Hosiery Industry
16 CFR Part 152 · Trade practice rules · in the Code of Federal Regulations 1941-1979 (18 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 These rules and guides are historical: most were rescinded or replaced, so do not assume any is in force.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, 1979 CFR · Earliest edition: 1941 CFR
Decisions that mention this industry's rules (20)
Text (1979 edition, OCR)
Title 14—Commercial Practices (This book contains Parts 150 to 999) CHAPTER I—Federal Trade Commission (Continued) CHAPTER I—Federal Trade Commission (Continued) (Parts 150 to 999). SUBCHAPTER B—GUIDES AND TRADE PRACTICE RULES (continued) Part 150-151 [Reserved] 152 154 228 229 230 231 232 233 234 235 236 ~ 237 238 239 240 241 242 243 244 245 247 248 HOSie ry industry ..............cccccccssscsseccccssssceccccacessecsucescecees Luggage and related products industry.................000 Tire advertising and labeling guides. .................cccccesee Guides for advertising fallout shelters.................cc00 Guides for advertising shell homes.............cc.ccsecsseeeee Guides for shoe content labeling and advertising... Guides for advertising radiation monitoring in- SEYUMENIUG............ccccccccsscccccsscnccscccecccacseseccesscessscssscsceees Guides against deceptive pricing ...........cccccccccccsseeccnees Guides for the mail order insurance industry........... Guides against deceptive labeling and advertising Of adhesive COMPOSITIONS .............cccccecceccosssssccssesssoees Guide for avoiding deceptive use of word “mill” in the textile industry... essssccsscesseessseeseeee Guides against debt collection deception.................. Guides against bait advertising....................cccccsssssseses Guides against deceptive advertising of guaran- LOOS.........0cssscsccccrsccssccsccscecreccsscseccenescerecseccssessenssscesenseeses Guides for advertising allowances and other mer- chandising payments and SePVICES .............sccccsseseees Guides for the dog and cat food industry.................. Guide against deceptive use of the word ‘“‘free” in connection with the sale of photographic film and film proceSSing SETVICE...........cccccssscsccccssceecccsecees Guides for the decorative wall paneling industry ... Guides for the greeting card industry relating to discriminatory pPractices.............c.sscccccssssssccccssssecsceces Guides for the watch industry...............cccsssccsssccsseees Guides for the ladies’ handbag industry................... Guides for the beauty and barber equipment and SUPD]ieS iINGUSUTY ...............csccccssssssecccncesscssecsssccscesceans Page 39 Part 250 251 252 253 254 255 256 259 300 301 303 304 400 401 402 403 404 405 406 408 409 Title 16—Commercial Practices Guides for the household furniture industry .......... Guide concerning use of the word ‘free’ and simi- 1AaYr FEPLESeNtatiONS........cccccccsccssssccccccsrcccreccensseceeseoeeces Guides for labeling, advertising, and sale of wigs and other hairpieCes...........cccescosssssccscsoscesscesccsccssnsnoes Guides for the feather and down products indus- LLY ..ccccccscccceccccsccscsccccsssersncsscesssscesscecscssssecececssseecceseseeseees Guides for private vocational and home study SCKOOIS......cscsceccsccccccccccnccsscocseccscccsscessnsscesssesecesacsenscsenees Guides concerning use of endorsements and testi- MoONials in AAVELTtISING .............ccccsccressserssseescesecsesoeses Guides for the law DOOK iINdUSUry............cccsssccesscoseoeens Guide concerning fuel economy advertising for NEW AUTOMODIIES...............ccceccscccsccecccsseasecsessescesonssonsens SUBCHAPTER C—REGULATIONS UNDER SPECIFIC ACTS OF CONGRESS Rules and regulations under the Wool Products Labeling Act Of 1939 .........c.ccccssssssssssscsscessecsecnsseesoeses Rules and regulations under Fur Products Label- ING AC ..........ccccccccececcscrnsccecsscccusccccasssssccescceseceesesecseesees Rules and regulations under the Textile Fiber Products Identification Act...........ccccccssssscssrcsssesssses Rules and regulations under the Hobby Protec- CIOT ACE oo... cei cccccceccecsccossceeecensceesceseceosecsssecenssesecses SUBCHAPTER D—TRADE REGULATION RULES Advertising and labeling as to size of sleeping bags Misuse of ‘automatic’ or terms of similar import as descriptive of household electric sewing ma- CTINES .0.0.......cccccesccscsccccccsccccsccsccscsceneceressenssssesensssssseses Deception as to nonprismatic and partially pris- matic instruments being prismatic binoculars...... Deceptive use of “leakproof,” ‘‘guaranteed leak- proof,” etc., as descriptive of dry cell batteries .... Deceptive advertising and labeling as to size of ta- blecloths and related Products .........cscccsssesscessessceeee Misbranding and deception as to leather content Of WaiSt DEIES ..............ccccsccssccsssccessceessccnssessseceesecseseesoss Deceptive advertising and labeling of previously USEd lUDriICAatiNg Oi] 22.0.0... eecececsecetscceeteeseesesecseeseees Unfair or deceptive advertising and labeling of cigarettes in relation to the health hazards of SMOKING ...........ccccccescccsccsnsccscccesccescccnccceresscacsrecsscovsossons Incandescent lamp (light bulb) industry .................. 4 Page 106 113 115 118 121 126 129 135 150 167 187 189 189 191 193 195 196 198 Chapter I—Federal Trade Commission Part 410 412 413 414 417 418 419 423 424 425 429 432 433 435 436 438 456 Page Deceptive advertising as to sizes of viewable pic- tures shown by television receiving sets ................ 202 Discriminatory practices in men’s and boy’s tai- lored Clothing industry ..............ccccccsssssssscssssssssscoveces 203 Failure to disclose that skin irritation may result from washing or handling glass fiber curtains and draperies and glass fiber curtain and drap- CTY LADTICS.................ccssssecssvsccsccccccceccccaccsaccsevecesessneseees 206 Deception as to transistor count of radio receiving sets, including transceive2..............c.cccccscesssssssescesere 208 “Failure to disclose the lethal effects of inhaling quick-freeze aerosol spray products used for frosting CocKtail glasses .............ccccccsscercsccescecssssesesers 210 Deceptive advertising and labeling as to length of EXteENSION lAAAETS ...............cccccsccssceccceccsseccceseccasscecssoes 211 Games of chance in the food retailing and gaso- lime iMGuStrie€ .................ccccccccecesseseeccccccscsessseeceasccsesces 213 Care labeling of textile wearing apparel................... 214 Retail food store advertising and marketing prac- CICES........ccccssescccccccncssccccccccscesceccsccssecsecasccessessesccaccsoseceses 215 Use of negative option plans by sellers in com- MET CE ........csscccesscnscccecscccsccncecescctscssesccessccossccsssccsccevscseees 216 Cooling-off period for door-to-door Sales. ..............06 219 Power output claims for amplifiers utilized in home entertainment Products ............sccccossssssssscoeees 221 Preservation of consumers’ claims and defenses..... 223 Mail order merchandise .................ccccssssscssscssscseccencerees 224 Disclosure requirements and prohibitions con- cerning franchising and business opportunity VOENIEUFES ...........ccessssevccccnssvcccccccscnsseccesecsecsessecscecescsessoens 229 Proprietary vocational and home study schools...... 241 Advertising of ophthalmic goods and services. ......... 261 SUBCHAPTER E—RULES, REGULATIONS, STATEMENT OF GENERAL POLICY OR INTERPRETATION AND EXEMPTIONS UNDER THE FAIR PACKAGING AND LABELING ACT 500 501 - 502 Regulations under section 4 of the Fair Packaging and Labeling ACt ............cccccessssssssesccossscssssssssessesscensers 265 Exemptions from requirements and prohibitions UNer Part 500 .............cccccccsscscceccissccccsccccscssssssecccceneees 276 Regulations under section 5(c) of the Fair Packag- ing and Labeling Act..............ccccccccsscscssscsssssssssssssceeres 278 Title 16—Commercial Practices Part Page 503 Statements of General Policy or Interpretation..... 282 SUBCHAPTER F—STATEMENTS OF GENERAL POLICY OR INTERPRETATIONS UNDER THE FAIR CREDIT REPORTING ACT 600 Statements of general policy or interpretations...... 287 SUBCHAPTER G—RULES, REGULATIONS, STATEMENTS AND INTERPRETATIONS UNDER THE MAGNUSON-MOSS WARRANTY ACT 700 Interpretations of Magnuson-Moss Warranty Act.. 296 701 Disclosure of written consumer product warranty terMs and CONGITIONS ...........cccccsecccereese sesevesseceees seeeeees 302 702 Pre-sale availability of written warranty terms....... 304 103 Informal dispute settlement procedures............ seveees 306 704-799 [Reserved] SUBCHAPTER H—RULES, REGULATIONS, STATEMENTS AND INTER- PRETATIONS UNDER THE HART-SCOTT-RODINO ANTITRUST IM- PROVEMENTS ACT OF 1976 800 Transitional rule............... sesececsccccescescesces sececenseseeseees wee 313 801 Coverage rules. ..........ccccccsccescescees aececececcccccsccsccnccos ceseeeece 313 802 Exemption rules .............. sesccescecscesccsscess acssesccecssseceeseteses LO 803 Transmittal rules.................ccceee0 cecsecescececesccnscosees eras 3] Cross REFERENCES: Animal and Plant Health Inspection Service, Department of Agricul- ture: 9 CFR Chapter I. Commodity Futures Trading Commission: 17 CFR Chapter I. Con- sumer Product Safety Commission: 16 CFR Chapter II. Securities and Exchange Commis- sion: 17 CFR Chapter II. SUPPLEMENTAL PUBLICATIONS: Federal Trade Commission decisions, Volumes 1-90 Index digest of volumes 1, 2, and 3 of decisions of the Federal Trade Commission with annota- tion of Federal cases. Mar. 16, 1915-June 30, 1921. Statutes and decisions pertaining to the Federal Trade Commission. 1914-1929, 1930-1938, 1939-1943, 1944-1948, 1949-1955, 1956- 1960, 1961-1965, 1966-1970, 1971-1975, 1976, 1977. Chapter I—Federal Trade Commission § 152.1 SUBCHAPTER B—GUIDES AND TRADE PRACTICE RULES—Continued Parts 150-151 [Reserved] PART 152—HOSIERY INDUSTRY Note: Nothing in these rules is to be con- strued as relieving anyone of the necessity of complying with the requirements of the Wool Products Labeling Act of 1939 or the requirements of the Textile Fiber Products Identification Act or with the rules and reg- ulations issued under such Acts. Sec. 152.0 Definitions. Group I 152.1 152.2 152.3 Scope of rules; imports and exports. Deception (general). “Lisle.” 152.4 “Irregulars,” or ‘“‘seconds”. 152.5 Removal, obliteration, or alteration of marks. 152.6 Misrepresentation as to character of business. 152.7 Deceptive price representations. 152.8 Substitution of products. 152.9 Size markings and designations. 152.10 Commercial bribery. 152.11 Exclusive deals. 152.12 Guarantees, warranties, etc. 152.13 Push money. 152.14 Prohibited discrimination. 152.15 Aiding or abetting use of unfair trade practices. - Group II 152.101 Information as to treatment and care of products. AvuTHOoRITY: Secs. 6, 5, 38 Stat. 721, 719; 15 U.S.C. 46, 45, unless otherwise noted. Source: 25 FR 8250, Aug. 30, 1960, unless otherwise noted. — § 152.0 Definitions. As used in this part the terms ‘‘in- dustry member” and “industry prod- ucts” shall have the following mean- ing: (a) Industry member. Any person, firm, corporation, or organization (in- cluding manufacturers, wholesalers, jobbers, importers, retailers, etc.) en- gaged in the sale, offering for sale, or 40-036 O—79——2 distribution, in commerce, of industry products as defined below. (b) Industry products. Hosiery for men, women and children, including all types and kinds of hose, stockings, socks, anklets, and other related prod- ucts of the Hosiery Industry. Group I § 152.1 Scope of rules; imports and ex- ports. (a) Applicability. Except where oth- erwise required by law, the rules in this part shall apply to all hosiery pro- duced in the United States or offered for sale, sold or distributed in the American market. (b) Imports. Imported hosiery is sub- ject to the rules in this part (and the marking requirements herein speci- fied) the same as domestic hosiery, ir- respective of whether the hosiery was originally manufactured in the United States and exported and thereafter imported; or whether it was manufac- tured in a foreign country and import- ed from such foreign country or an- other country into the United States; or whether the hosiery, foreign or do- mestic, was introduced into the Ameri- can market in any other way. (c) Exports. Hosiery produced in the United States for export to a foreign country need not be marked in accord- ance with the requirements of the rules in this part, except: (1) Where such hosiery, although in- tended for export, or actually export- ed, is subsequently offered for sale or sold for use, consumption or resale within the United States or place sub- ject to its jurisdiction; or (2) Where such hosiery manufac- tured in the United States for export, or sold for export, is marked, sold or exported in such manner or under such conditions as to involve fraud or deception, or an unfair method of competition against an American com- petitor engaged in export trade, or a § 152.2 matter otherwise contrary to the public policy of the United States; or (3) Where required by the Wool Products Labeling Act or by other pro- visions of law. [Rule 1] § 152.2 Deception (general). It is an unfair trade practice to sell, offer for sale, or distribute industry products by any method, or under any representation, description, circum- stance or condition which has the ca- pacity and tendency or effect of de- ceiving purchasers or prospective pur- chasers as to the grade, character, con- struction, origin, denier, size, style, fashion, gauge, twist of yarn, quality, quantity, value, price, serviceability, resistance to snagging or the develop- ment of runs, holes or breaks in the fabric, strength, stretch, length, color, finish, manufacture, or distribution of any product of the industry or compo- nent part of such product, or in any other material respect. [Rule 2) § 152.3 “Lisle.” (a) It is an unfair trade practice to use the term “lisle” or word, term, or representation of similar import, as descriptive of hosiery or any.: part thereof, under any condition having the capacity and tendency or effect of misleading or deceiving purchasers or prospective purchasers. For purposes of this section the term “lisle” as de- scriptive of hosiery, or part thereof, is considered as representing that such hosiery is made of yarn composed of. two or more ply of combed long staple cotton fiber, the ply twist of which is not less than the turns per inch indi- cated in the following table: 2-ply 3-ply 4ply Approx- Approx- Approx . Mini- imate Mini- imate Mini- imate Count mum twist mum twist mum_ twist twist muilti- twist multi- twist multi- plier plier pHer 16 4% 13 4% lt a 19 a” 15 4% 13 4 21 4% 17 4% 14 4 23 4% 18 4% 15 4 25 4% 20 4% 17 4 2 4% 21 an 18 4 28 a% 23 4% 19 4 29 a% 24 4% 20 4 31 a% 26 +" 22 4 Title 16—Commercial Practices 2-ply 3-ply 4-ply Approx- Approx- Approx- Mini- imate Mini- imate Mini- imate Count mum twist mum twist mum_ twist twist multi- twist multi- twist multi- plier plier plier 140 and higher 33 4% 28 4% 24 4 Nore: The minimum twist of intermediate counts not given should be in proportion to those given in the table. The average results of tests for number of turns of twist in a yarn shall be reported to the nearest whole number. Yarns having more than 4 plies shall have not less than the number of turns given for the 4-ply yarn, minus 1 turn for each additional ply above 4; that is, for each additional ply above 4, 1 turn per inch may be deducted from the minimum number of turns given for the 4-ply yarn. . (b) The term “long staple cotton fiber” as used in this section is under- stood to mean cotton fiber which is not less than 1%” in length of staple: Provided, however, That nothing in this section shall be construed as pro- hibiting the use of cotton fiber which is not less than 1%.” in length of staple for the counts of 35 and less above referred to. [Rule 3]. § 152.4 “Irregulars,” or “seconds”. (a) It~is_an_unfair trade practice to fail to disclosé,on industry products and in all advertising and promotional material relating thereto that such products are “irregulars” or ‘“‘seconds,”’ when such is the case. (b) It. is an unfair trade practice to cause any industry products to be fal- sely or deceptively marked, advertised, described or otherwise represented, either as not being or as being ‘‘irregu- lars” or ‘‘seconds,’’ when such is not the fact. (c) For the purpose of this section ‘irregulars’” shall be considered as in- cluding all hosiery which is not of first quality but which contains only minor imperfections limited to irregularities in dimensions, size, color or knit, and without the presence of any obvious mends, runs, tears or breaks in the fabric or any substantial damage to the yarn or fabric itself. “Seconds” shall be considered as including all ho- siery which is not of first quality, does not qualify as “irregulars” and which Chapter I—Federal Trade Commission contains runs, obvious mends, irregu- larities, substantial imperfections, or defects in material, construction or finish. (d) The marking of hosiery under this section shall be made in a con- spicuous and non-deceptive manner with sufficient permanency or indel- ibility to carry through the channels of trade to the ultimate consumer in a clearly legible condition. The words “irregulars” or “seconds” as the case may be shall be set out distinctly by transfer or other marking on the fabric of each stocking, sock or other unit, whether sold in pairs, threes or otherwise. In addition, if the hosiery is packaged in any manner so as to con- ceal the disclosures required by this section then such disclosures shall also be made on such packaging in a con- spicuous and non-deceptive manner. The required disclosures in advertising and other promotional material that industry products are “irregulars’”’ or “seconds,” must also be made in a con- spicuous and non-deceptive manner. [Rule 4] § 152.5 Removal, ation of marks. It is an unfair trade practice for any manufacturer, converter, processor, dyer, finisher, distributor, dealer, im- porter or vendor, or person acting for or in collusion with any concern or vendor, (a) to remove, obliterate, deface, change, alter, conceal, or make illegible any information required by the rules in this part to be disclosed on industry products, without replacing the same before sale, resale or distri- bution for sale with a proper mark meeting the requirements of the rules in this part; or (b) to sell, resell, or dis- tribute any industry product without its being marked and described in ac- cordance with the requirements of the rules in this part. obliteration, or alter- Note: Hosiery which has been redyed shall be re-marked in accordance with the requirements of the rules in this part. Ho- siery found to contain a false or deceptive mark, or a mark contrary to the require- ments of the rules in this part, shall be re- marked in accordance with the rules in this Part. (Rule 5) § 152.8 § 152.6 Misrepresentation as to character of business. It is an unfair trade practice for any member of the industry to represent, directly or indirectly, through the use of any word or term in his corporate or trade name, in his advertising or otherwise, that he is a manufacturer, producer, or importer of industry products, or that he is the owner or operator of a mill or factory manufac- turing them, when such is not the fact, or in any other manner to mis- represent the character, extent, volume, or type of his business. [Rule 6} § 152.7 Deceptive price representations. Members of the industry shall not represent directly or indirectly in ad- vertising or otherwise than an indus- try product may be purchased for a specified price, or at a saving, or at a reduced price, when such is not the fact; or otherwise deceive purchasers or prospective purchasers with respect to the price of any product offered for sale; or furnish any means or instru- mentality by which others engaged in the sale of industry products may make any such representation. Nore: On December 20, 1963, the Commis- sion adopted Guides Against Deceptive Pric- ing which became effective on January 8, 1964 and which superseded the Guides on this subject as adopted October 2, 1958. The 1964 Guides appear in the January 8, 1964 issue of the FEDERAL REGISTER on pages 178- 180 and are set forth as an appendix to the rules in this part. Copies of the Guides will be furnished upon request. [Rule 7} (29 FR 7461, June 10, 1964] § 152.8 Substitution of products. It is an unfair trade practice for a member of the industry to make an unauthorized substitution of products, where such substitution has the capac- ity and tendency or effect of mislead- ing or deceiving purchasers or prospec- tive purchasers, by (a) shipping or de- livering industry products which do not conform to samples submitted, to specifications upon which the sale is consummated, or to representations made prior to securing the order, with- § 152.9 out advising the purchaser of the sub- stitution and obtaining his consent thereto prior to making shipment or delivery; or (b) falsely representing the reason for making a substitution. [Rule 8] § 152.9 Size markings and designations. ? In connection with the sale or offer- ing for sale of industry products, it is an unfair trade practice: (a) To mark or otherwise represent any industry product as being of a cer- tain size which is not in fact the true and normal size thereof; or (b) To alter the true and normal size of industry products by stretching or manipulation so as to deceive purchas- ers or prospective purchasers as to such size; or (c) To fail to disclose on industry products the true and normal size thereof when the failure to make such disclosure has the capacity and ten- dency or effect of deceiving. purchas- ers or prospective purchasers as to the size of such products. , Note: So-called “stretch” hose (which is represented as being suitable for more than one size foot) should be marked so as to clearly disclose the minimum and the maxi- mum sizes for which such hose is in fact suitable, and the range should be limited to the sizes which such hose will comfortably fit without undue looseness or tension. (Rule 9] § 152.10 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, employ- ees, or representatives of customers or prospective customers, or to agents, employees, or representatives of com- petitors’ customers or prospective cus- tomers, without the knowledge of their employers or principals, as an in- ducemént to influence their employers or principals to purchase or contract to purchase products imported, manu- factured, or sold by such industry member or the maker of such gift or ?Commercial Standard CS 46-49, ‘‘Hosiery Lengths and Sizes” is recognized as a proper method to follow in determining measure- ments and sizes of hosiery. 10 Title 16—Commercial Practices offer, or to influence such employers or principals to refrain from dealing in the products of competitors or from dealing or contracting to deal with competitors.—([Rule 10] $152.11 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 line of commerce. CRule 11) § 152.12 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 dis- closed and 1_without deceptively mini- mizing the terms and conditions relat- ing to the obligations of the guaran- tor. (b) It is also an unfair trade practice to use, or cause to be used, any guar- antee in which the obligations of the guarantor are impracticable of fulfill- ment, or in respect to which the guar- antor fails or refuses to observe his li- abilities thereunder. (ce) This section shall be applicable not only to guarantees but also to war- ranties, to purported guarantees and warranties, and to any promise or rep- resentation in the nature of a guaran- tee or warranty. Nore: The “guarantees” and “warranties” to which this section relates do not include the “guaranty” provided for in the Wool Products Labeling Act of 1939, the Textile Fiber Products Identification Act, or in the rules and regulations issued under such Acts. (Rule 12] Chapter I—Federal Trade Commission § 152.13 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 in promoting the resale of products supplied by the in- dustry member to the customer: (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 (b) When the terms and conditions of the agreement or understanding are such that any benefit to the salesper- son or customer is dependent on lot- tery or chance; or (c) When any provision of the agree- ment or 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 compe- tition or tend to create a monopoly; or ce) 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. Note: Payments made by an industry member to a salesperson of a customer under an 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. [Rule 13] § 152.14 Prohibited discrimination. * (a) Prohibited discriminatory prices, rebates, refunds, discounts, credits, 3As 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 11 § 152.14 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 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, and are not purchased by schools, colleges, universities, public li- braries, churches, hospitals, and chari- table institutions not operated for profit, as supplies for their own use. Nore: Purchases by the U.S. Government. In an opinion submitted to the Secretary of War under date of December 26, 1936, the U.S. Attorney General advised that the Robinson-Patman Antidiscrimination Act “is not applicable to Government contracts for supplies.”’ (38 Opinions, Attorney Gener- al 539.) (2) That nothing contained in this paragraph shall prevent differentials which make only due allowance for differences in the cost of manufacture, sale, or delivery resulting from the dif- fering methods or quantities in which such commodities are to such purchas- ers sold or delivered; 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.” § 152.14 Note 1: Cost justification to be based on net savings in cost of manufacture, sale or delivery. Cost justification under paragraph (a)(2) of this section depends upon net sav- ings in cost based on ali facts relevant to the transactions under the terms of such sub- 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 justi- fied by cost differences, it does not follow that the same discount can be cost justified if granted to a purchaser of the same quan- tity by multiple orders or for multiple deliv- eries, “Notre 2: Credit or refund for returned goods. In determining whether a price dif- ferential based on cost savings under para- graph (a)(2) of this section is warranted there shall be taken into account any por- tion of the goods involved which are re- turned by the customer-purchaser to the seller for credit or refund. See also para- graph (e)(2) of this section. (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 this paragraph shall prevent price changes from time to time where made in re- sponse to changing conditions affect- ing the market for or the marketabil- ity of the goods concerned, such as but not limited to obsolescence of seasonal goods, distress sales under court proc- ess, or sales in good faith in discon- tinuance of business in the goods con- cerned; (5) That nothing contained in this section shall prevent the meeting in good faith of an equally low price of a competitor. Norte 1: An industry member cannot justi- fy a price differential under paragraph (a5) of this section if his lowered price is part of his general pricing system and is not made in response to an individual competi- tive demand. Norte 2: Subsection (b) of Section 2 of the Clayton Act, as amended, reads as follows: “Upon proof being made, at any hearing on a complaint under this section, that there has been discrimination in price or services or facilities furnished, the burden of rebutting the prima facie case thus made by showing justification shall be upon the person charged with a violation of this sec- tion, and unless justification shall be affir- matively shown, the Commission is author- 12 Title 16—Commercial Practices ized to issue an order terminating the dis- crimination; Provided, however, That noth- ing herein contained shall prevent a seller rebutting the prima facie case thus made by showing that his lower price or the furnish- ing 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.” Nore 3: In complaint proceedings, justifi- cation of pricé” differentials under para- graphs (a)(2), (4) and (5) of this section is a matter of affirmative defense to be estab- lished by the person or concern charged with price discrimination. (bo) The following are examples of price differential practices to be con- sidered as subject, to the prohibitions of paragraph (a) of this section when involving goods of like grade and qual- ity which are sold for use, consump- tion, or resale within any place under the jurisdiction of the United States, and which are not purchased by schools, colleges, universities, public li- braries, churches, hospitals, and chari- table institutions not operated for profit, as supplies for their own use,‘ and when: (1) The commerce requirements specified in paragraph (a) of this sec- tion are present; and (2) The price differential has a rea- sonable probability of substantially lessening competition or tending to create a monopoly in any line of com- merce, or of injuring, destroying, or preventing competition with the in- dustry member or with the customer receiving the benefit of the price dif- ferential, or with customers of either of them; and (3) The price differential is not justi- fied by cost savings (see paragraph (a)(2) of this section); and (4) The price differential is not made in response to changing conditions af- fecting the market for or the market- ability of the goods concerned (see paragraph (a)(4) of this section); and (5) The lower price was not made to meet in good faith an equally low price of a competitor (see paragraph (a)(5) of this section): Example No. 1. At the end of a given period an industry member grants a dis- ‘See also Note under paragraph (a)(1) of this section. Chapter I—Federal Trade Commission count to a customer equivalent to a fixed percentage of the total of the customer’s purchase during such period and fails to grant such discount to other customers under like conditions. Example No. 2. An industry member sells goods to one or more of his customers at a higher price than he charges other custom- ers for like merchandise. It is immaterial whether or not such discrimination is ac- complished by misrepresentation as to the grade and quality of the products sold. Example No. 3. Terms of 2/10th prox. are granted by an industry member to some cus- tomers on goods purchased by them from the industry member. Another customer or custumers are, nevertheless, allowed to take a 5% instead of a 2% discount when making payment to the industry member within the time prescribed. Example No. 4. An industry member sells goods to one or more of his customers at a lower price than he charges other customers therefor, basing his justification for the price difference solely on the fact that the goods sold at the lower price bear the pri- vate brand name of customers. Example No. 5. An industry member in- voices goods to all his customers at the same price but supplies additional quantities of such goods at no extra charge to one or more, but not to all, such customers; or sup- plies other goods or premiums to one or more, but not to all, such customers for which he makes no extra charge and which effects an actual price difference in favor of certain of his customers. Example No. 6. An industry member sells goods to one or more of his customers at a higher price than he charges other custom- ers for like merchandise. It is immaterial whether the goods sold at the lower price are classified by the industry member as “seconds,” “secondary line,” “rejects,” or are otherwise represented by the industry member as inferior, if the goods are in fact of like grade and quality as the goods sold at the higher price. NotE: As previously indicated, the forego- ing are examples of practices to be consid- ered violative of the prohibitions of para- graph (a) of this section when involving goods of like grade and quality and when not subject to the other exemptions, exclu- sions, or defenses set forth in this para- graph. (c) 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 such commerce, to pay or grant, or to receive or accept, anything of value as a commission, brokerage, or other compensation, or any allowance or dis- 13 § 152.14 count in lieu thereof, except for serv- ices 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. (d) Prohibited advertising or promo- tional allowances, etc.: It is an unfair trade practice for any member of the industry engaged in commerce to pay or contract fcr the payment of adver- tising or promotional allowances or any other thing of value to or for the benefit of a customer of such member in the course of such commerce as compensation or in consideration for any services or facilities furnished by or through such customer in 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 customers competing in the distribution of such products or commodities. Note 1: Industry members giving allowances for advertising or sales promo- tion must, in addition to according same to all competing customers on proportionally equal terms, exercise precaution and dili- gence in seeing that all such allowances are used by the customers for such purpose. Customers receiving such allowances must not use same for any other purpose. When an allowance is made ostensibly for advertising or sales promotion of products and is not in fact used for that purpose the practice may constitute a price discrimina- tion. In such case, the party giving the al- lowance may violate paragraph (a) of this section and the party receiving same may violate paragraph (f) of this section. Norte 2: When an industry member gives allowances to competing customers for ad- vertising in a newspaper or periodical, the fact that a lower advertising rate for equiva- lent space is available to one or more, but not all, such customers, is not to be regard- ed by the industry member as warranting the retention by such customer or custom- ers of any portion of the allowance for his or their personal use or benefit. § 152.15 (e) Prohibited discriminatory serv- ices 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 proc- essing, handling, sale, or offering for sale of such commodity so purchased upon terms not accorded to all com- peting purchasers on proportionally equal terms. Note 1: See subsection (b) of section 2 of the Clayton Act, as amended, which is set forth in paragraph (a)(5) Note No. 2 of this section. Nore 2: Among the practices inhibited by this paragraph is that of an industry member according to one or more customers the privilege of returning for credit or refund any or all of the goods purchased by them and failing to accord the same privi- lege to another or other competing custom- ers on proportionally equal terms. In this connection see also paragraph (a)(2) Note No. 2 of this section. Nore: Paragraphs (d) and (e) of this sec- tion are based on subsections (d) and (e) of section 2 of the Clayton Act, as amended. The Commission, on May 19, 1960, adopted Guides relating to the requirements of these statutory subsections which are of value to members of the industry in avoid- ing violations of such requirements in giving or receiving promotional allowances, includ- ing advertising or special services for pro- moting the sale of industry products. Copies of these Guides will be mailed to industry members upon request. (f) 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 provisions of this section. Note: This section is based on the provi- sions of section 2 of the Clayton Act as amended by the Robinson-Patman Act. [Rule 14] §152.15 Aiding or abetting use of unfair trade practices. It is an unfair trade practice for any person, firm or corporation to aid, 14 Title 16—Commercial Practices 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. [Rule 15) Grovr II § 152.101 Information as to treatment and care of products. The practice, by producers, manu- facturers, distributors and vendors, of furnishing and disseminating, through tags, labels, advertisement, or other publicity, accurate information as to the proper treatment, care and wash- ing of hosiery products is approved and recommended as a desirable prac- tice to follow in the interest of en- abling consumers to obtain and enjoy full benefit of the desirable qualities and service of such products. Note: This section is not to be construed as relieving anyone of the necessity of com- plying with the requirements of the Wool Products Labeling Act of 1939 or the re- quirements of the Textile Fiber Products Identification Act or with the rules and reg- ulations issued under such Acts. (Rule A) PART 154—LUGGAGE AND RELATED PRODUCTS INDUSTRY Sec. 154.0 154.1 Definitions. Deception (general). 154.2 Deception as to composition. 154.3 Deceptive practices as to aniline finish, graining, embossing and process- ing. 154.4 Deception as to hardware, frame or box. 154.5 Misuse of the terms “waterproof,” “dustproof,” “warpproof,” “scuffproof” and “scratchproof.” 154.6 False invoicing. 154.7 Substitution of products. 154.8 Commercial bribery. 154.9 Defamation of competitors or false disparagement of their products. 154.10 Procurement of competitors’ confi- dential information. 154.11 Unfair threats of infringement suits. 154.12 Deceptive use and imitation of trade or corporate names, trade-marks, etc. 154.13 Guarantees, warranties, etc. 154.14 Coercing purchase of one product as a prerequisite to the purchase of other products. 154.15 Inducing breach of contract.