Not to be included are dividends or interest on borrowed or invested capital, or nonoperating losses, such as fire losses and losses from the sale or exchange of capital assets. Operating cost should not be reduced by items of nonoperating income, such as income from investments, and gain on the sale of capital assets. (d) Nothing in this section shall be construed as relieving an industry member from compliance with any of the requirements of the Robinson-Patman Act. § 109.8 Inducing breach of contract. It is an unfair trade practice for any industry member knowingly to induce or attempt to induce the breach of existing lawful contracts between competitors and their customers or their suppliers, or to interfere with or obstruct the performance of any such contractual duties or services, under any circumstances having the capacity and tendency or effect of substantially injuring or lessening present or potential competition. NOTE: Nothing in this section is intended to imply that it is improper for any industry member to solicit the business of a customer of a competing industry member. However, the section is not 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. It is an unfair trade practice for any industry member (a) To defame competitors by falsely imputing to them dishonorable conduct, inability to perform contracts, questionable credit standing, or by other false representations; or (b) To falsely disparage competitors' products in any respect, or their business methods, selling prices, values, credit terms, policies, services, or conditions of employment. § 109.10 Procurement of competitors' confidential information by unfair means and wrongful use thereof. 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 substan It is an unfair trade practice for any industry member, directly or indirectly, to give, or offer to give, or permit or cause to be given, money or anything of value to agents, employees, or representatives of customers or prospective customers, or to agents, employees, or representatives of competitors' customers or prospective customers, without the knowledge of their employers or principals, as an inducement to influence their employers or principals to purchase or contract to purchase products manufactured or sold by such industry member or the maker of such gift or offer, or to influence such employers or principals to refrain from dealing in the products of competitors or from dealing or contracting to deal with competitors, or to effect any other advantage in favor of the industry member making such gift or offer with respect to the sale of industry products to such employers or principals. 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 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. |