Radio And Television Industry

16 CFR Part 142 · Trade practice rules · in the Code of Federal Regulations 1959-1978 (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 These rules and guides are historical: most were rescinded or replaced, so do not assume any is in force.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, 1978 CFR · Earliest edition: 1959 CFR

Text (1978 edition, OCR)

§ 131.6

spicuous size and legibility of type or
style, and should also appear similarly
on all invoices, labels, marks, or adver-
tisements which carry reference to the
shrinkage of the goods.

(c) The use of residual shrinkage
percentage designations not in confor-
mity with results obtainable under the
test specified in paragraph (e) of this
section, with the capacity and tenden-
cy or effect of misleading or deceiving
purchasers, prospective purchasers, or
the consuming public, ls an unfair
trade practice.

(da) The use or specification of an un-
reliable or inadequate test in any such
designations, or the refusal to specify
a test which ls proper and applicable,
when done for the purpose or with the
capacity and tendency or effect or di-
rectly or indirectly misleading or de-
ceiving purchasers, prospective pur-
chasers, or the consuming public, ls an
unfair trade practice.

(e) The following test is deemed to
be an accepted and recognized test for
determining shrinkage properties or
residual shrinkage of woven cotton
yard goods in the application of these
rules and is recommended for use as a
standard shrinkage test for this pur-
pose:

“Commercial Standard CS59-36”

$131.6 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, direct-
ly or indirectly, to use or promote the
use of any unfair trade practice speci-
fied in this part.

PART 142—RADIO AND TELEVISION
INDUSTRY

Sec.
142.0 Definitions.

Grovr I

142.1 Misbranding, misrepresentation, and
deceptive seiling methods.

142.2 “All-wave,” ‘“world-wave,” ‘“world-
wide wave,” ‘standard broadcast,” etc.
142.3 Specific types of advertisements or

representations among those prohibited.
142.4 Sponsorship.
142.5 Alteration of identifying names or
marks.

Title 16—Commercial Practices

Sec.

142.6-1 Representations concerning cabi-
net composition—avoiding deception and
making disclosures.

142.6-2 Describing wood components and
wood imitations.

142.6-3 Identity of woods.

142.7 Deceptive use or change of cabinets.

142.8 Alteration or removal of serial num-
bers.

142.9 [Reserved]

142.10 Deception as to the convertibility of
a television receiving set to services
other than those for which it was origi-
nally manufactured.

142.11 Misuse of terms “discontinued
model,” “floor sample,” “demonstrator,”
etc.

142.12 Deception as to being “new.”

142.13 Deception as to Identity of manu-
facturer when products are repaired, re-
conditloned, or rebuilt by other than the
original manufacturer.

142.14 Misuse of terms “factory rebuilt”
and “rebuilt.”

142.15 Deceptive pricing.

142.16 Misrepresentation as to the effec-
tiveness of televislon antennas.

142.17 Guaranties, warranties, etc.

142.18 Use of the word “free.”

142.19 False invoicing.

142.20 Imitation of trade-marks,
names, etc.

142.21 Tie-in sales—coercing purchase of
one product as a prerequisite to the pur-
chase of other products.

142.22 Unfair threats of infringement
suits.

142.23 Prohibited forms of trade restraints
(unlawful price fixing, etc.).

142.24 Consignment distribution.

142.25 Use of lottery.

142.26 Defamation of competitors or false
disparagement of their products.

142.27 Enticing away employees of com-
petitors.

142.28 Procurement of competitors’ confi-
dential information.

142.29 Commercial bribery.

142.30 Exclusive deals.

142.31 Push money.

142.32 Prohibited discrimination.

AuTuHoRITy: Secs. 6(g), 5, 38 Stat. 722, 719;
15 U.S.C. 46, 45, unless otherwise noted.
Source: 20 FR 4533, June 28, 1955, unless
otherwise noted.
§ 142.0 Definitions.

As used in the rules in this part, the
terms “industry member” and “indus-
try products” shall have the following
meanings, respectively:

Industry member: Any person, firm,
corporation, or organization engaged
in the manufacture, sale, or distribu-

trade

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Chapter I—Federal Trade Cammission

tion of industry products as herein-
after defined.

Industry products; Radio receiving
sets, television receiving sets, combina-
tion radio and television receiving sets,
or parts or accessories therefor.

Group I

§ 142.1 Misbranding, misrepresentation,
and deceptive selling methods.

It is an unfair trade practice for any
member of the industry, in the course
of the marketing or distribution of
products of the industry, (a) to use, or
promote the use of, any marks,
brands, labels, depictions, layouts, ad-
vertisements, prices, trade promotion-
al descriptions, or representations of
any kind, which, directly or by impli-
cation, are false, misleading, or decep-
tive to the purchasing or consuming
public; or (b) to offer for sale, sell, or
distribute, or promote the sale or dis-
tribution of, products of the industry
under any other conditions or selling
practices which have the capacity and
tendency or effect of misleading or de-
ceiving the purchasing or consuming
public in any material respect.

§ 142.2 “All-wave,” “world-wave,” “world-
wide wave,” “standard broadcast,” ete.

In the application of the rules in
this part, and for the purpose of avoid-
ing confusion, misunderstanding, and
deception:

(a) Except as provided in paragraph
(b) of this section, the terms “all-
wave,” ‘“world-wave,” ‘world-wide
wave,” or words, phrases, or represen-
tations denoting world-wide reception,
shall not be used as descriptive of a
radio receiving set advertised, offered
for sale, sold, or distributed in the
American market when such set is not
constructed to receive and capable of
receiving, with reasonable or adequate
consistency, the entire respective spec-
trum of radio frequencies, in recog-
nized use in the art, namely, all long-
wave broadcasts and transmissions, all
medium-wave and short-wave broad-
casts and transmissions, and all other
waves transmitted or broadcast, in-
cluding both foreign and domestic; ex-
cepting, however, that such set so de-
scribed or represented need not in-
clude within its capacity of reception

§ 142.2

such point-to-point transmissions as
are confidentia] and illegal for general
reception and divulgence to members
of the public, or such unchanging sig-
nals as emanate from radio beacons or
radio lighthouses, when such set is not
otherwise falsely or deceptively de-
scribed or represented, directly or indi-
rectly, as being constructed to receive,
or as being capable of receiving, such
point-to-point or beacon or lighthouse
transmissions.

(b) Nothing contained in this section
shall prohibit the use of the term
“limited all-wave,” “limited world-
wave,” “limited world-wide wave,” or
terms or words of similar import, as
descriptive of a radio receiving set ad-
vertised, offered for sale, sold, or dis-
tributed in the American market,
when such set is constructed for and
capable of consistently receiving at
least a continuous spectrum of fre-
quencies from 540 kilocycles to 18,000
kilocycles, provided such terms or
words are immediately accompanied
by words, phrases, or terms set forth
conspicuously and clearly, unequivo-
cally and truthfully stating the exact
wave bands or frequencies which such
set is capable of consistently receiving;
for example:

Limited All-Wave—From 540 to 18,000
kilocycles.

Limited All-Wave—From 530 to 21,000
kilocycles. |

Limited World-Wave—From 540 to 18,000
kilocycles.

Limited World-Wide Wave—From 540 to
18,000 kilocycles.

Limited All-Wave—From 140 to 410 kilocy-
cles, and from 540 to 18,000 kilocycles.

Limited World-Wave—From 540 to 18,000
kilocycles, and from 19,000 to 23,500 kilocy-
cles.

Limited World-Wide Wave—From 150 to
400 kilocycles, and from 540 to 35,000 kilocy-
cles.

(c) Nothing contained in this section
shall prohibit the use, as descriptive of
a radio receiving set, of the term “all-
wave” as an integral part of a clause,
sentence, or statement which truthful-
ly and unequivocally sets forth the
bands or radio frequencies such set
does not cover, and wherein the words
“all-wave” are not given greater promi-
nence or conspicuousness than the
other parts of such clause, sentence, or
statement, provided such set is con-

433 -


§ 142.3

structed for, and capable of receiving
with reasonable or adequate consisten-
cy, all the waves or bands of frequen-
cies from 540 to 18,000 kilocycles and
such other bands or frequencies as are
represented to be within its receptive
capacity. The following are illustrative
of such permissible phrases here pro-
vided for:

All waves except for frequencies above
21,000 kilocycles and below 540 kilocycles.

All waves except Asiatic stations.

All waves except foreign and domestic fre-
quencies above 18,000 kilocycies and below
540 kilocycles.

(ad) The terms “standard-broadcast
receiver,” ‘“frequency-modulation re-
ceiver” and “television receiver,” as de-
scriptive of an amplitude-modulation
or a frequency-moduiation radio or a
television receiving set, shall not be
used in such manner as to lead the
public to believe that such set is con-
structed for, and capable of receiving
with reasonable or adequate consisten-
cy, a greater number of radio or televi-
sion frequency signals or channels
than is in fact true of such set.

§ 142.3 Specific types of advertisements or
representations among those prohibit-
ed.

It is an unfair trade practice for any
member of the industry to use, or
cause to be used, any of the following-
described types of advertisements or
representations:

(a) Advertisements or representa-
tions stating, purporting, or implying
that any radio receiving set so adver-
tised or represented will receive dis-
tant stations or any or all foreigu
broadcasts or transmissions easily or
satisfactorily or as easily or satisfac-
torily as local or domestic reception,
when such is not the fact.

(b) Advertisements or representa-
tions stating, purporting, or implying
that any radio or television receiving
set so advertised or represented, or the
reception thereof, is not subject to in-
terference or to being interfered with
or interrupted by fading, noise, electri-
cal interference, atmospheric condi-
tions, static, or any other phenomena
or conditions, when such is not the
fact.

(c) Advertisements or representa-
tions with respect to the receiving ca-

Title 16—Commerciol Procticos

pacity or performance of any radio or
television receiving set which make de-
ceptively exaggerated or misleading
claims, or claims which are not justi-
fied and supported by the fact or per-
formance of such radio or television
receiving set.

(d) Advertisements or representa-
tions which directly or by implication
lead purchasers to believe that the
radio or television receiving set so ad-
vertised or represented is capable of:
greater or more consistent or satisfac-
tory performance or reception than is
in fact true.

(e) Advertisements or representa-
tions stating, purporting, or implying
that a radio receiving set so advertised
or represented will give world-wide
continuous reception or other continu-
ous reception, when such is not the
fact; or that the radio receivmg set
will given such reception or other re-
ception with loud-speaker volume,
when such is not the fact; or that the
radio receiving. set will give world-wide
reception or other reception regularly
or dependably, when such is not the
fact.

(f) Advertisements or representa-
tions of any radio receiving set stating,
purporting, or implying that each sta-
tion or any station, whether nearby or
foreign or domestic, can be brought in,
or brought in with sharp, clear, or dis-
tinct reception, or with ease, simplic-
ity, or regularity, by any amplitude-
modulation radio receiving set so ad-
vertised or represented, when such is
not the fact.

(g) Advertisements or representa-
tions stating, purporting, or implying
that any radio receiving set so adver-
tised or represented will bring in or re-
ceive broadcasts from Europe, Africa,
South America, Australia, or Asia, or
from any other designated locality, or
that it will bring in such broadcasts, or
any of them, consistently or satisfacto-'
rily, when such is not the fact.

(h) Advertisements or representa-
tions stating, purporting, or implying
that any radio or television receiving
set so advertised or represented sifts
out noise or is free from noise, or
brings in far distant stations sharp or
clear, or brings in signals to weak
signal areas sharp or clear, or brings in

434


Chapter I—Federal Trade Commission

signals to fringe areas sharp or clear,
when such is not the fact.

(i) Advertisements or representa-
tions stating, purporting, or implying
that any radio receiving set so adver-
tised or represented will bring in or re-
ceive satisfactorily or consistently for-
eign stations, police calis, aviation
calls, radio transmissions from or to
Ships at sea, amateur stations, or other
types of radio transmissions, when
such is not the fact, or when only a
small part of any such class of radio
frequencies transmitted or broadcast
is so receivable and such fact, or the
fact that others of the same class are
not so receivable, is deceptively con-
cealed.

(j) Advertisements or representa-
tions stating, purporting, or implying
that a radio or television receiving set
so advertised or represented contains a
certain number of tubes or their equiv-
alents or is of a certain tube capacity
or equivalent tube capacity when one
or more of such tubes or their equiv-
alents in the set are dummies or fakes
or contribute no useful function
toward enhancing the normal and in-
tended operation of the amplitude-
modulation or frequency-modulation
radio or television receiving set.

Nore: In order to avoid and prevent mis-
leading tendencies or results, so-called “‘bal-
last tubes,” dial or other lamps used for illu-
mination, so-called “plug-in resistors,” and
other like accessories or devices not provid-
ing the recognized and customary functions
or tubes used to enhance the operation of a
radio or a television receiving set, are not to
be included as tubes or their equivalents in
advertisements or representations of a radio
or a television receiving set which describe
or refer to the set as having a certain
number of tubes or their equivalents or as
being of a specified tube capaclty or equiv-
alent tube capacity. Rectifier tubes, used to
supply power to the set, shall not be includ-
ed in the computation of tube count of such
set.

(k) Advertisements or representa-
tions stating, purporting, or implying
that radio or television receiving sets
so advertised or represented are of a
current model, as specified by the
manufacturer, when such is not the
’ fact; or advertisements or representa-
tions which, directly or indirectly,
have the capacity and tendency or
effect of leading the purchasing public

§ 142.4

to believe that the set is of the current
year’s model or has not been supplant-
ed, superseded, or succeeded by a
newer or later model, when such is not
true in fact; or advertisements or rep-
resentations which are otherwise de-
ceptive or misleading respecting the
inodel of the set.

Norte: The term “current,” in reference to
a model means that the said model appears
in the prevailing literature published by the
advertiser.

(1) Advertisements or representa-
tions concerning a radio or a television
receiving set which, by reference to
the name of the manufacturer, or one
or more component parts of the set, or
to a patent license pursuant to which
the set was manufactured, or other-
wise, have the capacity and tendency
or effect of misleading purchasers or
the consuming public into the belief
that such set is manufactured or spon-
sored by said component part manu-
facturer or patent licensor, when such
is not the fact.

(m) Advertisements or representa-
tions stating, purporting, or implying
that a television receiving set is a color
television receiving set unless such re-
ceiving set is capable, as so constitut-
ed, or reproducing color television sig-
nals in color as transmitted from a
television station transmitting in
color; or advertisements or representa-
tions which, directly or indirectly,
have the capacity and tendency or
effect of leading the purchasing public
to believe that the television receiving
set is capable of reproducing color
television transmission signals in color
as transmitted from a color television
transmitting station, when such is not
the fact.

(n) Advertisements or representa-
tions stating, purporting, or implying
that a device for color television is ca-
pable of producing television pictures
in color as broadcast, when such is not
the fact.

§ 142.4 Sponsorship.

It is an unfair trade practice to use,
or cause to be used, advertisements or
representations relating to any radio
or television sets, parts or accessories
therefor, or to other products of the
industry, which have the capacity and
tendency or effect of misleading pur-

435


§ 142.5

chasers or the consuming public into
the belief that such radio or television
receiving sets, parts, accessories, or
products are sponsored by, or are oth-
erwise associated with, any person,
concern, or organization, when such is
not the fact. .

§ 142.5 Alteration of identifying names or
marks.

It is an unfair trade practice for any
industry member to remove or deface
the name, trade name, or trade-mark
of any manufacturer appearing on any
industry products when such removal
or defacement has the capacity and
tendency or effect of deceiving pur-
chasers or prospective purchasers of
the product in any material respect.

§ 142.6-1 Representations concerning
cabinet composition—avoiding decep-
tion and making disclosures.

(a) In general, industry members
should not sell, offer for sale, or dis-
tribute any industry product under
any representation or circumstance,
including failure to disclose material
facts, that has the capacity and ten-
dency or effect of misleading or de-
ceiving purchasers or prospective pur-
chasers with respect to the construc-
tion, composition, durability, design,
style, quality, model, origin, manufac-
ture, or grade of any cabinet or other
enclosure.

(b) Affirmative disclosures. Material
facts concerning merchandise, which
if known to prospective purchasers
would influence their decision of
whether or not to purchase, should be
disclosed. This includes situations
where deception may result from the
appearance alone which, in the ab-
sence of affirmative disclosures, could
have the capacity and tendency or
effect of misleading or deceiving. For
example, veneered construction, use of
plastic with simulated wood appear-
ance, use of materials or products that
simulate other materiais or products
used in the manufacture of cabinets,
or use of simulated fmish or grain
design, are considered to be material
facts and a failure to disclose such in-
formation may be an unfair trade
practice or deceptive act or practice
violative of section 5 of the Federal
Trade Commission Act.

Title 16—Cammercial Practices

Norte: In the absence of statements which
could be misleading if not qualified, disclo-
sure will not be required of the fact that
components such as knobs, handles, pulis,
and similar parts attached to cabinets, have
been plated or colored to simulate precious
or semiprecious metals.

(1) Where disclosures should be
made. Unless otherwise provided, any
affirmative disclosure which should be
made under this part should be on the
industry product, or on a tag or label
prominently attached thereto, and
should be of such permanency as to
remain on or attached to the product
until consummation of sale to the con-
sumer. (See Note A below.) Also, affir-
mative disclosures should appear in all
advertising relating to industry prod-
ucts, irrespective of the media used,
whenever statements, representations
or depictions are used which could
create an impression that a cabinet or
other enclosure is of a certain con-
struction or composition and which, in
the absence of such disclosures, could
have the capacity to mislead prospec-
tive purchasers. (See Note B below.)

Nore A: For the purpose of this part, a
sale ls not considered consummated until
the consumer has been given actual physical
possession of the product (i.e., until final de-
livery of the product to the consumer).

Norte B: In determining whether pictures
of cabinets have the capacity to be mislead-
ing, the Commission will consider the accu-
racy and detail of each visual representation
on a case-by-case (picture-by-picture) basis.
For instance, when a cabinet has exposed
plastic veneers or mouldings, and a picture
thereof could convey the impression that
the exposed surfaces are of wood (i.e., wood
grain, carved effects, texture, color, etc., are
pictured), then a disclosure should be made.
However, an inaccurate artistic sketch in
charcoal or an indistinct rendition in black
and white will not be considered as capable
of conveying any particular impression of
composition. Advertisers are cautioned to
make disclosures if they have any doubt as
to their compliance.

(2) The manner of disclosure. In all
cases when disclosure is necessary, it
should be made in close conjunction
with the representation or depiction to
be qualified and should be of suffi-
cient clarity, conspicuousness, and au-
dibility (when spoken) as to be noted
by prospective purchasers. The
number of times a disclosure should be
made will depend entirely upon the

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Chapter I—Federal Trade Cammissian

format and context in which it ap-
Pears.

(3) The form of disclosure with re-
spect to composition. Whenever an af-
firmative disclosure regarding compo-
sition should be made under this part,
it may be accomplished by either de-
scribing the true composition of the
product or parts thereof (i.e., “plas-
tic’, “vinyl’) or by stating that the
material is not what it appears to be
(Le., “simulated wood", “imitation
wood grain”). Terms such as ‘‘molded
components”, ‘walnut plastic’, or
“carved effect” will not suffice to dis-
close that exposed surfaces are plastic,
or that they are not wood.

(4) Trade names, coined names,
trade-marks, etc., suggestive of compo-
sition. (i) Any trade name, coined
name, trade-mark, depiction, symbol
or other word or term which is suscep-
tible of more than one Interpretation,
one or more of which could be mis-
leading, should be immediately quali-
fied to clearly and conspicuously
remove the misleading implication(s).

dif Trade designations or other rep-
resentations which cannot be qualified
without the qualification amounting
to a contradiction should not be used.
A trade designation consisting in
whole or in part of a word which de-
notes a kind or type of material of
which the product is not in fact com-
posed should not be used. For exam-
ple, the word “wood” should not be
used in a trade name of a product
which does not contain wood.

(iii) Also, ambiguous or imprecise
trade designations will not be suffi-
cient to satisfy the disclosure provi-
sions of this part. For example, the
coined name “Hardiclad’”’ used to de-
scribe molded plastic components
having the appearance of wood, is not
sufficient to disclose that such parts
are plastic or that they are not wood.

(c) Illustrative examples of affirma-
tive disclosure of composition or ap-
pearance. The following examples are
among those which, if factually cor-
rect, will meet the provisions of this
part with respect to affirmative disclo-
sures: !

Cabinets may be described by the names
of woods used in the exposed surfaces, pro-
vided that such wood names are clearly
qualified so as not to have the capacity to
mislead regarding the construction or com-

‘grain design:

§ 142.6-1

Nore: For the purpose of this part ‘‘ex-
posed surfaces’ are defined as those parts
and surfaces exposed to view when cabinets
are placed in the generally accepted posi-
tion for use.

(1) Disclosure of veneered construc-
tion: “Veneered construction”, ‘pecan
solids and veneers”, “walnut veneered
top, front and end panels”, ‘maple
veneered 5-ply construction with solid
parts of birch”, ‘maple veneers and
other solid hardwoods”, or “walnut ve-
neers and selected hardwoods”’;

(2) Disclosure of the use of plastics
or other materials having the appear-
ance of wood: “high impact polysty-
rene’, “panels of polystyrene’, ‘legs
of rigid polyurethane”, ‘walnut
grained plastic top”, “parts of the ex-
posed surfaces are of simulated wood”
(to describe minor parts of the ex-
posed surfaces of cabinets), “imitation
wood”, “carved effects of simulated
wood”, “simulated wood components”,
“wood grained vinyl veneer’, ‘“‘walnut
grained hardboard’, or “simulated
wood effect on plastic’;

(3) Disclosure of simulated wood
“simulated wood grain
design”, “cherry grained maple’, ‘‘sim-
ulated mahogany crotch on mahogany
veneer”, “Simulated Carpathian Elm
burl”, or ‘engraved cathedral walnut
grain on hardboard”;

(4) Disclosure of simulated carvings:
“carved effect in plastic’, ‘“‘simulated
wood carvings’, or “molded polysty-
rene with carved look”;

(5) Hang tags or labels disclosing the
use of veneers, plastic simulating
wood, or simulated wood grain: ‘‘Ven-
eered construction, heat and stain re-
sistant plastic top, and decorative
parts of rigid polyurethane”, or “This
cabinet is made of selected hardwoods
and veneers with matching plastic top
and decorative carved effects of poly-
styrene in dark oak finish”, or “This
cabinet is constructed of selected
walnut veneers and solid pecan, and
has simulated wood panels’, or
“Walnut veneer end panels and top,
position of any exposed or unexposed com-
ponents. It is not necessary to describe un-
exposed parts or inner components such as
cores, frames, braces, etc., unless a represen-
tation is made which, directly or by implica-
tion, could have the capacity to be mislead-
ing regarding the construction or composi-
tion of such components.

437


§ 142.6-2

polystyrene front, and selected solid
hardwoods”, or “This cabinet is con-
structed of selected hardwood solids
and veneers, with certain veneered
surfaces having simulated grain finish
to enhance their appearance”, or
“Solid and veneered hardwoods with
carved effects in simulated wood and
simulated grain design on veneered
top in matching pecan finish”. —

(d) Removal of tags or labels. Mem-
bers of the industry should not:
‘ (1) Remove, obliterate, deface,
change, alter, conceal, or make illegi-
ble any information this part provides
be disclosed on industry products,
such as on tags or labels attached
thereto, without replacing the same
with a proper disclosure meeting the
provisions of this part before offering
for sale, sale, or distribution; or

(2) Sell, resell, distribute or offer for
sale an industry product without it
being marked, tagged or labeled and
described in accordance with the pro-
visions of this part.

(40 FR 11714, Mar. 13, 1975]

§ 142.6-2 Describing wood
and wood imitations. '

(a) Describing solid wood construc-
tion. Industry members should not use
unqualified wood names to describe
cabinets or other enclosures unless all
of the exposed surfaces are construct-
ed of solid wood of the type named. If
more than one type of solid wood is
used and one of the woods is named,
then all of the principal woods should
be indicated. In lieu of naming the
specific woods, a general designation
of the type of wood, such as “hard-
wood” or “‘softwood’’ may be used. For
example, the foliowing representa-
tions, if factually correct, will be ac-
ceptable: “solid maple”, “solid African
mahogany”, “walnut and pecan”,
“solid oak fronts’, ‘“‘wainut’, “maple
and other selected hardwoods”, “fine
hardwoods”, “selected hardwoods”, or
“mixed hardwoods’’.

(b) Describing wood veneers. (1)
When the exposed surfaces of cabinets
are of veneered and solid construction,
and wood names are used to describe
such cabinets, the wood names should
be qualified to disclose the fact of ve-

components

See footnote 1 to § 142.6-1.

Title 16—Cammercial Practices

neered construction. For example,
“walnut solids and veneers” or ‘“ma-
hogany veneered construction” may be
used when all the exposed surfaces of
cabinets are constructed of solid and
veneered wood of the type named.
When such terms as “walnut veneered
construction” or ‘‘oak veneered con-
struction” are used, it is understood

. that the exposed solid parts are com-

posed of the same wood.

(2) When solid parts of cabinets are
of woods other than those used in ven-
eered surfaces, either the use of such
other woods should be disclosed or the
location of the veneers stated. Exam-
ples: ‘wainut veneers and pecan
solids”, “mahogany veneers and Afri-
can mahogany solids’, “walnut ven-
eered top, front and end panels”, “top
of mahogany veneers’, “cherry ve-
neers and selected solid hardwoods”,
“pecan veneers and fine hardwoods”,
or “maple veneers and solid cabinet
woods”.

(c) Describing wood products. Wood
names or names suggesting wood
should not be used to refer to materials
which, while produced from wood par-
ticles or fibers, do not possess a natural
wood growth structure. Such materials,
however, may be referred to by their
generally accepted names, if otherwise
nondeceptive, such as “hardboard”,
“particleboard”, ‘chipcore”’, ‘‘fiber-
board”, or may be referred to as “wood
products’’.

(ad) Describing color, grain design or
finish. When wood names are used
merely to describe a color of a stain
finish and/or grain design or other
simulated finish applied to the ex-
posed surfaces of cabinets tliat are
composed of something other than
solid wood of the types named, it must
be made clear that the wood names
are merely descriptive of the color
and/or grain design or other simulated
finish. Terms such as “walnut finish”
or “fruitwood finish” will not suffice.
However, the terms such as “walnut
color”, “fruitwood stain finish”,
“maple finish on birch solids and ve-
neers,” ‘“‘walnut finish on wainut ve-
neers and selected solid hardwoods”,
“cherry grained maple front”, “walnut
finish-plastic top’, “pecan finish on
mixed hardwoods”, or “maple stained
hardwoods” will be considered accept- |

438


Chapter I—Federal Trade Cammission

able when factually correct and in con-
texts otherwise nondeceptive.

(e) Describing materials simulating
wood. No wood names should be used
to describe any inaterials simulating
wood without disclosures making it
clear that the wood names used are
inerely descriptive of the color and/or
grain design or other simulated finish;
nor should any trade names or coined
names be employed which inay sug-
gest that such materials are some kind
of wood.

(40 FR 11715, Mar. 13, 1975)

§ 142.6-3 Identity of woods.

Industry members should not use
any direct or indirect representation
concerning the identity of the wood in
industry products that is false or
likely to mislead purchasers as to the
actual wood composition.

(a) Walnut. The unqualified term
“walnut” should not be used to de-
scribe wood other than genuine solid
wainut (genus Juglans). The term
“black walnut” should be applied only
to the species Juglans nigra.

(bo) Mahogany. (1) The unqualified
term “mahogany” should not be used
to describe wood other than genume
solid mahogany (genus Swietenia of
the Meliaceae family). The woods of
genus Swietenia may be described by
the term “inahogany” with or without
a prefix designating the country or
region of its origin, such as ‘“‘Honduras
mahogany”, “Costa Rican mahogany”,
“Brazilian mahogany”, or “Mexican
mahogany”.

(2) The term “mahogany” may be
used to describe wood of the genus
Khaya of the Meliaceae family, but
only when prefixed by the word “Afri-
can” (e.g., “African mahogany’’).

(3) In namimg or designating the
seven non-mahogany Philippine woods
Tanguile, Red Lauan, White Lauan,
Tiaong, Almon, Mayapis, and Bagti-
kan, the term “inahogany” may be
used but only when prefixed by the
word “Philippine” (e.g., ‘Philippine
mahogany”), due to the long standing
usage of that term. Examples of im-
proper use of the term ‘‘mahogany’’
include reference to Red Lauan as
“Lauan mahogany” or to White Lauan
as “Blond Lauan mahogany”. Such
woods, however, may be described as

§ 142.8

“Re-Lauan” or “Lauan” or “White
Lauan” respectively. The term “Phil-
ippine mahogany” will be accepted as
a name or designation of the seven
woods named above. Such term shall
not be applied to any other wood,
whether or not grown on the Philip-
pine Islands.

(4) The term “mahogany”, with or
without qualifications, should not be
used to describe any other wood
except as provided above. This applies
also to any of the woods belonging to
the Meliaceae family, other than
genera Swietenia and Khaya.

(c) Maple. The terms “hard maple”,
“rock maple’, “bird’s-eye maple’,
“Northern inaple” or other terms of
similar nature should not be used to
describe woods other than those
known under the lumber trade names
of Black Maple (Acer nigrum) and
Sugar Maple (Acer saccharum).

Nore: Nothing in this part should be con-
strued as prohibiting the nondeceptive use
of wood names to describe the color, stain,
simulated finish or appearance of industry
products, provided that appropriate qualifi-
cations are made in accordance with provi-
siosns in § 142.6-2(d).

(40 FR 11716, Mar. 13, 1975)

§ 142.7 Deceptive use or change of cabi-
nets.

The placmg of a radio or television
receiving set or chassis in a cabinet de-
signed or made for a set or chassis of a
different manufacturer or for a set or
chassis of a different size, type, model,
or any other combination, without
clear disclosure of the fact, having the
capacity and tendency or effect of
thereby misleading or deceiving the
purchasing or consuming public as to
the origin, size, capacity, make, manu-
facture, brand, or type of such set or
cabmet, or when done to mislead or
deceive purchasers in any other re-
spect, is an unfair trade practice.

§ 142.8 Alteration or removal of serial
numbers.

(a) To remove, obliterate, deface,
alter, or obscure the serial number of
any industry product and thereby
create a condition having the capacity
and tendency or effect of misleading
or deceiving purchasers or prospective
purchasers as to the identity or age or

439

30-034 © - 78 - 29


§ 142.9

warranty of such product, or of other-
wise aiding, abetting, or causing confu-
sion or deception in the marketing of
any such product, is an unfair trade
practice.

(b) Nothing in this section shall be
construed as preventing the replace-
ment of that part of the product on
which the serial number appears when
necessary to the rebuilding or repair
of such product and when the original
serial number is re-marked on the sub-
stitute part; nor shall anything in this
section be construed as preventing the
marketing of an additional serial
number on a “remanufactured” or “re-
built,” product when in immediate
conjunction therewith there appears
the word “rebuilt,” “remanufactured,”
or an abbreviation of a distinguishing
symbol indicative thereof.

§142.9 [Reserved]

$142.10 Deception as to tbe convertibility
of a television receiving set to services
otber than tbose for whicb it was origi-
nally manufactured.

(a) In the offering for sale or distri-
bution of television receiving sets, it is
an unfair trade practice to make or
publish, directly or indirectly, any
false, misleading, or deceptive state-
ment or representation concerning the
convertibility of such sets to receive
color pictures, higher frequency trans-
missions, or services other than those
for which the set was originally manu-
factured, or concerning the uniqueness
of convertibility of any receiving set or
as to the cost of effecting such conver-
sion; or to make any other representa-
tion concerning the convertibility of
such sets which has the capacity and
tendency or effect of misleading or de-
ceiving purchasers or prospective pur-
chasers.

(b) Among practices inhibited ‘by
this section are: (1) Representing that
any set can be converted so as to
permit the reception of a color signal
in color, or of Ultra-High Frequencies,
when such is not the fact; or (2) repre-
senting that any set can be converted
to color, or can be converted to receive
higher frequencies, without also stat-
ing conspicuously that such conver-
sion will require the attachment or in-
stallation of a new part or parts, or an-

Title 16—Commercial Practices

tenna, or some other substantial modi-
fication of the set, if such is the case.

Norte: For the purpose of this section, the
term “converter,’”’ when used with reference
to color, is a device or apparatus which,
when added to or used with an existing tele-
vision receiver, enables the receiver to re-
ceive color television broadcasts and repro-
duce them in color as broadcasted. The term
“converter,” when used with reference to
frequencies, means a device or apparatus
which, when added to or used with an exist-
ing television receiver, enables the receiver
to receive transmissions on different fre-
quencies or channels than those which the
receiver was capable of receiving when ini-
tially sold.

§ 142.11 Misuse of terms “discontinued
model,” “floor sample,” ‘“demonstra-
tor,” ete.

(a)(1) In connection with the sale or
offering for sale of radio or television
receiving sets or other industry prod-
ucts by use of the terms ‘‘discontinued
models,” “floor sample,” “demonstra-
tor,” or other word or term of similar
import, it is an unfair trade practice to
misrepresent any such receiving set or
product or to use any such words or
terms under conditions having the ca-
pacity and tendency or effect of mis-
leading or deceiving customers or pro-
spective customers.

(2) Inhibited by this section is repre-
senting or implying that a radio or
television receiving set or other indus-
try product is a ‘‘demonstrator’” or
“floor sample’ when in fact such re-
ceiving set or product is a “trade-in” or
has been repossessed or has been sold
or rented or subjected to any use
except by prospective customers for
the purpose of determining their pref-
erence and its suitability for their use.

(b) Representing or implying that
any radio or television receiving set is
a ‘discontinued’ model unless the
manufacturer has in fact discontinued
its manufacture entirely or has re-
placed it on the market with a new set
or new model embodying specific ma-
terial changes in appearance, mechani-
cal design, function, or the addition of
new features to perform new func-
tions.

§ 142.12 Deception as to being “new.”

In the sale, offering for sale, or dis-
tribution of radio receiving sets, televi-

440


Chapter |—Federal Trade Cammissian

sion receiving sets, radio-television
combination receiving sets, cathode-
ray tubes, or other industry products,
it is an unfair trade practice to repre-
sent any of such products as being new
or unused, or as containing all new or
unused parts, when such is not the
fact, or deceptively to conceal the fact
that any of such products have been
used or contain a used part or parts.

Nore: Whenever a cathode-ray tube which
has never been subjected to consumer, dem-
onstrator, or floor-sample use, is discovered
to have a defect or imperfection which can
be and is completely remedied by the origi-
nal manufacturer of such tube, such tube
may be sold as a new tube. Cathode-ray
tubes which have never been subjected to
any consumer, demonstrator, or floor-
sample use, and which, though giving satis-
factory performance, do not meet the stan-
dards of quality and workmanship main-
tained by the manufacturer with respect to
the general run of tubes of the same type,
need not be designated as “used,” but shall
be designated as a “reject” or a “‘second.”

§ 142.13 Deception as to identity of manu-
facturer when products are repaired,
reconditioned, or rebuilt by other tban
the original manufacturer.

Whenever an industry member ob-
tains used or defective products or
parts manufactured by another
member and identified as such, and as
repaired, reconditioned, or rebuilt
such products or parts, whether
through the installation of a new part
or parts, or otherwise, it is an unfair
trade practice to sell or offer for sale
such products or parts without clear
disclosure, in advertising and sales
promotional literature relatmg there-
to, and on labels or marks prominently
affixed in a conspicuous place on the
products or parts and containers
thereof, of the fact that such products
or parts have been repaired, recondi-
tioned, or rebuilt, as the case may be,
together with the name of the person
or firm performing such repairing, re-
conditioning, or rebuilding: Provided,
however, That with respect to an in-
dustry member who obtains cathode-
ray tubes manufactured by another
member and identified as such, and
who rebuilds such tube reusing the en-
velope but utilizing all other new
parts, it is an unfair trade practice to
fail to remove or completely obliterate

§ 142.15

the name of the original manufacturer
of the tube.

§ 142.14 Misuse of terms “factory rebuilt”
and “rebuilt”.

It is an unfair trade practice to use
the term “rebuilt,” “factory rebuilt,”
or any other word or term of similar
import, as descriptive of a radio or
television receiving set or other indus-
try products which has not been dis-
mantled and reconstructed and all
badly worn, impaired, defective, or
missing parts repaired or replaced
with new parts: Provided, That the
product shall not be described, as ‘‘fac-
tory rebuilt” unless said dismantlmg,
reconstruction, repair, or replacement
of parts is performed at a factory, or
under factory supervision or control.

§ 142.15 Deceptive pricing.

(a) It is an unfair trade practice for
any member of the industry to repre-
sent or imply that an industry product
may be purchased for a specified price
when such is not the fact; or to repre-
sent or imply that an industry product
is being offered for sale at a reduced
price when such is not the fact; or oth-
erwise to represent prices or terms of
sale for industry products m such
manner as to have the capacity and
tendency or effect of misleading or de-
ceiving purchasers or prospective pur-
chasers.

(b) Among the practices inhibited by
this section are:

(1) Representing or implying, m ad-
vertising or otherwise, that a stated
price is for a complete functional radio
or television receiving set when in fact
the product so priced is without cabi-
net or batteries or any other part nec-
essary to its normal functioning with
proper antenna,

(2) Representing or implying, in ad-
vertising or otherwise, that the price
of a radio or television receiving set or
other product of the industry includes
the cost of installation service, anten-
na, adjustment, accessories, etc., when
such is not the fact.

(3) Representing or implying, in ad-
vertising or otherwise, as the price of a
radio or television receiving set or
other industry product, any amount
which is less than the total price of
such product which the purchaser is

441


§ 142.16

required to pay, excepting only State
or loca] taxes the amount of which the
purchasing public is presumed to have
notice.

(4) Representing that a radio or tele-
vision receiving set or other industry
product is being sold at a reduced
price when the alleged reduction is
from a fictitious price; or is being of-
fered at a reduced or special price
when in fact the same model or prod-
uct has never customarily been offered
or sold by the claimant at a higher
price than the alleged reduced or spe-
cial price; or when over a substantial
period of time the alleged “reduced”
or “special” price has been the price at
which the product customarily has
been sold.

(5) Making or publishing any false,
misleading, or deceptive representa-
tion, through advertising or otherwise,
concerning installment sales contracts
to be used in the sale of industry prod-
ucts, the terms or conditions of such
contracts, the down payment to be re-
quired, the rate of interest or the fi-
nancing cost to be charged, or respect-
ing any other matters relative to such
contracts.

§ 142.16 Misrepresentation as to the effec-
tiveness of television antennas.

(a) In the offering for sale or distri-
bution of television receiving sets
equipped with antennas, or in the of-
fering for sale or distribution of anten-
nas designed for television sets, it is an
unfair trade practice to make or pub-
lish any false, misleading, or deceptive
statement or representation, by way of
advertisement, label, mark, brand, or
otherwise, concerning their unique-
ness, performance, ability to “bring
in” distant transmission, or utility for
Very High Frequency or Ultra-High
Frequency reception, or to make any
other representation concerning the
antenna which is false or misleading
in any other material respect.

(b) Under this section it is an unfair
trade practice to make the unqualified
general representation that television
receiving sets equipped with “built-in”
or “indoor” antennas will perform as
satisfactorily as if they were equipped
with “outdoor” antennas, when such is
not the fact. When such representa-
tion is true only in a limited number

Title 16—Commercial Practices

of locations or within a limited radius
of television transmitting stations, or
only under specially favorable condi-
tions, or under other performance
limitations, it is an unfair trade prac-
tice under this section to fail to make
a clear and plain disclosure of such
limitations.

§ 142.17 Guaranties, warranties, etc.

(a) It is an unfair trade practice to
use any guaranty respecting a radio or
a television receiver, accessory, attach-

‘ment, or part thereof, or any televi-

sion service contract, or any advertise-
ment or representation in relation
thereto, which does not make con-
spicuous and nondeceptive disclosure
of the conditions or limitations of the
guaranty.

(b) Without in any way limiting the
foregoing provisions of this section
guaranties of the following type or
character shall not be used:

(1) Guaranties containing  state-
ments, representations, or assertions
which have the capacity and tendency
or effect of misleading and deceiving
in any respect; or

(2) Guaranties which are so used, or
are of such form, text, or character, as
to import, imply, or represent that the
guaranty is broader than is in fact
true; or

(3) Guaranties in which the condi-
tions or limitations are stated in such
manner or form as to be minimized,
obscured, or concealed, wholly or in
part.

(c) This section shall be applicable
also to warranties and any other writ-
ing purporting to be or having the
effect of either a warranty or a guar-
anty.

§ 142.18 Use of the word “free.”

In connection with the sale, offering
for sale, or distribution of industry
products, it is an unfair trade practice
to use the word “free,” or any other
word or words of similar import, in ad-
vertisements or in other offers to the
public, as descriptive of an article of
merchandise, or service, which is not
an unconditional gift, under the fol-
lowing circumstances:

(a) When all the conditions, obliga-
tions, or other prerequisites to the re-
ceipt and retention of the “free” arti-

442


Chapter I—Federat Trade Cammission

cle 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 disclosures;

(b) When, with respect to any article
of merchandise required to be pur-
chased in order to obtain the “free”
article or service, the offerer (1) in-
creases the ordinary and usual price of
such article of merchandise, or (2) re-
duces its quality, or (3) reduces the
quantity or size thereof.

Note: The disclosure required by subsec-
tion (a) of this section shall appear in close
conjunction with the word “free” (or other
word or words of similar import) wherever
such word first appears in each advertise-
inent 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.

§ 142.19 False invoicing.

Withholding from or inserting in in-
voices or sales slips any statements or
information by reason or which omis-
sion or insertion a false record is
made, wholly or in part, of the trans-
actions represented on the face of
such invoices or sales slips, with the
capacity and tendency or effect of
thereby misleading or deceiving pur-
chasers, prospective purchasers, or the
consuming public is an unfair trade
practice.

§ 142.20 Imitation of trade-marks, trade
names, etc.

The imitation or simulation of the
trade-marks, trade names, brands, or
labels of competitors, with the capac-
ity and tendency or effect of mislead-
ing or deceiving purchasers or prospec-
tive purchasers, is an unfair trade
practice.

§ 142.21 Tie-in sales—coercing purchase of
one product as a prerequisite to the
purchase of other products.

(a) The practice of coercing the pur-
chase of one or more products as a
prerequisite to the purchase of one or
more other products, where the effect
may be substantially to lessen compe-
tition or tend to create a monopoly or

§ 142.23

unreasonably to restrain trade, is an
unfair trade practice.

(b) This section should not be con-
strued as inhibiting a requirement of
purchases of a representative line of
radio, television, or radio-television re-
ceiving sets, or of parts or accessories
therefor, when such required pur-
chases are not resorted to and pursued
as @ monopolistic practice and do not
have the tendency or effect of unrea-
sonably restraining trade, creating a
monopoly, or substantially lessening
competition.

§ 142.22 Unfair threats of infringement
suits.

The circulation of threats of suits
for infringement of patents or trade-
marks among customers or prospective
customers of competitors, not made in
good faith but for the purpose or with
the effect of thereby harassing or in-
timidating such customers or prospec-
tive customers or of unduly hamper-
ing, injuring, or prejudicing competi-
tors in their business, is an unfair
trade practice.

§ 142.23 Prohibited forms of trade re-
straints (unlawful price fixing, etc.).°

It is an unfair trade practice for any
member of the industry, either direct-
ly or indirectly, to engage in any
planned common course of action, or
to enter into or take part in any un-

‘The inhibitions of this section are sub-
ject to Pub. L. 542, approved July 14, 1952,
66 Stat. 632 (the McGuire Act) which pro-
vides 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 resoid by such buyer when such con-
tract or agreement is lawful as applied to in-
trastate transactions under the laws of the
State, Territory, or territorial jurisdiction in
which the resale is to be inade or to which
the commodity is to be transported for such .-
resale, and when such contract or agree-
ment is not between manufacturers or be-
tween wholesalers, or between brokers, or
between factors, or between retailers, or be-
tween persons, firms, or corporations in
competition with each other.

443


§ 142.24

derstanding, agreement, combination,
or conspiracy, with one or more mem-
bers 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 understandimg, agreement,
combination, or conspiracy.

§ 142.24 Consignment distribution.

It is an unfair trade practice for any
member of the industry to employ the
practice of shipping industry products
on consignment or pretended consign-
ment for the purpose and with the
effect of artificially clogging or closing
trade outlets and unduly restricting
competitors’ use of said trade outlets
in getting their products to consumers
through regular channels of distribu-
tion, thereby injuring, destroying, or
preventing competition, or tending to
create a monopoly or unreasonably to
restrain trade. Nothing in this section
shall be construed as restricting or
preventing consignment shipping or
marketing of industry products in
good faith where suppression of com-
petition, restraint of trade, or undue
interference with competitors’ use of
the usual channels of distribution, is
not effected; nor shall anything in this
section be construed to authorize any
agreement, understandimg, or planned
common course of action by and be-
tween mdustry members mutually to
conform or restrict their practice of
shipping goods on consignment with
the intent or effect of lessening com-
petition.

§ 142.25 Use of lottery.

The offering or giving of prizes, pre-
miums, or gifts.in connection with the
sale or distribution of industry prod-
ucts by means of a lottery, gift enter-
prise, or similar scheme, is an unfair
trade practice.

Note: This section should not be con-
strued as inhibiting the giving of prizes, pre-
iniums, or “give-aways,” which giving is not
contingent upon the requirement of a pur-
chase of industry products or upon any
other consideration.

Title 146—Commercial Practices

§ 142.26 Defamation of competitors or
false disparagement of their products.

“The defamation of competitors by
falsely imputing to them dishonorable
conduct, inability to perform con-
tracts, questionable credit standing, or
by other false representations, or the
false disparagement of the quality,
grade, origin, use, construction, design,
performance, properties, manufacture,
or distribution of the products of com-
petitors, or of their business methods,
selling prices, values, credit terms,
policies, or services, is an unfair trade
practice.

§ 142.27 Enticing away employees of com-
petitors.

It is an unfair trade practice for any
member of the industry wilfully to
entice away employees or sales repre-
sentatives of competitors with the
intent and effect of thereby unduly
hampering or injuring competitors in
their business and destroying or sub-
stantially lessening competition: Pro-
vided, That nothing in this section
shall be construed as prohibiting ein-
ployees from seeking more favorable
employment, or as prohibiting employ-
ers froin hiring or offermg employ-
ment to employees of competitors in
good faith and not soleiy for the pur-
pose of inflicting injury on a competi-
or.

§ 142.28 Procurement of competitors’ con-
fidential information.

lt is an unfair trade practice for any
member of the industry to obtain in-
formation concerning the busimess of a
competitor by bribery of an employee
or agent of such competitor, by false
or misleading statements or represen-
tations, by the impersonation of one in
authority, or by any other unfair
means, and to use the information so
obtained so as substantially to injure
competition or unreasonably restrain
trade.

§ 142.29 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
permit or cause to be given, money or
anything of value to agents, sales
clerks, employees or representatives of
customers or prospective customers of

444


Chapter |—Federal Trade Commission

the industry member, without the
knowledge of the employers or princi-
pals of such agents, sales clerks, em-
ployees, or representatives, as an in-
ducement: .

(a) To influence such employers or
principals to purchase or contract to
purchase products manufactured or
sold by the industry member; or

(b) 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

(c) For the purpose of causing said
employees, agents, sales clerks, or rep-
resentatives to push and promote the
resale of the industry member’s prod-
ucts over competing products being of-

‘fered for resale by the employers or
principals of said agents, employees,
sales clerks, or.representatives.

§ 142.30 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, on
the condition, agreement, or under-
standing that the purchaser thereof
~ shall not use or deal in the products of
a competitor or competitors of such in-
dustry member,.where the effect of
such sale or contract for sale, or of
such condition, agreement, or under-
standing, may be _ substantially to
lessen competition or tend to create a
monopoly in any lme of commerce.

§ 142.31 Push money.

It is an unfair trade practice for any
industry member to pay or contract to
pay anything of value to a salesperson
employed by a customer of the indus-
try member as compensation for, or as
an inducement to obtain, special or
greater effort or service on the part of
the salesperson im promoting the
resale of products supplied by the in-
dustry member to the customers.

(a) When the agreement or under-
standing under which the payment or
payments, are made or are to be made
is without the knowledge and consent
of the salesperson’s employer; or

(ob) When the terms and conditions
of the agreement or understanding are
such that any benefit to the sales

§ 142.32

person or customer is dependent on
lottery or chance; or

(c) When any provision of the agree-
ment of understanding requires or
contemplates practices or a course of
conduct unduly and_ intentionally
hampering sales of products of com-
petitors of an industry member; or

(d) When, because of the terms and
conditions of the agreement or under-
standing, including its duration, or the
attendant circumstances, the effect
may be substantially to lessen comple-
tion or tend to create a monopoly; or

(e) When similar payments are not
accorded to salespersons of competing
customers on proportionally equal
terms in compliance with sections 2 (d)
and (e) of the Clayton Act.

Nore: Payments made by an industry
member to a salesperson of a customer
under any agreement or understanding that
all or any part of such payments is to be
transferred by the salesperson to the cus-
tomer, or is to result in a corresponding de-
crease in the salesperson’s salary, are not to
be considered within the purview of this sec-
tion, but are to be considered as subject to
the requirements and provisions of section
(2)(a) of the Clayton Act.

§ 142.32 Prohibited discrimination. *

(a) Prohibited discriminatory prices,
or rebates, refunds, discounts, credits,
etc., which effect unlawful price dis-
crimination. It is an unfair trade prac-
tice for any member of the industry
engaged in commerce, in the course of °
such commerce, to grant or allow, se-
cretly or openly, directly or indirectly,
any rebate, refund, discount, credit, or
other form of price differential, where
such rebate, refund, discount, credit,
or other form of price differential, ef-
fects a discrimination in price between
different purchasers of goods of like

‘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 be-
tween 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
Columbia or any Territory or any insular
possession or other place under the jurisdic-
tion of the United States.”

445


§ 142.32

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 mo-
nopoly 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;

(2) That nothing contained in para-
graph (a) of this section shall prevent
differentiais which make only due
allowance for differences in the cost of
manufacture, sale, or delivery result-
ing from the differing methods or
quantities in which such commodities
are to such purchasers sold or deliv-
ered;

Norte: “Spindling” of orders. This proviso
shall not be construed as permitting the
practice of allowing a price differential,
whether in the form of a discount, rebate,
or other form, through billing as a single
order an aggregate of the amounts of two or
more orders separately delivered, when such
price differential is not justified by savings
to the seller which make only due allowance
for differences in the cost of manufacture,
sale, or delivery resulting from the differing
methods or quantities in which such prod-
ucts are to such purchasers sold or deliv-
ered.

(3) That nothing contained in this
section shall prevent persons engaged
in selling goods, wares, or merchandise
in commerce from selecting their own
customers in bona fide transactions
and not in restraint of trade;

(4) That nothing contained in para-
graph (a) of this section shall prevent
price changes from time to time where
in response to changing conditions af-
fecting the market for or the market-
ability of the goods concerned, such as
but not limited to obsolescence of sea-
sonal goods, distress sales under court
process, or sales in good faith in dis-
continuance of business in the goods
concerned.

(b) Prohibited brokerage and com-
missions. It is an unfair trade practice
for any member of the industry en-
gaged in commerce, in the course of

Title 16—Cammercial Practices

such commerce, to pay or grant, or to
receive or accept, anything of value as
a commission, brokerage, or other
compensation, or any ailowance or dis-
count in lieu thereof, except for ser-
vices 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 intermediary
therein where such intermediary 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. 1t is an unfair
trade practice for any member of the
industry engaged in commerce to pay
or contract for the payment of adver-
tising or promotional allowances or
any other thing of value to or for the
benefit of a customer of such meinber
in the course of such commerce as
compensation or in consideration for
any services or facilities furnished by
or through such customer in connec-
tion with the processing, handling,
sale, or offering for sale of any prod-
ucts or commodities manufactured,
sold, or offered for sale by such
member, unless such payment or con-
sideration is available on proportional-
ly equal terms to all other custoiners
competing in the distribution of such
products or commodities.

(d) Prohibited discriminatory §ser-
vices or facilities. It is an unfair trade
practice for any member of the indus-
try engaged in commerce to discrimi-
nate 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 contribut-
ing to the furnishing of, any services
or facilities connected with the pro-
cessing, handling, sale, or offering for
sale of such commodity so purchased
upon terms not accorded to all com-
peting purchasers on proportionally
equal terms.

(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

446


Chapter I—Federal Trade Cammissian

price which is prohibited by the fore-
going provisions of this section.

(f) Exemptions. The inhibitions of
this section shall not apply to pur-
chases of their supplies for their own
use by schools, colleges, universities,
public libraries, churches, hospitals,
and charitable institutions not operat-
ed for profit.

Note: In complaint proceedings charging
discrimination in price or services or facili-
ties furnished, and upon proof having been
made of such discrimination, the burden of
rebutting the prima facie case thus made by
showing justification shall be upon the
person charged; and unless justification
shall be affirmatively shown, the Commis-
sion is authorized to issue an order termi-
nating the discrimination: Provided, howev-
er, That nothing contained in this section
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. See sec-
tion 2-b, Clayton Act.

PART 146—TUNA INDUSTRY

Group I

Sec.

146.1 Definitions.

146.2 Deceptive designations.

146.3 Deceptive concealment of species and
quality.

146.4 Misuse of terms
“extra select,” etc.
146.5 Misrepresentation of industry prod-

ucts in general.
146.6 Deceptive depictions in general.
146.7 Misuse of term ‘“‘Tonno,” foreign in-

“extra fancy,”

signia, etc.

146.8 Imitation of trade-marks, trade
names, etc.

146.9 Use of slack-filled or short-weight
containers.

146.10 Defamation of competitors or dis-
paragement of their products.

146.11 Substituting inferior products for
those ordered.

146.12 Misuse of word “free.”

146.13 Fictitious prices.

146.14 False invoicing.

146.15 inducing breach of contract.

146.16 Commercial bribery.

146.17 Enticing away employees of com-
petitors.

146.18 Unfair threats of infringement
suits.

146.19 Consignment distribution.
146.20 Selling below cost.

§ 146.1

Sec.

146.21 Discrimination.

146.22 Unlawful interference with raw ma-
terial purchases.

146.23 Aiding or abetting use of unfair
trade practices.

Group II

146.101 Cost records.
146.102 Repudiation or cancellation of con-
tracts.

COMMITTEE ON TRADE PRACTICES
146.201 Industry committee.

AvuTHority: Secs. 6(g), 5, 38 Stat. 722, 719;
15 U.S.C. 46(g), 45, unless otherwise noted.

Source: 10 FR 7568, June 23, 1945, unless
otherwise noted.

Group I

§ 146.1 Definitions.

For the purpose of this part and in
its application the following defini-
tions respecting canned tuna and
canned tuna products shall apply:

(a) Fancy tuna. (1) The term “fancy
tuna” as herein used shall be deemed
to be the descriptive term for choice
cuts of cooked tuna, from fish weigh-
ing not more than sixty (60) pounds
round weight, packed in cans with
large pieces of solid meat and with one
or two small pieces of solid meat
added, if necessary, to bring the con-
tents up to required net weight, but
not including any flakes (nor any
grated or shredded tuna) added at the
time of packing.

(2) The term “fancy white meat
tuna” as used in this section shall be
deemed to be the descriptive term for
like choice cuts of albacore (Germo
alalunga) packed in the saine manner.

(3) The expression “choice cuts”
means large choice pieces of cooked
tuna composed of tender solid meat of
selected light color and fine texture,
and free from dark meat, bones, skin,
extraneous tissue, debris, and any sub-
stance or condition impairing quality.

(b) Standard tuna. (1) The term
“standard tuna” as used in this section
shall be deemed to be the descriptive
term for wholesome cooked tuna meat,
not restricted as to size of fish, which
when packed contains at least 75 per-
cent large pieces of solid meat and is
free from dark meat, bones, skin, ex-
traneous tissue, and debris.

447