Buff And Polishing Wheel Manufacturing Industry
16 CFR Part 109 · Trade practice rules · in the Code of Federal Regulations 1938-1976 (13 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 These rules and guides are historical: most were rescinded or replaced, so do not assume any is in force.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, 1976 CFR · Earliest edition: 1938 CFR
Text (1976 edition, OCR)
Chapter I—Federal Trade Commission products, where the effect may be to sub- stantially 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 in- voice a false record, wholiy 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” inde- pendent. The practice by a member of the in- dustry of selling or marketing industry products through a pretended independ- ent concern to induce the purchasing public to believe such concern is inde- pendent and in competition with the said member of the industry ownmg or con- trolling such concern, when such is not the fact, with the tendency or capacity to mislead or deceive purchasers, pro- spective purchasers or the consuming public, is an unfair trade practice. PART 109-——-BUFF AND POLISHING WHEEL MANUFACTURING INDUS- TRY Sec. 109.0 Definitions. 109.1 Misrepresentation and deception (general). 109.2 Misrepresentation as to character of business. 109.3 Misrepresenting products as con- forming to standard. 109.4 False and misleading price quota- tions, etc. 109.5 Deceptive invoicing. 109.6 Substitution of products. 109.7 Prohibited sales below cost. 109.8 Inducing breach of contract. 109.9 Defamation of competitors or false disparagement of their products. 109.10 Procurement of competitors’ confi- dential information by unfair means and wrongful use thereof. 109.11 Commercial bribery. 109.12 Prohibited forms of trade restraints (unlawful price fixing, etc.). 109.13 Prohibited discrimination. 109.14 Aiding or abetting use of unfair trade practices, COMMITTEE ON TRADE PRACTICES 109.201 Industry committee. AuvrnHority: Secs. 6(g), 5, 38 Stat. 722, 719; 15 U.S.C. 46, 45, unless otherwise noted. § 109.3 Source: 22 FR 4497, June 27, 1957, unless otherwise noted. § 109.0 Definitions. (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 with- out abrasives, for surface finishing. § 109.1 Misrepresentation and decep- tion (general). It is an unfair trade practice for any industry member, in connection with the offering for sale, sale, or dis- tribution of industry products, to use, or cause or promote the use of, any trade promotional literature, advertlsing 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 distribu- tion of any product of the industry, or in any other material respect. § 109.2 Misrepresentation as to charac- ter of busincss. It is an unfair trade practice for any industry meinber, in the course of or in connection with the offering for sale, sale, or distribution of industry products, to misrepresent the character, extent, vol- ume, 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, per- sonal 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. 529 § 109.4 § 109.4 False and misleading price quo- tations, 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 prod- ucts, to publish or circulate false or mis- leading 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 consum- ing public, in any material respect. § 109.5 Deceptive invoicing. Withholding from or inserting in in- voices any statement or information by reason of which omission or insertion a false, inaccurate, or incomplete record 1s made, which has the capacity and tend- ency or effect of deceiving purchasers, Prospective purchasers, or the consum- ing 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 unau- thorized substitution of products, where such substitution has the capacity and tendency or effect of misleading or de- ceiving purchasers or the consuming public, by— (a) Shipping or delivering industry products which do not conform to sam- ples submitted, to specifications upon which the sale is consummated, or to rep- resentations made prior to securing the order, without advising the purchaser of the substitution and obtaining his con- sent thereto prior to making shipment or delivery; or (b) Falsely representing the reason for making a substitution. Nore: Nothing in this section shall be con- strued 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 pro- moted 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, sup- press, or stifle competition or tend to Title 16—Commercial Practices 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 mo- nopoly. Among the situations in which the requisite purpose or intent wouid ordinarily be lacking are cases in which such saies were: (1) of obsolescent goods; (2) made under judicial process; or (3) made in bona fide discontinuance of busi- ness 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 mdustry 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 ac- quisition, 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 non- operating losses, such as fire losses and losses from the sale or exchange. of capital assets. Operating cost shouid not be reduced by items or nonoperating incoine, such as income from invest- ments, and gain on the sale of capital assets. (d) Nothing in this section shall be construed as relieving an industry mem- ber 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 per- formance of any such contractual duties or services, under any circumstances having the capacity and tendency or effect of substantially injuring or lessen- ing present or potential competition. 530 Chapter |I—Federal 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 any- wise authorizing any agreement, under- standing, or planned common course of ac- tion 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. § 109.9 Defamation of competitors or false disparagement of their prod- ucts. It is an unfair trade practice for any industry member— (a) To defame competitors by faisely imputing to them dishonorable conduct, inability to perform contracts, question- able 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 einployment. § 109.10 Procurement of competitors’ confidential information hy unfair means and wrongful use thereof, It is an unfair trade practice for any member of the industry to obtain infor- mation concerning the business of a com- petitor by bribery of an employee or agent of such competitor, by false or mis- leading 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- tially to injure competition or unreason- ably restrain trade. § 109.11 Commercial bribery. 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 in- ducement 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 mem- Trade Commission § 109.13 ber making such gift or offer with respect to the sale of industry products to such employers or principals. § 109.12 Prohibited forms of trade re- straints (unlawful price fixing, ete.)." It is an unfair trade practice for any industry member, either directly or indi- rectly, to engage in any planned common course of action, or to enter into or take part in any understanding, agree- ment, 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, intimida- tion, or coercion to induce any member of the industry or other person or per- sons to engage in any such planned com- mon course of action, or to become a party to any such understanding, agree- ment, combination, or conspiracy. § 109.13 Prohibited discrimination.’ (a) Prohibited discriminatory prices, or rebates, refunds, discounts, credits, 1The inhibitions of this section are subject to Public Law 542, approved July 14, 1952, 66 Stat. 632 (the McGuire Act) which pro- vides that with respect to a commodlty whlch bears, or the label or container of which bears, the trade-mark, brand, or name of the producer or distributor of such com- modity and which is in free and open com- petition with commodities of the same general class produced or distributed by others, a seller of such a commodity may en- ter 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 con- tract 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 agree- ment is not between manufacturers, or between wholesalers, or between brokers, or between factors, or between retailer, or between persons, firms, or corporations in competition with each other. 2As used in this section, the word “com- merce” 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 Dis- trict of Columbia or any foreign nation, or within the District of Columbia or any Terri- tory or any Insular possession or other place under the jurisdiction of the United States.” 531 § 109.13 etc., which effect unlawful price discrimi- nation. It is an unfair trade practice for any industry member engaged in com- merce, in the course of such commerce, to grant or allow, secretly or openly, di- rectly 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 other 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 competi- tion 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, con- sumption, or resale within any place un- der the jurisdiction of the United States, and are not purchased by schools, col- leges, universities, public libraries, churches, hospitals, and charitable in- stitutions 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 delivery resulting from the differing methods or quantities in which such commodities are to such purchasers sold or delivered; Nore: Cost justification under proviso (2) depends upon net savings in cost based on all facts relevant to the transactions under the terms of this proviso. For example, if a seiler regularly grants a discount based upon the purchase of a specified quantity by a singie 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 deiiveries. (3) That nothing contained in this section shall prevent persons engaged in sellmg 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 Title 16—Commercial Practices the goods concerned, such as but not limited to distress sales under court process, or sales in good faith in dis- continuance 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: See subsection (b) of section 2 of the Clayton Act as amended, which is set forth in the note following paragraph (e) of this section. Exampies with reference to this para- graph: The following are examples of price differential practices to be con- sidered as subject to the prohibitions of this paragraph when involving goods of like grade and quality sold for use, con- sumption, or resale within any place under the jurisdiction of the United States, and which are not purchased by schools, colleges, universities, public li- braries, churches, hospitals, and chari- table institutions not operated for profit, as supplies for their own use, and when— (i) The commerce requirements speci- fied in this paragraph are present; and (ii) The price differential has a rea- sonable probability of substantially less- ening competition or tendmg to create a monopoly in any line of commerce, or of injuring, destroying, or preventing com- petition with the industry member or with the customer receiving the benefit of the price differential, or with cus- tomers of either of them; and (iii) The price differential is not justi- fied by cost savings (see subparagraph (2) of this paragraph); and (iv) The price differential is not made in response to changing conditions af- fecting the market for or the market- ability of the goods concerned (see sub- paragraph (4) of this paragraph); and (v) The lower price was not made to meet in good faith an equally low price of a competitor (see subparagraph (5) of this paragraph). : Example A, At the end of a given period an industry member grants a discount to a customer equivalent to a fixed percentage of the total of the customer’s purchases during such period and fails to grant such discount to other customers under like conditions. Example B. An industry member sells goods to one or more of his customers at a higher price than he charges other custom- ers for like merchandise. It is tmmaterial whether or not such discrimination is ac- complished by misrepresentation as to the grade and quality of the products sold. 532 Chapter I—Federal Trade Commission (b) Prohibited brokerage and com- missions. It is an unfair trade practice for any member of the industry engaged in commerce, in the course of such com- merce, to pay or grant, or to receive or accept, anything of value as a commis- sion, brokerage, or other compensation, or any allowance or discount in lieu tnereof, 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 in- termediary therein where such interme- diary is acting in fact for or in behalf, or is subject to the direct or indirect con- trol, of any party to such transaction other than the person by whom such compensation is so granted or paid. (c) Prohibited advertising or promo- tional allowances, etc. It is an unfair trade practice for any member of the in- dustry engaged in commerce to pay or contract for the payinent 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 coinpensation or in consideration for any services or facili- ties furnished by or through such cus- tomer 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 com- modities. (ad) Prohibited discriminatory services or facilities. It is an unfair trade prac- tice for any member of the industry en- gaged in commerce to discriminate in favor of one purchaser against another purchaser or purchasers of a commodity bought for resale, with or without proc- essing, by contracting to furnish or fur- nishing, or by contributing to the fur- nishing of, any services or facilities con- nected with the processing, handling, sale, or offering for sale of such com- modity so purchased upon terms not accorded to all competing purchasers on proportionally equal terms. Nore: See subsection (b) of section 2 of the Clayton Act as amended, which is set forth in the note foliowing paragraph (e) of this section, (e) Inducing or receiving an illegal discrimination in price. It is an unfair trade practice for any member of the § 109.13 industry engaged in commerce, in the course of such commerce, knowingly to induce or receive a discrimination in price which is prohibited by the provi- sions of this section. Nove: Paragraph (e) of this section is a restatement of section 2 (f) of the Clayton Act as amended. In a complaint proceeding under this section, in order to make out a prima facie violation, the Commission must show that the favored buyer induced or received the iower price knowing, or knowing facts from which he should have known, that such price was violative of section 2 (a) of said act and not justified under sub- paragraph (2), (4), or (5) of paragraph (a) of this section. When, in any such pro- ceeding, the issue is limlted to the question of whether the price differential involved made only due allowance for differences in cost of manufacture, sale, or delivery result- ing from the differing methods or quantities in which the goods were sold and delivered, the Commission may establish a prima facie case in a number of ways, including: (1) By showing that the buyer paying the lower price knew that the methods by, and quantities in, which the goods were sold and delivered to him by the seller were the same as in the case of the competing buyer or buyers paying the higher price or prices; or (2) By showing, when there is a difference in the methods or quantities in which the goods were sold and delivered by the seller to the buyer than in the case of the com- peting buyer or buyers paying the higher price or prices, that the buyer paying the lower price or prices knew the nature and extent of such differences and knew or should have kuown that they could not have resulted in sufficient cost savings of the kind and character specified as to justify the price differential, Nore: Section 109.13 is based on the pro- visions of section 2 of the Clayton Act as amended by the Robinson-Patman Act. Subsection (b) of section 2 of the Clay- ton Act as amended, which reads as follows, is in amplification of the note to subsection (5) of paragraph (a) of this section and of the note to paragraph (d) of this section: “Upon proof being made, at any hearing on @ complaint under this section, that there has been discrimination in price or services or facillties furnished, the burden of re- butting the prima facie case thus made by showing justification shali be upon the per- son charged with a vioiation of this section. and unless justification shali be affirmatively shown, the Commission is authorized to is- sue an order terminating the discrimination: Provided, however, That nothing herein con- tained shall prevent a seiler rebutting the prima facle 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 falth to meet an equally 533 § 109.14 iow price of a competitor, or the services or facilities furnished by a competitor.” $109.14 Aiding or abetting use of un- fair trade practices. It is an unfair trade practice for any industry member to aid, abet, coerce, or induce another, directly or indirectly, to use or promote the use of any unfair trade practice specified in §§ 109.0 to 109.14. COMMITTEE ON TRADE PRACTICES § 109.201 Industry committce. The provisions of § 16.1 of this sub- chapter shall be applicable to an industry committee established under this part. PART 110—COTTON CONVERTING INDUSTRY Grour 1 Sec. 110.1 Misrepresentation of industry prod- ucts. 110.2 Misbranding. 110.3. False invoicing. 110.4 Deception as to origin. 110.5 Substitution of products. 110.6 Inducing breech of contract. 110.7 Commercial bribery. 110.8 Imitation of trade-marks, etc. 110.9 Defamation of competitors or dis- paragement of their products. 110.10 Fictitious price lists. 110.11 Use of lottery schemes. 110.12 Prohibited discrimination. 110.13 Aiding or abetting use of unfair trade practices. Group IT 110.101 Saturday and Sunday closings. 110.102 Repudiation of contracts. 110.103 Information as to width, count and weight to appear on invoices and confirmations of orders, 110.104 Use of samples. AurHority: Secs. 6, 5, 38 Stat. 721, 719; 15 U.S.C. 46, 45, unless otherwise noted. Source: 14 FR 2588, May 17, 1949, unless otherwise noted. Group I § 110.1 Misrepresentation of industry products. It is an unfair trade practice to make or publish, or cause to be made or pub- lished, directly or indirectly, any false, misleading or deceptive statement or rep- resentation, by way of advertisement or otherwise, concerning the grade, quality, quantity, use, size, material, content, Title 16—Commercial Practices thread count, origin, shrinkage proper- ties, colorfastness, washability, produc- tion, manufacture or distribution of any product of the industry or concerning any component of such product, or in any other material respect. § 110.2 Misbranding. The false or deceptive marking or branding of products of the industry with respect to the grade, quality, quantity, use, size, material, content, thread count, origin, shrinkage properties, colorfast- ness, washability, production, manufac- ture or distribution of such products, or in any other material respect, is an un- fair trade practice. § 110.3 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, with the effect of thereby misleading or deceiving pur- chasers, prospective purchasers of the consuming public, is an unfair trade practice. § 110.4 Deception as to origin. In respect to any fabrics of the follow- ing types: Fabrics which have been woven or fabricated in a foreign country and imported in the gray or other un- finished state and dyed or finished in the United States; or fabrics which have been imported in the finished state and dyed, redyed or refinished in the United States; is an unfair trade practice: (a) To offer for sale, sell or distribute any such fabrics under marks, stamps, brands, labels or representations which have the capacity and tendency or effect of misleading or deceiving purchasers or the consuming public into the erroneous belief that such fabrics were woven or fabricated in the United States, or that they were not so dyed, finished, redyed or refinished in the United States, as the case may be; or (b) To offer for sale, sell or distribute any such fabrics without the same being marked, stamped, branded or labeled so as to indicate clearly and nondeceptively (1) the country of origin of the fabric, and (2) that such fabrics were woven or fabricated in such country and were dyed or finished or redyed or refinished in the United States, as the case may be; the failure, refusal or omission to so mark, stamp, brand or labe) such fabrics having 534