Luggage And Related Products Industry
16 CFR Part 154 · 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 These rules and guides are historical: most were rescinded or replaced, so do not assume any is in force.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
Text (1979 edition, OCR)
§ 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.
Chapter I—Federal Trade Commission
Sec.
154.16 Misrepresentation as to character of
business.
154.17 Deception in distribution of special
lots.
154.18 Use of the word “free.”
154.19 Deceptive pricing.
154.20 Use of gift enterprise or lottery
schemes.
154.21 Prohibited forms of trade restraints
(unlawful price fixing, etc.).
154.22 Unfair interference.
154.23 Prohibited discrimination.
154.24 Discriminatory returns.
154.25 Consignment distribution.
154.26 Exclusive dealing.
154.27 Aiding or abetting use of unfair
trade practices.
AutnHorirTy: Secs. 6, 5, 38 Stat. 721, 719; 15
U.S.C. 45, 46, unless otherwise noted.
Source: 27 FR 6217, June 30, 1962, unless
otherwise noted.
§ 154.0 Definitions.
Industry member. Any person, firm,
§ 154.2
§ 154.2 Deception as to composition.
(a) In the sale, offering for sale, or
distribution of industry products, it is
‘an unfair trade practice to misrepre-
corporation or organization engaged in.
the manufacture, sale or distribution
of any industry products as defined
below.
Industry products. Industry prod-
ucts consist of all kinds and type of
trunks, suitcases, traveling bags,
sample cases, instrument cases, brief
cases, ring binders, billfolds, wallets,
key cases, coin purses, card cases,
french purses, dressing cases, stud
boxes, tie cases, jewel boxes, travel
kits, gadget bags, camera bags, and
similar articles, of any composition.
Ladies’ handbags are not included.
§ 154.1 Deception (general).
It is an unfair trade practice to sell,
offer for sale, or distribute industry
products by any method, or under any
circumstance or condition which has
the capacity and tendency or effect of
misleading or deceiving the purchas-
ing or consuming public with respect
to the kind, grade, quality, quantity,
material content, thickness, finish,
serviceability, durability, price, origin,
size, weight, ease of cleaning, construc-
tion, manufacture, processing, or dis-
tribution of any product of the indus-
try or part thereof, or in any other
material respect. [Rule 1]
15
sent the composition of any industry
product or part thereof, or to fail to
disclose, in the manner hereinafter set
forth (see paragraph (b)(9) of this sec-
tion), material facts concerning the
composition of an industry product
when the failure to do so has the ca-
pacity and tendency or effect of de-
ceiving purchasers or prospective pur-
chasers.
(b) The foregoing provisions of this
section are to be construed as, but not
limited to:
(1) Split leather. Requiring disclo-
sure' of the fact that an industry
product, or part thereof, is made of
split leather if the split leather is visi-
ble or if any representation is made as
to the composition thereof. For exam-
ple, a disclosure such as,
Split Cowhide
Nore: For purposes of this part leather
from portions of hides or skins which have
been split into two or more thicknesses,
other than the grain or hair side, shall be
considered split leather.
(2) Imitation or simulated leather.
Requiring that when an industry prod-
uct or part thereof is made of non-
leather material which has the ap-
pearance of leather, disclosure! be
made either of the fact that the mate-
rial is not leather, or of the general
nature of the material as will clearly
show that it is not leather, as, for ex-
ample:
Not leather
Imitation leather
Simulated leather
Vinyl
Vinyl coated fabric
Plastic
(3) Embossed or processed leather.
Requiring disclosure’ of the kind and
type of leather which an industry
product or part thereof is made when
such leather has been embossed, dyed,
or otherwise processed, so as to simu-
late the appearance of a different kind
of type of leather, as, for example:
() An industry product made wholly
of top grain cowhide which has been
'See paragraph (b)(9) of this section.
§ 154.2
processed so as to imitate pigskin may
be represented as being made of:
Top Grain Cowhide
(ii) Any additional representation as
may be made concerning the simulat-
ed appearance of an industry product
composed of leather shall be immedi-
ately accompanied by the required dis-
closure of the kind and type of leather
in the product, as, for example:
Top Grain Cowhide
Simulated Pigskin Grain
(4) Backing material. Requiring dis-
closure! that any material in an indus-
try product is backed with another
kind of material when the backing is
not apparent to purchasers or prospec-
tive purchasers upon casual inspection
of the product, or when representa-
tions are made which, in the absence
of such disclosure, would be deceptive
as to the composition of the product.
For example, disclosures such as,
Top Grain Cowhide Backed With Split
Cowhide
or
Split Cowhide Backed With Simulated
Leather
or
Vinyl Backed With Other Material
If the different backing material used
is visible and is split leather, non-
leather material which has the ap-
pearance of leather, or leather proc-
essed so as to simulate a different kind
of leather, disclosure as is required by
paragraphs (b) (1), (2) or (3) of this
section, whichever is applicable, must
also be made.
(5) Fictitious animal designations.
Prohibiting any representation or im-
plication that an industry product is
made in whole or in part from the skin
or hide of an animal which in fact is
nonexistent. .
(6) Misuse of trade names, etc. Pro-
hibiting the use of any trade name,
coined name, trade-mark, or other
word or term, or any depiction or
device, which has the capacity and
tendency or effect of deceiving pur-
chasers or prospective purchasers into
believing that an industry product is
made in whole or in part from the skin
‘See paragraph (b)(9) of this section.
Title 16—Commercial Practices
or hide of an animal or that material
in an industry product is leather, top
grain leather, split leather, plastic,
fiber-glass, nylon or other material,
when such is not the case. This prohi-
bition shall include, among other prac-
tices, the use of a stamping, tag, label,
card, or other device in the shape of a
tanned hide or skin or in the shape of
a silhouette of an animal in connec-
tion with any industry product having
the appearance of leather but which is
not made wholly or in substantial part
- from the skin or hide of an animal.
16
(1) Misrepresentation that product is
wholly of a particular composition.
Prohibiting any representation or im-
plication that an industry product is
made wholly of a particular composi-
tion when such is not the case.
A representation as to the composi-
tion of a particular part of a product
must clearly indicate the part to
which the representation is properly
applicable.
di) Where a product is made princi-
pally ‘of top grain leather or of split
leather with the exception of certain
non-leather parts thereof which have.
the appearance of leather, the product -
may be described as made of top grain
leather or split leather, as the case
may be, except for such designated
non-leather parts when accompanied
by disclosure’ either of the fact that
the designated parts are not leather or
of the general nature of such parts as
will clearly show that they are not
leather. For example: A brief case
made of top grain cowhide except for
frame covering, gussets and partitions
which are made of plastic but have the
appearance of leather may be de-
scribed as— co,
Top Grain Cowhide
With Plastic Frame Covering, Gussets
and Partitions ,
or
Top Grain Cowhide With Gussets,
Frame Covering and Partitions Made of
Non-leather Material
A zipper binder made throughout,
except for hardware, of vinyl backed
with split cowhide may be described
as—
Vinyl] Backed With Split Cowhide
Chapter I—Federal Trade Commission
(See also disclosure requirements con-
cerning use of backing material set
forth in paragraph (a)(4) of this sec-
tion.) A billfold made of top grain cow-
hide except for partitions and stay
which are made of plastic coated
fabric but have the appearance of
leather may be described as—
Top Grain Cowhide With Partitions
and Stay Made of Non-Leather Material
or
Top Grain Cowhide With Partitions
and Stay Made of Plastic Coated Fabric
(ii) Where a product is made princi-
pally of top grain leather and the only
other parts thereof which have the ap-
pearance of leather are made of split
leather. the product may be described
as made of top grain leather except
for the designated parts made of split
leather when accompanied by disclo-
sure! that such parts are made of split
ieather. For example: A brief case
made of top grain cowhide except for
frame covering, gussets and partitions
which are made of split cowhide may
be described as—
Top Grain Cowhide With Split Cow-
hide Frame Covering, Gussets and Parti-
tions
(8) Ground, pulverized or shredded
leather. Prohibiting any representa-
tion directly or by implication that a
material in an industry product is
leather, if such material contains
ground, pulverized or shredded leather
and thus is not wholly the hide of an
animal. This provision shall not be
construed as preventing an accurate
representation as to the ground, pul-
verized or shredded leather content of
the material. However, if the material
has the appearance of being leather it
must be accompanied by disclosure ' as
is required by paragraph (b)(2) of this
section. For example: A brief case
made of a composition material con-
sisting of shredded leather fibers held
together with a rubber adhesive and
coated with vinyl may be described
as—
Composition Material Containing
Shredded Leather Fibers, Rubber Adhe-
sive and Vinyl Coating.
‘See paragraph (b)(9) of this section.
17
§ 154.4
(9) Form of required disclosures
under this Section. All disclosures re-
quired by provisions of this section
shall appear in the form of a stamping
on the product, or on a tag, label, or
card attached thereto, and be affixed
with such degree of performance as to
remain on or attached to the product
until it is received by the consumer
purchaser. All disclosures so required
on industry products shall also appear
in all advertising of such products irre-
spective of the media used whenever
statements, representations or depic-
tions appear in such advertising which
in the absence of such disclosures
serve to create a false impression that
the products, or parts thereof, are of a
certain kind of composition. The dis- .
closures affixed to products and made
in advertising must be of such con-
spicuousness and clarity as to be noted
by purchasers and prospective pur-
chasers casually inspecting the prod-
ucts or casually reading, or listening
to, such advertising. A disclosure re-
quired in connection with any repre-
sentation must be in close conjunction
therewith. [Rule 2]
§ 154.3 Deceptive practices as to aniline
finish, graining, embossing and proc-
essing.
In the sale, offering for sale or dis-
tribution of industry products, it is an
unfair trade practice to represent, di-
rectly or by implication:
(a) That any such product is colored,
finished, or dyed with aniline dye
when such is not true in fact; or
(b) That any such product or any
part thereof is dyed, embossed,
grained, processed, finished or stitched
in a certain manner when such is not
true in fact. [Rule 3]
§ 154.4 Deception as to hardware, frame
or box.
In the sale, offering for sale or dis-
tribution of industry products, it is an
unfair trade practice to represent, di-
rectly or by implication:
(a) That the hardware or any item
thereof contained in an industry prod-
uct is brass, solid brass, or some other
designated material when such is not
true in fact or when such hardware is
only plated or coated with the materi-
§ 154.5
al designated and the remaining metal
therein is of a different kind; or
(b) That the box or frame of an in-
dustry product is made in whole or in
part of a certain kind of material
when such is not true in fact. [Rule 4]
§ 154.5 Misuse of the terms “waterproof,”
“dustproof,” “warpproof,” “scuffproof”
and “scratchproof.”
It is an unfair trade practice to:
(a) Use the term “Waterproof” as
descriptive of an industry product or
the material of which an industry
product is made unless such product
or material, whichever is so designated
is impermeable to water and moisture.
(b) Use the term “Dustproof” as de-
- scriptive of an industry product unless
such product is so constructed that
when it is closed dust cannot enter the
product.
(c) Use the term “Warpproof” as de-
scriptive of an industry product or
part thereof unless the product or
part so designated is such that it
cannot warp.
(d) Use the term: “Scuffproof” or
“Scratchproof” as descriptive of an in-
dustry product unless the outside sur-
face of the product is immune to
scratches or scuff marks. [Rule 5]
§ 154.6 False invoicing.
Withholding from or inserting in in-
voices or sales slips any statements or
information by reason of 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 in any material re-
spect, is an unfair trade practice.
(Rule 6]
§ 154.7 Substitution of products.
It is an unfair trade practice for a
member of the industry to make unau-
thorized substitutions of products,
where such substitutions have the ca-
pacity and tendency or effect of mis-
leading or deceiving purchasers, by:
(a) Shipping or delivering industry
products which do not conform to
samples submitted, to specifications
Title 16—Commercial Practices
(in bids or otherwise) upon which the
sale is consummated, or to representa-
tions made prior to securing the order,
without advising the purchaser of the
substitution and obtaining his consent
thereto prior to making shipment or
delivery; or
(b) Falsely representing the reason
for making substitutions. [Rule 7]
§ 154.8 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-
ducement to influence their employers
or principals to purchase or contract
to purchase products sold or offered
for sale by such industry member, or
to influence such employers or princi-
pals to refrain from dealing in the
products of competitors or from deal-
ing or contracting to deal with com-
petitors. [Rule 8).
§ 154.9 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,
manufacture, or distribution of the
products of competitors, or of their
business methods, selling prices,
values, credit terms, policies, or serv-
ices, is an unfair trade practice. [Rule
9)
§ 154.10 Procurement of competitors’ con-
fidential information.
It is an unfair trade practice for any
member of the industry to obtain in-
formation concerning the business of a
competitor by bribery of an employee
or agent of such competitor, by the
impersonation of one in authority, or
by any other unfair means, and to use
the information so obtained so as sub-
18
<3)
Chapter I—Federal Trade Commission
stantially to injure a competitor or un-
reasonably restrain trade. [Rule 10)
§ 154.11 Unfair threats of infringement
suits.
The circulation of threats of suit for
infringement of patents or trade-
marks among competitors, or custom-
ers or prospective customers of com-
petitors, not made in good faith but
for the purpose and with the effect of
harassing or intimidating such com-
petitors, or customers or prospective
customers, or of hampering, injuring,
or prejudicing competitors in their
business, is an unfair trade practice.
{Rule 11]
§ 154.12 Deceptive use and imitation of
trade or corporate names, trade-marks,
etc.
It is an unfair trade practice for any
member of the industry to use any
trade name, corporate name, trade-
mark, or other trade designation,
which has the capacity and tendency
or effect of misleading or deceiving
purchasers or prospective purchasers
as to the character, name, nature,
manufacture or origin of any product
of the industry, or of any material
used therein, or which is false or mis-
leading in any material respect. (See
also § 154.16 of this part.) [Rule 12]
§ 154.13 Guarantees, warranties, etc.
(a) It is an unfair trade practice to
represent in advertising or otherwise
that a product is “guaranteed” with-
out clear and conspicuous disclosure in
conjunction therewith of:
(1) the nature and extent of the
guarantee, and
(2) any material conditions or limita-
tion in the guarantee which are im-
posed by the guarantor, and
(3) the manner in which the guaran-
tor will perform thereunder, and
(4) the identity of the guarantor.
Representations that a product is
“guaranteed for life’ or has a “life-
time guarantee” in addition to meet-
ing the above requirements, shall con-
tain a conjunctive and conspicuous dis-
closure of the meaning of “life” or
“lifetime” as used (whether that of
the purchaser, the product or other-
wise).
19
§ 154.15
(b) Guarantees shall not be used
which under normal conditions are im-
practical of fulfillment or which are
for such a period of time or are other-
wise of such nature as to have the ca-
pacity and tendency of misleading pur-
chasers or prospective purchasers into
the belief that the product so guaran-
teed has a greater degree of servicea-
bility, durability or performance capa-
bility in actual use than is true in fact.
(c) This section has application not
only to “guarantees” but also to “war-
ranties,” to purported “guarantees”
and “warranties,” and to any promise
or representation in the nature of a
“guarantee” or “warranty.” [Rule 13]
§ 154.14 Coercing purchase of one product
as a prerequisite to the purchase of
other products.
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
unreasonably to restrain trade, is an
unfair trade practice. [Rule 14)
§ 154.15 Inducing breach of contract.
(a) Knowingly inducing or attempt-
ing to induce the breach of existing
lawful contracts between competitors
and their customers or between com-
petitors and their suppliers, or inter-
fering with or obstructing the per-
formance of any such contractual
duties or services, under any circum-
stance having the capacity and ten-
dency or effect of substantially injur-
ing or lessening competition, is an
unfair trade practice.
(b) Nothing in this section is intend-
ed to imply that it is improper to solic-
it the business of a customer of a com-
peting industry member; nor is the
section to be construed as in anywise
authorizing any agreement, under-
standing, or planned common course
of action by two or more industry
members not to solicit business from,
or to sell to, the customers of either of
them, or customers of any other indus-
try member. {Rule 15]
§ 154.16
§ 154.16 Misrepresentation as to character
of business.
It is an unfair trade practice for any
industry member, in the course of or
in connection with the sale of industry
products, to represent, directly or indi-
rectly, that he is a manufacturer of in-
dustry products, unless he owns and
operates or directly controls a factory
wherein such products are made, or to
represent that he is a wholesaler of in-
dustry products when such is not a
fact, or in any other manner to mis-
represent the character, extent, or
type of his business. [Rule 16]
§ 154.17 Deception in distribution of spe-
cial lots.
In the case of lots or quantities of in-
dustry products advertised or offered
for sale at so-called special or bargain
sales or reduced price sales or other-
wise, it is an unfair trade practice to
use advertisements or representatives
thereof which represent, import or
imply that such merchandise consists
entirely or in substantial or greater
part of products or articles of well-
known manufacturers or of well-
known or reputable brands or of prod-
ucts or articles of certain high quality,
grade, or price, when no such products:
or articles are contained in said lot or
quantity of merchandise or when only
a relatively small quantity or number
thereof is contained in such merchan-
dise, or when such advertisements or
representations otherwise have the ca-
pacity and tendency or effect of mis-
leading or deceiving the purchasing or
consuming public. [Rule 17]
$154.18 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-
cle of merchandise or service offered
are not clearly and conspicuously set
20
Title 16—Commercial Practices
forth at the outset so as to leave no
reasonable probability that the terms
of the offer will be misunderstood;
and, regardless of such disclosure:
(b) When, with respect to any article
of merchandise required to be pur-
chased in order to obtain the “free”
article or service, the offeror (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 para-
graph (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
advertisement 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.
[Rule 18]
§ 154.19 Deceptive pricing.
It is an unfair trade practice for any
member of the industry to represent
directly or indirectly in advertising or
otherwise that an industry 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 pur-
chasers with respect to the price of
any product offered for sale; or fur-
nish any means or instrumentality by
which others engaged in the sale of in-
dustry 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 supersede the Guides on
this subject as adopted October 2, 1958.
Copies of the Guides will be furnished upon
request.
CRule 19)
[29 FR 7670, June 16, 1964]
§ 154.20 Use of gift enterprise or lottery
schemes. ,
The offering or giving of prizes, pre-
miums, or gifts in connection with the
sale or distribution of industry prod-
ucts, or as an inducement thereto, by
any method which involves a lottery
or gift enterprise, and the sale or dis-
tribution of industry products by any
Chapter I—Federal Trade Commission
method or plan which involves a lot-
tery or gift enterprise, are unfair trade
practices. [Rule 20]
§ 154.21 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-
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 understanding, agreement,
combination, or conspiracy. [Rule 21]
§ 154.22 Unfair interference.
It is an unfair trade practice for any
member of the industry, by means of
any monopolistic practice, or through
combination, conspiracy, coercion,
boycott, threats, or any other unlaw-
ful means, directly or indirectly, to in-
terfere with a competitor’s right to
purchase his materials and supplies
?The prohibitions of this section are sub-
ject to Pub. L. 542, approved July 14, 1952—
66 Stat. 632 (the McGuire Act, commonly
referred to as the Fair Trade Amendment)
which provides that with respect to a com-
modity which bears, or the label or contain-
er 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 resold 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 made or to which
the commodity is to be transported for such
resale, and when such contract or agree-
ment is not between manufacturers, or be-
tween wholesalers, or between brokers, or
between factors, or between retailers, or be-
tween persons, firms, or corporations in
competition with each other.
21
§ 154.23
from whomsoever he chooses, or to
sell to whomsoever he chooses. [Rule
22)
§ 154.23 Prohibited discrimination.
(a) Prohibited discriminatory prices,
rebates, discounts, etc. It is an unfair
trade practice for any member of the
industry engaged in commerce, in the
course of such commerce, to grant or
allow, secretly or openly, directly or
indirectly, any rebate, refund, dis-
count, credit, or other form of price
differential, where such rebate,
refund, discount, credit, or other form
of price differential effects a discrimi-
nation in price between different pur-
chasers of goods of like grade and
quality, where either or any of the
purchasers involved therein are in
commerce, and where the effect there-
of may be substantially to lessen com-
petition or tend to create a monopoly
in any line of commerce, or to injure,
destroy, or prevent competition with
any person who either grants or know-
ingly receives the benefit of such dis-
crimination, 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;
(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;
Norte: Cost justification under paragraph
(a)(2) of this section depends upon net sav-
ings in cost based on all facts relevant to the
transactions under the terms of such para-
graph. 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.
§ 154.23
(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.
Note: 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 rebut-
ting 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-
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.”
(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
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-
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
22
Title 16—Commercial Practices
other than the person by whom such
compensation is so granted or paid.
(c) Prohibited advertising or promo-
tional allowances, etc.: It is an unfair
trade practice for any member of the
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 member
im 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 made known to and is
available on proportionally equal
terms to all other customers compet-
ing in the distribution of such prod-
ucts or commodities.
NoTE 1: Industry members giving advertis-
ing allowances to competing customers must
exercise precaution and diligence in seeing
that all of such allowances are used in ac-
cordance with the terms of their offers.
Nore 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.
(d) 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: Subsection (b) of section 2 of the
Clayton Act as amended, which is set forth
in the note concluding paragraph (a) of this
section is applicable to this paragraph.
Chapter I—Federal Trade Commission
(e)(1) The following is presented for
the purpose of clarifying the require-
ments of paragraphs (c) and (d) of this
section with respect to the supplying
of marketing services, facilities or
allowances by industry members to
their customers, but it is not intended
to imply by such presentation that
other methods which assure of propor-
tional equality of treatment of com-
peting customers may not also be
used,
(2) An industry member may simul-
taneously offer to each of his custom-
ers competing in the resale of his
products the same kind of promotional
service, facility or allowance of a cost
value equal to a uniform percentage of
the sales (or purchases) of the indus-
try member’s products by each cus-
tomer during a specified and identical
period of time: Provided, however,
That when the service, facility or al-
lowance offered is of a type which
under reasonable terms and conditions
is not usable or suitable to the facili-
ties and business of all customers, and
is offered to any one customer, the
member offer each of those customers
to whom the service, facility or allow-
ance is not usable or suitable an alter-
nate type of promotional service, fa-
cility or allowance which is of equiva-
lent measurable cost, is usable by the
customer, and is suitable to his facili-
ties and business, and promptly
inform all competing customers of the
kind and amount of services, facilities
or allowances which he has offered to
each aid the respective terms and con-
ditions under which such services,
facilities or allowances are to be fur-
nished by the industry member; and
provided, further, that when the offer
of any service, facility or allowance to
any customer is conditioned on such
customer supplying some reciprocal
service, facility or payment, a recipro-
cal service, facility or payment be re-
quired in the offers to all other cus-
tomers and there be an equality of
ratio among all customers as to the
measurable cost of that which is sup-
plied by the industry member and the
reciprocal service, facility or payment
required of any customer. The indus-
try member must take every reason-
able precaution to see that services,
40-036 O—79——3
23
§ 154.24
facilities or allowances which he fur-
nishes to customers are used in accord
with the terms of his offer; and upon
failure of the customer to perform any
obligation on his part the industry
member must cease supplying the cus-
tomer any further service, facility or
allowance.
(f) Inducing or receiving an illegal
discrimination in price, advertising or
promotional allowances, or services or
facilities: It is an unfair trade practice
for any member of the industry en-
gaged in commerce, in the course of
such commerce, knowingly to induce
or receive a discrimination in price, ad-
vertising or promotional allowances, or
services or facilities, prohibited by the
foregoing provisions of this section.
[Rule 23]
§ 154.24 Discriminatory returns.
It is an unfair trade practice for any
member of the industry to discrimi-
nate in favor of one customer-purchas-
er against another customer-purchaser
of industry products, bought from
such member of the industry for
resale, by contracting to furnish, or
furnishing in connection therewith,
upon terms not accorded to all custom-
er-purchasers on proportionally equal
terms, the service or facility whereby
such favored customer is accorded the
privilege of returning industry prod-
ucts so purchased and receiving there-
for credit or refund of purchase price:
Provided, however, That nothing in
this part shall prohibit or be used to
prevent the return of merchandise by
purchaser for credit or refund of pur-
chase price: Provided, however, That
merchandise has not been properly la-
beled by the seller in accordance with
this part or has been otherwise falsely
or deceptively labeled or represented,
or when and because such merchan-
dise is defective in material, workman-
ship, or in any other respect is con-
trary to warranty or purchase con-
tract: And provided, further, That
nothing herein shall prohibit a pur-
chaser from exchanging the current
season’s merchandise for different
sizes of the same style number in
order to balance purchaser’s stock.
(Nothing in this section is intended to
modify or affect any of the require-
§ 154.25.
ments of § 154.23 of this part entitled
“Prohibited Discrimination.’) [Rule
24)
§ 154.25 Consignment distribution.
(a) It is an unfair trade practice for
any member of the industry to employ
the practice of shipping industry prod-
ucts on consignment without the ex-
press request or prior consent of the
purchasers.
(o) Nothing in this section shall be
construed to authorize any under-
standing or agreement, combination or
conspiracy, or planned common course
of action, by and between industry
members, mutually to conform or re-
strict their practice of shipping goods
on consignment. (Rule 25]
§ 154.26 Exclusive dealing.
It is an unfair trade practice for any
member of the industry engaged in
commerce, in the course of such com-
merce, to lease or make a sale or con-
tract for sale of any industry product,
for use, consumption, or resale within
any place under the jurisdiction of the
United States, or fix a price charged
therefor, or discount from, or rebate
upon, such price, on the condition,
agreement, or understanding that the
lessee or purchaser thereof shall not
use or deal in the goods of a competi-
tor or competitors of the lessor or
seller, where the effect of such lease,
sale, or contract for sale, or such con-
dition, agreement, or understanding,
may be to substantially lessen compe-
tition or tend to create a monopoly in
any line of commerce. [Rule 26]
§ 154.27 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 pro-
hibited by this part. [Rule 27]
PART 228—TIRE ADVERTISING AND
LABELING GUIDES
Sec.
228.0 “Industry Product”
Member” defined.
228.0-1 Use of guide principles.
and ‘Industry
24
Title 16—Commercial Practices
Sec.
228.1 Tire description.
228.2 Designations of grade, line, level, or
quality.
228.3 Deceptive designations.
228.4 Original equipment.
228.5 Comparative quality and perform-
ance claims.
228.6 Ply count, plies, ply rating.
228.7 Cord materials.
228.8 ‘“Change-Overs,”
Offs,” etc.
228.9 Retreaded and used tires.
228.10 Disclosure that products are obso-
lete or discontinued models.
228.11 Blemished, imperfect,
etc., products.
228.12 Pictorial misrepresentations.
228.13 Racing claims.
228.14 Bait advertising.
228.15 Deceptive pricing.
228.16 Guarantees.
228.17 Safety or performance features.
228.18 Other claims and representations.
228.19 Snow tire advertising.
AutHoritTy: Secs. 5, 6, 38 Stat. 719, as
amended, 721; 15 U.S.C. 45, 46, unless other-
wise noted.
Source: 32 FR 15525, Nov. 8, 1967, unless
otherwise noted.
§ 228.0 “Industry Product” and “Industry
Member” defined.
As used in this part, the terms ‘In-
dustry Product” or “Product” shall
mean pneumatic tires for use on pas-
senger automobiles, station wagons,
and similar vehicles, or the materials
used therein. The term ‘Industry
Member” shall mean: All persons or
firms who are engaged in the manu-
facture, sale or distribution of indus-
try products as above defined whether
under the manufacturer’s or a private
brand; and the manufacturers of pas-
senger automobiles, station wagons,
and similar vehicles for which indus-
try products are provided as original
equipment.
“New Car Take
defective,
§ 228.0-1 Use of guide principles.
The following general principles will
be used in determining whether termi-
nology and other direct or indirect
representations subject to the Com-
mission’s jurisdiction regarding indus-
try products conform to laws adminis-
tered by the Commission.