Tobacco Distributing Industry
16 CFR Part 105 · Trade practice rules · in the Code of Federal Regulations 1966-1977 (11 annual editions)
Scanned CFR pages, OCR text may contain errors; the linked Library of Congress PDF is the authority. Not legal advice; not affiliated with the FTC. These rules and guides are historical: most were rescinded or replaced, so do not assume any is in force.
Latest edition: Library of Congress, 1977 CFR · Earliest edition: 1966 CFR
Text (1977 edition, OCR)
Chapter l—Federal Trade Commission
PART 105—TOBACCO DISTRIBUTING
INDUSTRY
Sec.
105.0 Definitions.
105.1 Misrepresentation and deception in
general.
1052 False invoicing.
105.3 Misrepresentation as to character of
business.
105.4 Deceptive use or limitation or simu-
lation of trade or corporate names,
trade-marks, etc.
108.5 False and misleading price quota-
tions, etc.
108.0 Defamation of competitors of false
disparagement of their products.
105.7 Commercial bribery.
105.8 Inducing breach of contract.
105.9 Tie-in sales—coercing purchase of
one produot as a prerequisite to
the purchase of other products.
105.10 Prohibited discrimination.
105.11 Prohibited forms of trade restraints
(unlawful price fixing, etc.).
105.12
Aiding or abetting use of unfair trade
practices.
Avrnortiry: Secs. 6, 5, 88 Stat. 721, 719; 15
U.S.C. 46, 45, unless otherwise noted.
Source: 27 FR 6211, June 80, 1962, unless
otherwise noted.
§ 105.0 Definitions.
(a) Industry member. Any person,
firm, corporation or organization en-
gaged in the distribution of industry
products as defined below.
(b) Industry products. Industry
products consist of all forms of finished
tobacco for human use and include cig-
arettes, cigars, pipe tobacco, chewing to-
bacco and snuff.
§ 105.1 Misrepresentation and decep-
tion in general.
It is an unfair trade practice to use, or
cause or promote the use of, any trade
promotional literature, advertising mat-
ter, guarantee, warranty, mark, brand,
label, trade name, picture, design or de-
vice, designation, or other type of oral
or written representation, however dis-
seminated or published, which directly
or by implication, or through failure te
disclose material information has the
capacity and tendency or effect of mis-
jeading or deceiving purchasers or pro-
spective purchasers with respect to the
type, kind, brand, grade, quality, quan-
tity, size, weight, nature, substanco,
origin, preparation, production, manu-
facture, distribution, or customary and
usual price, of any product of the
§ 105.4
industry, or which otherwise has the
capacity and tendency or effect of mis-
leading or deceiving purchasers or
prospective purchasers. [Rule 1]
§ 105.2 False invoicing.
Withholding from or inserting in in-
voices any statements or information by
reason of which omission or insertion a
false record is made, wholly or in part,
of the transactions represented on the
face of such invoices, when having the
capacity and tendency or effect of
thereby misleading or deceiving pur-
chasers, prospective purchasers, or the
consuming public, in any material re-
spect, is an unfair trade practice.
[Rule 21
§ 105.3 Misrepresentation as to charac-
ter of business.
(a) It is an unfair trade practice for
any member of the industry, in connec-
tion with the distribution of industry
products, to misrepresent, directly or
indirectly, by means of advertising, let-
terheads, telephone listings, oral state-
ments, or otherwise, the character, ex-
tent, or type of his business.
(b) 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 indus-
try member to sell any such products
under circumstances having the capacity
and tendency or effect of causing pur-
chasers to believe that they are buying
at wholesale prices when such is not
the case. [Rule 3]
§ 105.4 Deceptive use or imitation or
simulation of trade or corporate
names, trade-marks, etc. .
It is an unfair trade practice for any
member of the industry:
(a) to imitate or simulate the trade-
marks, trade names, brands, or labels
of competitors, with the capacity and
tendency or effect of misleading or
deceiving purchasers or prospective
purchasers; or
(b) to use any trade name, corporate
name, trade-mark, or other trade des-
ignation, which has the capacity and
tendency or effect of misleading or de-
ceiving purchasers or prospective pur-
chasers as to the name, nature, or origin
of any product of the industry, or of any
material used therein, or which is false,
deceptive, or misleading in any other
material respect. [Rule 4]
489
§ 105.5
§ 105.5 False and misleading price quo-
tations, etc.
The publishing or circulating to pur-
chasers or prospective purchasers by any
member of the industry of false or mis-
leading price quotations, price Usts, or
terms or conditions of sale, with the ca-
pacity and tendency or effect of thereby
misleading or deceiving purchasers or
prospective purchasers, is an unfalr trade
practice. [Rule 5]
§ 105.6 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 dis-
paragement of the products of competi-
tors in any respect, or of their business
methods, selling prices, values, credit
terms, policies, or services, is an unfair
trade practice. [Rule 6]
§ 105.7 Commercial bribery.
It is an unfair trade practice for a
member of the industry, directly or in-
directly, to give, or offer to give, or per-
mit or cause to be given, money or any-
thing of value to agents, employees, or
representatives of customers or prospec-
tive customers, or to agents, employees,
or representatives of competitors’ cus-
tomers or prospective customers, without
the knowledge of their employers or prin-
cipals, as an inducement to influence
their employers or principals to purchase
or contract to purchase products manu-
factured 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 contract-
ing to deal with competitors. [Rule 7]
§ 105.8 Inducing breach of contract.
(a) Knowingly inducing or attempt-
ing to induce the breach of existing law-
ful contracts between competitors and
their customers or between competitors
and thcir suppllers, or interfering with
or obstructing the performance of any
such contractual duties or services, under
any circumstances having the capacity
and tendency or effect of substantially
injuring or lessening competition, is an
unfair trade practice.
(b) Nothing in this section is intended
to imply that it is improper for any in-
dustry member to solicit the business of
Title 16—Commercial Practices
@ customer of a competing industry
member; nor is the section to be con-
strued as in anywise authorizing any
agreement, understanding, or planned
common course of action by two or more
industry members not to solicit business
from, or to seli to, the customers of
either of them, or customers of any other
industry member. [Rule8j
§ 105.9 Tie-in sales—coercing purchase
of one product as a prerequisite to
the purchase of other products.
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 sub-
stantially to lessen competition or tend
to create a monoply or unreasonably to
restrain trade, is an unfair trade prac-
tice. (Rule 9]
§ 105.10 Prohibited discrimination.
(a) Prohibited discriminatory prices,
rebates, discounts, etc. No member of the
industry engaged in commerce, in the
course of such commerce, shali grant or
allow, secretly or openly, directly or in-
directly, any rebate, refund, discount,
credit, or other form of price differen-
tial, where such rebate, refund, discount,
credit, or other form of price differen-
tial, effects a discrimination in price be-
tween 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 substantialiy to lessen
competition or tend to create a monoply
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 discrimina-
tion, or with customers of elther of them:
Provided, however,
(1) That the goods involved in any
such transaction are sold for use, con-
sumption, or resale within any place
under the jurisdiction of the United
States, and are not purchased by schools,
colleges, universitles, public libraries,
churches, hospitals, and charitable insti-
tutions not operated for profit, as sup-
plies for their own use;
(2) That nothing contained in this
paragraph shall prevent differentials
which make only due allowance for dif-
ferences in the cost of manufacture, sale,
or dellvery resulting from the differing
methods or quantities in which such
commodities are to such purchasers sold
or delivered;
490
Chapter Il—Federal
Nore: Cost justification under the above
proviso depends upon net savings in cost
based on all facts relevant to the transac-
tions 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 dellvery, 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 detiveries.
(3) That nothing contained in this
section shall prevent persons engaged in
selling goods, wares, or merchandise in
commerce from selecting their own cus-
tomers 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 re-
sponse 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.
Nove 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 re-
butting the prima facie case thus made by
showing justification shall be upon the per-
son charged with a violation of this section,
and unless justification shail be affirmatively
shown, the Commission is authorized to issue
an order terminating the discrimination:
Provided, however, That nothing herein con-
tained 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.”
Norte 2: 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 In competition with their customers
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.
Trade Commission § 105.10
(b) Prohibited brokerage and com-
missions. 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 com-
pensation, or any allowance or discount
in lfeu thereof, except for services rend-
ered in connection with the sale or pur-
chase of goods, wares, or merchandise,
either to the other party to such trans-
action or to an agent, representative, or
other intermediary therein where such
intermediary is acting in fact for or in
behalf, or 1s subject to the direct or in-
direct control, of any party to such trans-
action other than the person by whom
such compensation {1s so granted or patd.
(c) Prohibited advertising or promo-
tional allowances, etc. No member of
the industry engaged in commerce shall
pay or contract for the payment of ad-
vertising 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 com-
pensation or in consideration for any
services or facilities furnished by or
through such customer in connection
with the processing, handimg, sale, or
offering for sale of any products or com-
modities 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 com-
peting in the distribution of such prod-
ucts or commodities.
(a) Prohibited discriminatory services
or facilities. No member of the indus-
try engaged in commerce shall discrim-
inate 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 fa-
cilities including, but not limited to, dis-
plays, exhibits, and processing, handling,
connected with the processing, handling,
sale, or offering for sale of such com-
modity so purchased upon terms not ac-
corded to all competing purchasers on
proportionally equa! terms.
Nore: 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 ftlegal
discrimination in price, advertising or
491
§ 105.11
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, ad-
vertising or promotional allowances, or
services or facilities, which is prohibited
by the foregoing provisions of this sec-
tion. [Rule 10]
(27 FR. 6211, June 30, 1962, as amended
at 29 FR. 9369, July 9, 1964]
§ 105.11 Prohibited forms of trade re-
strainis (unlawful price fixing, etc.)."
It is an unfair trade practice for any
member of the industry, elther 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 indus-
try, 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, intimi-
dation, 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 un-
fair trade practices.
It is an unfair trade practice for any
person, firm, or corporation to aid, abet,
1The prohibitions of this section are sub-
ject to Publlc Law 542, approved July 14,
1952-66 Stat. 682 (the McGuire Act, com-
monly referred to as the Fair Trade Amend-
ment) which provides that with respect to
&® commodity which bears, or the label or
container of which bears the trade-mark,
brand, or name of the producer or distribu-
tor of such commodity and whlch ts in free
and open competition with commodities of
the same general class produced or distrib-
uted 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, oF
between factors, or between retailers, or be-
tween persons, firms, or corporations in com-
petition with each other.
Titie 16—Commercial Practices
coerce, or induce another, directly or
indirectly, to use or promote the use of
any unfair trade practice prohibited by
this part. [Rule 12]
.PART 114—PRESERVE MANUFAC-
TURING INDUSTRY *
Group I
Sec.
114.1 Falsely advertising, marking or brand-
ing preserves.
114.2 Disclosure in respect to imitations.
1148 False invoicing.
Avurnoerrry: Secs. 6(g), 5, 88 Stat. 722, 719;
16 U.S.C. 46(g), 45, unless otherwise noted.
Source: Trade practice rules, Preserve
Manufacturing Industry, FTC, Sept. 12, 1936,
unless otherwise noted.
§ 114.1 Falsely advertising, marking or
branding preserves.
Tho practice of selling, advertising,
describing, branding, marking, labeling
or packing of fruit preserves, fruit jams,
fruit jellies or apple butter, or any simu-
lation thereof, in a manner which fs cal-
culated to mislead or deceive, or has the
tendency and capacity or effect of mis-
leading or deceiving, purchasers, pro-
spective purchasers or the consuming
public, with respect to the character,
nature, content, grade, quality, quantity,
substance, material, preparation or
manufacture of such product, or in any
other material respect, is an unfair trade
practice. For purposes of this section:
(a) Preserve, fruit preserve, jam, fruit
jam, are understood to mean the clean,
sound fruit product possessing definite
characteristic flavor of the preserved
fruit or fruits named on the label, made
by cooking or concentrating to a sultable
consistency properly prepared, clean,
sound, entire edible portion of fresh
fruit, cold-packed fruit, canned fruit, or
@ mixture of two or all of these, with
sugar or with sugar and water, with or
without spice or vinegar, or with such
harmless organic acids as may be neces-
sary to compensate for natural acid defi-
elency of the particular fruit used, but
1This part does not, in any respect, sup-
plant or relieve anyone of the necessity of
complying wlth the legal requirements of the
pure food laws or other provisions of law.
They are established under the Federal Trade
Commission Act for the purpose of more ef-
fectlvely stamping out unfair competitive
practices in the interest of the public, and
to assist in general law enforcement to this
end,
492