Paint And Varnish Industry

16 CFR Part 136 · Trade practice rules · in the Code of Federal Regulations 1975-1975 (1 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 These rules and guides are historical: most were rescinded or replaced, so do not assume any is in force.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, 1975 CFR · Earliest edition: 1975 CFR

Text (1975 edition, OCR)

§ 134.101

customer in connection with the process-
ing, handling, sale, or offering for sale
of any products or commodities manu-
factured, sold, or offered for sale by such
member, unless such payment or con-
sideration is available on proportionally
equal terms to a]jl other customers com-
peting in the distribution of such prod-
ucts or commodities.

(d) Prohibited discriminatory services
or facilities. It is an unfair trade prac-
tice for any member of the industry
engaged in commerce to discriminate
in favor of one purchaser against an-
other purchaser or purchasers of a com-
modity beught for resale, with or with-
out processing, by contracting to furnish
or by furnishing, or by contributing to
the furnishing of, any services or facili-
ties connected with the processing, han-
dling, sale, or offering for sale of such
commodity so purchased upon terms not
accorded to ail purchasers on propor-
tionally equal terms.

(e) Illegal price discrimination. It is
an unfair trade practice for any mem-
ber of the industry or other person en-
gaged in commerce, in the course of
such commerce, to discriminate in price
in any other respect contrary to section
2 of the Clayton Act as amended by the
act of Congress approved June 19, 1936
(49 Stat. 1526-8; 15 U.S.C. 13-13b, 21a),
or knowingly to induce or recelve a dis-
crimination in price which 1s prohibited
by such section as amended.

(Sec. 2, 38 Stat. 730, as amended, secs. 2,3, 4,
49 State. 1627, 1528; 15 U.B.C. 18, 13a, 13b
a

Group II
§ 134.101 Cost records.

It is the judgment of the industry that
each member should independently keep
Proper and accurate records for deter-
mining his costs.

§ 134.102 Repudiation of contracts.

Lawful contracts are business obliga-
tions which should be performed in
letter and in spirit. The repudiation of
contracts by sellers on a rising market or
by buyers on a declining market is con-
demned by the industry.

§ 134.103 Promotion of use of Ameri-
can agricultural products.

The industry recommends that the
members thereof in the manufacture of
their products encourage and promote
the greater consumption of raw materials
produced by American agriculture.

Title 16—-Commercial Practices

PART 136—PAINT AND VARNISH
BRUSH INDUSTRY

Sec.

136.0 Definitions.

136.1 Deception (general).

136.2 Deception as to the kind of matertal
of which the brushing part of a
brush is composed.

136.3 Misrepresentation as to setting.

186.4 Misleading price quotations, etc.

136.5 False invoicing.

136.6 Substitution of products.

186.7 Inducing breach of contract.

136.8 Commercial bribery.

186.9 Deceptive use of trade or corporate
names, trade-marks, etc.

136.10 Misrepresenting character of busi-
ness,

136.11 Use of word “free.”

136.12 Consignment distribution.

136.13 Prohibited sales below cost.

136.14 Misrepresenting products as con-
forming to standard.

186.15 Guarantees, warrantles, etc.

136.16 Defamation of competitors or false
disparagement of their products,

186.17 Misrepresentation as to origin and

disclosure of foreign origin.

136.18 Prohibited forms of trade restraints.

136.19 Prohibited discrimination.

186.20 Exclusive deals.

136.21 Aiding or abetting use of unfair trade

practices.
COMMITTEE ON TRADE PRACTICES
136.201 Industry committee.

Auruority: Secs. 6, 5, 38 Stat. 721, 719; 15
U.S.C. 46, 45, unless otherwise noted.

Source: 23 FR 4362, June 17, 1958, unless
otherwise noted.

§ 136.0 Definitions.

(a) Industry members. Persons, firms,
corporations, and organizations engaged
in the manufacture, sale or distribution
of industry products as defined in this
section.

(b) Industry products. The term “in-
dustry preducts” and the word “‘brushes”
as used in the rules in this part includes
all types and kinds of brushes which are
designed for use in applying paint, var-
nish, lacquer, calcimine, wallpaper or
other decorative or protective coatings or
primers or undercoatings for such coat-
ings. Also non-wire brushes for use in
dusting or cleaning surfaces preliminary
to the application of such coatings or
undercoatings.

§ 136.1 Deception (general).

In the sale, offering for sale, or distri-
bution of industry products it is an un-

578


Chapter I—Federal Trade Commission

fair trade practice to use, or cause or
promote the use of, any trade promo-
tional Hterature or advertising matter,
however disseminated or published, or to
use any marking, brand, or label on any
such product, which, directly or by impli-
cation, or through failure to disclose
material information in conjunction
therewith, has the capacity and tendency
or effect of decelving purchasers or pros-
pective purchasers of such product in any
matevial respect.

§ 136.2 Deception as to the kind of ma-
terial of which the hrushing part of
a hrush is composed.

In the sale, offering for sale, or distri-
bution of industry products, it is an un-
fair trade practice:

(a) To represent or imply that the
brushing part of a brush is of a different
kind or type of material than is in fact
the case; or

(b) To fail correctly to identify, In the
manner set forth in this paragraph, the
kind of material of which the brushing
part of a brush is composed when, by
reason of the similarity of such material
to another or other kinds of material
used in the brushing part of brushes, the
failure to make the identification has the
capacity and tendency or effect of de-
ceiving purchasers or prospective pur-
chasers as to the true composition
thereof.

(1) Such identification shall be in the
form of a legible marking or stamping on
the handle or ferrule of the brush and
shall be of such size, conspicuousness,
and degree of permanency, as to be
noticeable and readable upon casual in-
spection when the brush is offered for
sale to consumer purchasers.

(2) When the composition of the
brushing part of a brush is of two or
more kinds of material, the identifica-
tion required by this paragraph shall be
of each kind in the order of its predomi-
nance by weight or be immediately ac-
companied by the percentage by weight
of the entire composition which it rep-
resents (Examples: When, by weight,
composed of 60 percent horsehair and
40 percent bristle—‘“Horsehair and
Bristle” or “60 percent Horsehair and 40
percent Bristle;” and when, by weight,
composed of 60 percent nylon and 40
percent bristle—‘Nylon and Bristle” or
“60 percent Nylon and 40 percent
Bristle’) : Provided, however, That when
any kind of material constitutes but an
insubstantial proportion of the entire

§ 136.6

mixture, the percentage by weight of the
mixture accounted for by such kind shall
immediately accompany the identifica-
tion thereof.

(3) In identifying the composition of
the brushing part of a brush:

(i) The word ‘bristle’ shall not be
used as descriptive of any material other
than hog or swine hair;

(ii) The term “China bristle” shall be
confined to hog or swine hair imported
from China;

(iil) No part of the composition shall
be described as tipped or flagged, or as
tapered to leveled, when such is not the

act;

(iv) No part of the composition shall
be represented as being “natural black”
or “undyed” when such is not the fact;

(v) Any part of the composition which
is used material shall be iunmediately ac-
companied by a clear and non-deceptive
disclosure of such fact.

§ 136.3 Misrepresentation as to setting.

It is an unfair trade practice to mis-
represent the materials used in the set-
ting of a brush or the process by which
the brushing part is affixed to the handle,
through the use of such terms as “Vul-
canized in Rubber,” “Epoxy,” or other-
wise, when such is not the fact.

§ 136.4 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 price quotations,
price lists, or terms or conditions of sale,
which have the capacity and tendency
or effect of misleading or deceiving pur-
chasers or prospective purchasers, or the
consuming public, in any material
respect.

§ 136.5 False 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 is
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.

§ 136.6 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 un-

579


§ 136.7

authorized 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 sam-
ples 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 ship-
ment or delivery; or

(b) Falsely representing the reason
for making a substitution.

§ 136.7 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 inter-
fering with or obstructing the perform-
ance of any such contractual duties or
services, under any circumstances hav-
ing 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 for any in-
dustry member to solicit the business of
@ customer or a competing industry
member nor is this 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 the customers of either of them,
or from the customers of any other in-
dustry member.

§ 136.8 Commereial bribery.

It is an unfair trade practice for a
member of the industry directly or in-
directly, to give, offer to give, or cause
to be given, money or anything of value
to agents, employees, or representatives
of custoiners or prospective customers, or
to agents, emplovees, or representatives
of coinpetitors’ 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 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 deal-
ing or contracting to deal with competi-
tors, or to effect any other advantage in

Title 16—Commercial Practices

favor of the industry member making
such gift or offer with respect to the sale
of industry products to such employers
or principals.

§ 136.9 Deceptive use of trade or cor-
porate names, trade-marks, etc.

The use of any trade name, corporate
name, trade-mark, or other trade desig-
nation which has the capacity and tend-
ency or effect of misleading or deceiving
the purchasing or consuming public as
to the character, name, nature, or origin
of any product of the industry, or any
material used therein, or which is false
or misleading in any other material re-
spect, is an unfair trade practice.

§ 136.10 Misrepresenting 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 indi-
rectly, that he is a manufacturer of in-
dustry 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 or extent, or type of his busi-
ness.

§ 136.11 Use of word “‘free’’.

In connection with the sale, offering
for sale, or distribution of industry prod-
ucts it is an unfair trade practice to use
the word “free,” or any other word or
words of similar import, in advertise-
ments 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 ali the conditions, obliga-
tions, or other prerequisites to the re-
ceipt 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 offeror (1) increases the
ordinary and usual price of such article
of merchandlse, or (2) reduces its quality,
or (3) reduces the quantity or size
thereof,

Note: The disclosure required by para-

graph (a) of this section shali appear in close
conjunction with the word “free” (or other

580


Chapter i—Federai

word or words of similar Import) wherever
such word first appears In each advertise-
ment 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.

§ 136.12

(a) It is an unfair trade practice for
any member of the industry to employ
the practice of shipping industry prod-
ucts on consignment without the express
request or prior consent of the pur-
chasers.

(b) It is an unfair trade practice for
any member of the industry to employ
the practice of shipping industry prod-
ucts on consignment or pretended con-
signment for the purpose and with the
effect of artificially clogging or closing
trade outlets and unduly restricting com-
petitors’ use of said trade outlets in
getting their products to purchasers
through regular channels of distribution,
thereby injuring, destroying, or prevent-
ing competition or tending to create a
monopoly or unreasonably to restrain
trade.

(c) Nothing in this section shall be
construed to authorize any understand-
ing or agreement, combination or con-
spiracy, or planned common course of
action, by and between industry mem-
bers, mutually to conform or restrict
their practice of shipping goods on con-
signment with the intent or effect of
lessening competition.

§ 136.13 Probibited 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 tle 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 a 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 obsoles-
cent goods; (2) made under judicial

Consignment distribution.

Trade Commission § 136.15
process; or (3) made in bona fide discon-
tinuance of business in the goods con-
cerned.

(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 bo determined by an
industry cost survey or some other
method. It consists of the total outlay
or expenditure by the seller in the acqui-
sition, 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, process-
ing, preparation for marketing, sale, and
delivery of the products. Not to be in-
cluded are dividends or interest on bor-
rowed or invested capital, or nonoperat-
ing losses, such as fire losses and losses
from the sale or exchange of capital
assets. Operating cost should not be re-
duced 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 mem-
ber from compliance with any of the
requirements of the Robinson-Patman
Act.

§ 136.14 Misrepresenting products as
conforming to standard.

In connection with the sale or offering
for sale of industry products, it is an
unfair trade practice to represent,
through advertising or otherwise, that
such products conform to any standard
recognized in or applicable to the in-
dustry when such is not the fact.

§ 136.15 Guarantees, warranties, etc.

(a) It is an unfair trade practice to
represent, in advertising or otherwise,
that any industry product is ‘‘guaran-
teed” unless the nature and extent of
such guarantee is conjunctively disclosed
and without deceptively minimizing the
terms and conditions relating to the obli-
gation of the guarantor.

(b) It is also an unfair trade practice
to use, or cause to be used, any guarantee
in which the obligations of the guarantor
are impracticable of fulfillment, or in
respect to which the guarantor fails or
refuses to observe his liabilities there-
under.

581


§ 136.16

(c) This section shall be applicable not
only to guarantees but also to warranties,
to purported guarantees and warranties,
and to any promise or representation in
the nature of a guarantee or warranty.

§ 136.16 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 grade or quality of the
goods of competitors, their credit terms,
values, policies, services, the nature or
form of the business conducted, or in any
other material respect, is an unfair trade
practice.

§ 136.17 Misrepresentation as to origin
and disclosure of foreign origin.

(a) It is an unfair trade practice to
misrepresent the place of origin, produc-
tion, assembly, or manufacture of indus-
try products or their components.

(b) (1) It is also an unfair trade prac-
tice to offer for sale, sell, or distribute
any industry product manufactured or
produced in a foreign country, or any
industry product containing a substan-
tial or material part manufactured or
produced in a foreign country, without
affirmatively and clearly disclosing the
fact that such product or part was man-
ufactured or produced in an identified
foreign country, when the failure to
make such disclosure has the capacity
and tendency or effect of misleading or
deceiving purchasers or prospective pur-
chasers.

(2) Such identification, when required,
shall be in the form of a legible marking
or stamping on the handie or ferrule
of the brush, or on a label or tag securely
attached thereto, and shall be of such
size, conspicuousness, and degree of
permanency, as to be noticeable and
readable upon casual inspection when
the brush is offered for sale to con-
sumer purchasers.

Note 1: Nothing in paragraph (b) of this
section is to be construed as requiring dis-
closure of the foreign origin of material or
parts which, by reason of further processing
in this country subsequent to their importa-
tion, no longer retain the appearance and
essential characteristics possessed by them at
the time of thelr importation.

Nore 2: Nothing in this section shall be
construed as relieving any member of the
industry or other party of the necessity of

Title 16—Commerclal Practices

complying with the requirements of the
customs laws or regulations relating to the
marking of imported articles.

§ 136.18 Prohibited forms of trade re-
straints.’

It is an unfair trade practice, either di-
rectly or indirectly, to engage in any
planned common course of action, or to
enter into or take part in any under-
standing, agreement, combination, or
conspiracy with one or more industry
members, or with any other person or
persons, to fix or maintain the price of
any goods or otherwise unlawfully to re-
strain trade; or to use any form of
threat, intimidation, or coercion to in-
duce 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.

§ 136.19 Prohihited discrimination.*

(a) Prohibited discriminatory prices,
rebates, refunds, discounts, credits, etc.,

1The inhibitions of this section are sub-
ject to Public Law 542, approved July 14,
1952, 66 Stat. 6382 (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 com-
modity and which ts 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
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 applled
to intrastate transactions under the laws
of the State, Territory, or territorial juris-
diction in which the resale is to be made or
to which the commodity ts to be trans-
ported for such resaie, and when such con-
tract or agreement is not between manu-
facturers, or between wholesalers, or between
brokers, or between factors, or between re-
tallers, or between persons, firms, or corpo-
rations in competition with each other.

*As 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 District
of Columbia or any foreign nation, or within
the District of Cotumbia or any Territory or
any insular possession or other place under
the jurisdiction of the United States.”

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Chapter |—-Federal Trade Commission

which effect unlawful price discrimina-
tion. It is an unfair trade practice for
any member of the industry engaged in
commerce, in the course of such com-
merce, to grant or allow, secretly or
openly, directly or indirectly, any rebate,
refund, discount, credit, or other form of
price differential, where such rebate, re-
fund, 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, con-
sumption, 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 in-
stitutions not operated for profit, as sup-
plies for their own use;

(2) That nothing contained in this
paragraph shali prevent differentials
which make only due allowance for
differences in the cost of manufacture,
sale, or delivery resulting from the differ-
ing methods or quantities in which such
commodities are to such purchasers sold
or delivered;

NoTE: 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 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 cus-
tomers in bona fide transactions and
not in restraint of trade;

§ 136.19

(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,
actual or imminent deterioration of per-
ishable goods, 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 com-
petitor.

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.

(b) Pronibited brokerage and com-
missions. It is an unfair trade practice
for any member of the industry en-
gaged in commerce, in the course of such
commerce, to pay or grant, or to receive
or accept, anything of value as a coimn-
mission, brokerage, or other compensa-
tion, 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 in-
termediary therein where such inter-
mediary 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) Prohibitec advertising or promo-
tional allowances, ctc. 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 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 suck member,
unless such payment or consideration is
available on proportionally equal terms
to ail other customers competing in the
distribution of such products or com-
modities.

583


§ 136.20

(ad) Prohibited discriminatory services
or facilities. It is an unfair trade prac-
tice 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 fur-
nishing of, any services or facilities con-
nected with the processing, handiing,
sale, or offering for sale of such com-
modity so purchased upon terms not
accorded to all competing purchasers on
proportionally equal terms.

Note: See subsection (b) of section 2 of
the Clayton Act as amended, which ts set
forth tn the note follfowlng 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
industry engaged in commerce, in the
course of such commerce, knowingly to
induce or receive a discrimination in
price which is prohibited by the fore-
going provisions of this section.

Note: Paragraph (e) of this section ts 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 lower price knowing, or knowing
facts from whlch he should have known,
that such price was violative of section 2(a)
of said act and not justified under subpara-
graphs (2), (4) or (5) of paragraph (a) of
this section.

When, in any such proceeding, the issue is
Mmited to the question of whether the price
differential involved made only due allow-
ance for differences in cost of manufacture,
sale, or delivery resulting 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
puyers paying the higher price or prices; or

(2) By showing, when there ts 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 competing
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 known

Title 16—Commerciol Practices

that they could not have resulted In sufficient
cost savings of the kind and character spec-
ified as to justify the price differential.

Note: Section 136.19 ts based on the pro-
visions of section 2 of the Clayton Act as
amended by the Roblnson-Patman Act.

Subsection (b) of section 2 of the Clayton
Act as amended, which reads as follows, is in
ampilficatlon of the note to subparagraph
(5) of paragraph (a) of this section and of
the note to paragarph (d) of this section.

“Upon proof belng made, at any hearing
on a complaint under this section, that there
has been discrimination in price or servlces or
facilities furnished, the burden of rebutting
the prima facle 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 ts 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 the 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 com-
petitor, or the services or facilities furnished
py a competitor.”

§ 136.20 Exclusive deals.

It is an unfair trade practice for any
member of the industry to contract to
sell or sell any industry product, or fix
a price charged therefor, or discount
from, or rebate upon, such price, upon
the condition, agreement, or understand-
ing that the purchaser thereof shail not
use or deal in the product of a competitor
or competitors of such industry member,
where the effect or such sale or contract
or understanding, may be substantially
for sale, or of such condition, agreement,
to lessen competition or tend to create
a monopoly in any line of commerce.

§ 136.21 Aiding or abetting use of un-
fair 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 specified in this
part.

COMMITTEE ON TRADE PRACTICES
§ 136.201 Industry committee.

The provisions of § 16.1 of this sub-
chapter shall be applicable to an indus-
try committee established under this
part.

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