Wood Cased Lead Pencil Industry

16 CFR Part 162 · Trade practice rules · in the Code of Federal Regulations 1945-1978 (14 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 These rules and guides are historical: most were rescinded or replaced, so do not assume any is in force.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: 1945 CFR

Decisions that mention this industry's rules (1)

Text (1978 edition, OCR)

Chapter I—Federal Trade Commissian

§ 160.28 Deception through failure to dif-
ferentiate betwecn wholesale and retail
transactions.

Where industry products are sold at
wholesale and at retail in the same es-
tablishment of a member of the indus-
try, the commingling of the two types
of business in such manner as to have
the capacity and tendency or effect to
misleading or deceiving purchasers or
prospective purchasers is an unfair
trade practice.

8160.29 Aiding or abetting use of unfair
trade practices.

It is an unfair trade practice for any
person to aid, abet, coerce, or induce
another, directly or indirectly, to use
or promote the use of any unfair trade
practice specifled in §§ 160.1 to 160.29
of this part.

Group II

§ 160.101 Publication of price lists and
terms of sale.

(a) The industry approves the prac-
tice of each individual member of the
industry independently publishmg and
circulating to the purchasing trade his
own price lists.

(b) The industry approves the prac-
tice of making the terms of sale a part
of all published price schedules.

$8 160.102 Repndiation of contracts.

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

§ 160.103 Maintenance of accurate re-
cords.

It is the judgment of the industry
that eacli member sliould indepen-
dently keep proper and accurate re-
cords for determining his costs.

$ 160.104 Arbitration.

The industry approves the practice
of handling business disputes between
members of the industry and their
customers in a fair and reasonable
manner, coupled with a spirit of mod-
eration and good will, and every effort
should be made by the disputants

30-035 O - 78 - 4

§ 160.106

themselves to compose their differ-
ences. If unable to do so they should,
if possible, submit these disputes to ar-
bitration.

§ 160.105 Fictitious bids.

When submitting blds, all bidders
should make their bids in good faith
and on a fully competitive basis. The
use by any member of the industry of
fake or fictitious bids, having the ten-
dency or effect of destroying competl-
tion and securing unfalr advantage, is
condemned by the industry.

§ 160.106 Coercion in sales.

The use of buying power to force un-
economic or unjust terms of sale upon
seilers, and the use of seiling power to
force uneconomic or unjust terms of
sale upon sellers, and the use of selling
power to force uneconomic or unjust
terms of sale upon buyers are con-
demned by the industry.

PART 162—WOOD CASED LEAD
PENCIL INDUSTRY

Grovr I

Sec.
162.1 Misrepresentation and misbranding.

162.2 Deception as to origin of pencils

39

made of fully fabricated imported lead
or slats.

162.3 Misuse of word ‘‘free,’’ etc.

162.4 Defamation of competitors or dispar-
agement of their products.

162.5 Procurement of competitors’ confi-
dential information by unfair means and
wrongful use thereof.

162.6 Commercial bribery.

162.7 Imitation or simulation of trade-
marks, trade names, etc.

162.8 Selling below cost.

162.9 Use of ‘loss leaders.”

162.10 Coercing purchase of one product as
a@ prerequisite to the purchase of other
products.

162.11 Substitution of products.

162.12 Combination or coercion to fix
prices, suppress competition, or restrain
trade.

162.13 Discrimination.

Grovr II

162.101 Ambiguity in contracts or orders.

162.102 Fictitious bids.

162.103 Recording of trade-marks, trade
names, etc., to avoid confusion.


§ 162.1

COMMITTEE ON TRADE PRACTICES

Sec.
162.201 Industry committee.

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

Source: 10 FR 7902, June 29, 1945, unless
otherwise noted.

Group I

§ 162.1 Misrepresentation and misbrand-
ing.

It is an unfair trade practice to use,
or cause or promote the use of, any ad-
vertising by radio, newspapers, maga-
zines, or other media, or any trade
rromotionai literature, label, brand,
mark, imprint, designation, or repre-
sentation, however disseminated or
published:

(a) Which has the capacity and ten-
dency or effect of misleading or de-
ceiving the purchasing or consuming
public with respect to the lead hard-
ness, brand, grade, origin, quality,
quantity, durability, size, use, value,
price, or terms of saie of any mdustry
product, or with respect to the manu-
facture, distribution, or marketing of
such product; or

(b) Which is false, misleading, or de-
ceptive in any other respect.

§ 162.2 Deception as to origin of pencils
made of fully fabricated imported lead
or slats.

(a) In the sale or distribution in the
domestic market of wood cased lead
pencils assembled in the United States
from fully fabricated imported lead or
slats. (1) It is an unfair trade practice
to conceal or fail to fully and nonde-
ceptively disclose the foreign ongin of
such lead or slats or both, as the case
may be, the concealment or nondisclo-
sure having the capacity and tendency
or effect of misleading or deceiving
the purchasing or consuming public.

(2) The practice of imprinting the
phrase ‘Made in U.S.A.” upon such
pencils or their containers, or the use
thereof in advertisements or other
representatlons pertaining to such
pencils, is also an unfair trade practlce
when truthful disclosure is not clearly
and conspicuously made, in immediate
conjunctlon therewith, showing that
such lead or slats or both, as the case

Title 16—Commerciai Practices

may be, have been imported from or
made in the country of their origin.

(b) Manner of disclosure. The follow-
ing is prescribed as a proper manner of
making said disclosure under this sec-
tion of the foreign origin of such lead
or slats or both, as the case may be:

(1) Unless the disclosure is made on
the pencils themselves, the disclosure
shall in all cases be made on the wrap-
per or immediate container of a dozen
or smaller number of pencils, irrespec-
tive of whether or not the phrase
“Made in U.S.A.” is used; and

(2) Whenever the phrase “Made in
U.S.A.” is used, whether on the pen-
cils, on their wrappers or containers,
or in advertising matter, the disclosure
shall be made in immediate conjunc-
tion with such phrase wherever used.

(3) Illustrative designations of for-
eign origin of such lead or slats which
may be used under this section are as

follows: “Lead made in “a
“Slats made in ,” “Lead and
slats made in »” “Lead import-
ed from .’ “Slats imported
from .” “Lead and slats import-
ed from .” (inserting the ap-

plicable country of origin in such
blanks).

(¢c) All the provisions of this section
respecting the phrase “Made in
U.S.A.”’ shall be equally applicable to
expressions or representations of simi-
lar import or meaning such as, but not
limited to, ‘“‘U.S.A.,”” “Made in Amer-
ica,” ‘“‘American Made,” “U.S. Prod-
uct,”’ etc.

(d) This section shall not be con-
strued as prohibiting the imprinting
upon such pencils, or the use in adver-
tising or eisewhere, of the name of the
city or State, or both, which constitute
the address of the person or concern
manufacturing or marketing such pen-
cils: Provided, however, all other rrovi-
sions of this section are complied with
and no deception is involved.

(e) Nothing in this sectlon shall be
deemed to relieve anyone of the neces-
sity of complying with the require-
ments of the customs law or regula-
tions, or other applicable provisions of
law or regulations, relating to the
marking of imported articles.

40


Chepter I—Federal Trade Commission

$162.3 Misuse of word “free,” etc.

It is an unfair trade practice to use
the term “free,” or any other term of
similar import or meaning, to describe,
designate, or refer to any industry
product which is not given to the re-
cipient thereof without cost and un-
conditionally.

$162.4 Defamation of competitors or dis-
paragement 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 grade or
quality of the products of competitors
or of the source or origin of raw mate-
rials or component parts used in their
products, or the false disparagement
of the nature or form of business con-
ducted by competitors, their credit
terms, values, policies, or services, or
other false disparagement, is an unfair
trade practice.

$162.5 Procurement of competitor's confi-
dential information by unfair means
and wrongful use thereof.

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 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 in such manner as to injure
said competitor in his business or to
suppress competition or unreasonably
restrain trade.

§ 162.6 Commercial bribery.

It is an unfair trade practice for any
member of the industry, directly or in-
directly, to give, or offer to give, or
permit or cause to be given, money or
enything 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

41

§ 162.9

to purchase products manufactured or
sold by such industry member or the
maker of such gift or offer, or to influ-
ence such employers or principals to
refrain from dealing or contracting to
deal with competitors.

§ 162.7 Imitation or simulation of trade-
marks, trade names, etc.

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

$162.8 Selling below cost.

The practice of seiling industry
products below the seiler’s cost, when
pursued with wrongful intent of there-
by injuring a competitor and where
the effect of such practice is to unrea-
sonably restrain trade, tend to create a
monopoly, or substantially lessen com-
petition, is an unfair trade practice.

This section is not to be construed as
prohibiting all sales below cost, but
only such seiling below the seller’s
cost as is resorted to and pursued as a
monopolistic practice with the wrong-
ful intent referred to and coupled with
the effect of unreasonably restraining
trade, tending to create a monopoly,
or substantially lessening competition.

All elements recognized by good ac-
counting practice as proper elements
of such cost shall be included in deter-
mining cost under this section. The
costs referred to in this section are
actual costs of the respective seller
and not some other figure or average
costs in the industry, determined by
an industry cost survey or otherwise.

$162.9 Use of “loss leaders.”

The practice of selling any product
of the industry below the seller’s cost
as a “loss leader’ to induce the pur-
chase of any other product of the in-
dustry, the sale of the latter being
used to recoup the loss sustained on
the “loss leader” product so sold, with
the capacity and tendency or effect of
misleading or deceiving purchasers,
prospective purchasers, or the consum-
ing public, is an unfair trade practice.


§ 162.10

§ 162.10 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 to substantially lessen compe-
tition or tend to create a monopoly or
to unreasonably restrain trade, is an
unfair trade practice.

§ 162.11 Substitution of products.

The practice of shipping or deliver-
ing products which do not conform to
samples submitted, to specifications
upon which the sale is consummated,
or to representations made prior to se-
curing the order, without the consent
of the purchasers to such substitution,
or with the capacity and tendency or
effect of misleading or deceiving the
purchasing or consuming public, is an
unfair trade practice.

§ 162.12 Combination or coercion to fix
prices, suppress competition, or re-
strain trade.

It is an unfair trade practice for a
member of the industry, or any other
person:

(a) To use, directly or indirectly, any
form of threat, intimidation, or coer-
cion against any member of the indus-
try or other person to unlawfully fix,
maintain, or enhance prices, suppress
competition, or restrain trade; or

(b) To enter into or take part in, di-
rectly or indirectly, any agreement,
understanding, combination, conspir-
acy, or concerted action with one or
more members of the industry, or with
one or more other persons, to unlaw-
fully fix, maintain, or enhance prices,
suppress competition, or restrain
trade.

§ 162.13 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

Title 16——-Commercial Practices

(whether in the form of so-called free
goods or otherwise), 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, consump-
tion, or resale within any place under
the jurisdiction of the United States;

(2) That nothing contained in this
section 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;

(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
section shall prevent price changes
from time to time where made, in re-
sponse to changing conditions affect-
ing either (1) the market for the goods
concerned, or (ii) the marketability of
the goods, such as, but not limited to,
actual or imminent deterioration of
perishable goods, 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
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 ser-
vices rendered in connection with the
sale or purchase of goods, wares, or

42


Chapter I—Federal Trade Commissian

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. 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
ber-efit 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.

(d) Prohibited discriminatory ser-
vices or facilities. It is an unfair trade
practice for any meiber of the indus-
try to discriminate in favor of one pur-
chaser against another purchaser or
purchasers of a commodity bought for
resale, with or without processing, by
contracting to furnish or furnishing,
or by contributing to the furnishing
of, any services or facilities connected
with the processing, handling, sale, or
offering for sale of such commodity so
purchased upon terms not accorded to
all purchasers on proportionally equal
terms.

(e) Inducing or receiving an illegal
discrimination in pricc. It is an unfair
trade practice for any member of the
industry engaged in commerce, in the
course of such commerce, knowingly
to induce or receive a discrimination in
price which is prohibited by the provi-
sions of this section.

(f) Purchases by schools, colleges,
universities, public libraries, churches,
hospitals, and charitable institutions
not operated for profit. The foregoing
provisions of this section relate to
practices within the purview of the

43

§ 162.103

Robinson-Patman Antidiscrimination
Act, which act and the application
thereunder of this section are subject
to the limitations expressed in the
amendment to such Robinson-Patman
Antidiscrimination Act, which amend-
ment, passed by Congress, was ap-
proved May 26, 1938, and reads as fol-
lows:

Be it enacted by the Senate and House of
Representatives of the United States of
America in Congress assembled, That noth-
ing in the Act approved June 19, 1936
(Public, Numbered 692, Seventy-fourth Con-
gress second session), known as the Robin-
son-Patman Antidiscrimination Act, shall
apply to purchases of their supplies for
their own use by schools, colleges, universi-
ties, public libraries, churches, hospitals,
and charitable institutions not operated for
profit.

(Sec. 2, 38 Stat. 730, as amended, secs. 2, 3,
4, 49 Stat. 1527, 1528, ch. 283, 52 Stat. 446;
15 U.S.C. 13, 13a, 13b, 13c, 21a)

Grovr II

§ 162.101 Ambiguity in
orders.

In order to avoid ambiguity and mis-
understandings between buyers and
seilers, it is the judgment of the indus-
try that contracts or orders for wood
cased lead pencils should be specific as
to the description, quality, and price
of the pencils to be furnished thereun-
der.

contracts or

§ 162.102 Fictitious bids.

The industry condemns fake or ficti-
tious bids made for the purpose of de-
ceiving competitors and_ securing
undue advantage.

§ 162.103 Recording of trade-marks, trade
names, etc., to avoid confusion.

To avoid confusion within the mdus-
try, it is recommended that each
member thereof voluntarily file with
some person designated by the mdus-
try all trade-marks, trade naines,
labels, or brands belonging to and used
by such member and that such infor-
mation be made equally available to
all members of the industry and to the
public.


§ 162.201 ;
COMMITTEE ON TRADE PRACTICES

§ 162.201 Industry committee.

The provisions of §16.1'! of this
chapter shall be applicable to an in-
dustry committee established under
this part.

(21 FR 1174, Feb. 21, 1956]

PART 165—ARTIFICIAL LIMB
INDUSTRY

Grovur I

Sec.

165.1 Deception (general).

165.2 Disclosures to be made before sale.

185.3 Representation or promise that prod-
uct will “fit”.

165.4 Protection of public with respect to
apparent agency.

165.5 Deceptive testimonials or depictions.

165.6 Deceptive demonstrations.

165.7 Misuse of terms ‘custom made,”
“custom built,” “tailored,” eto.

165.8 Guarantees, warranties, etc.

165.9 Misrepresenting products as con-
forming to standard.

165.10 Deception as to rebuilt or second-
hand products.

165.11 Substitution of products.

165.12 False invoicing.

165.13 Misrepresentation as to installment
sales contracts, their terms, conditions,
etc.

165.14 Misrepresentation as to charactcr of
business.

165.15 Deception through failure to differ-
entiate between wholesale and retail
transactions.

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

165.17 Procurement of competitors’ confi-
dential information by unfair means and
wrongful use thereof.

165.18 Unfair threats of infringement
suits.

165.19 Deceptive use of trade or corporatc
names, trade-marks, etc.

165.20 Misuse of the word ‘‘free,” etc.

165.21 Coercing purchase of one product as
& prerequisite to the purchase of other
products.

165.22 Fictitious prices.

165.23 Inducing breach of contract.

165.24 Enticing away employees of com-
petitors.

165.25 Combination or coercion to fix
prices, suppress competition, or restrain

e.
165.26 Discrimination.

‘16CFR 16.1 was deleted at 36 FR 3116,
Feb. 18, 1971.

Title 16—Commerclal Practices

Sec.
165.27 Aiding or abetting use of unfair
trade practices.

Grovor II

165.101 Disapproval of solicitation when
benefits unlikely.

165.102 Cooperation with doctors.

165.103 Importance of personal fitting.

165.104 Minimizing importance of “fit” by
exploitation of less important features.

165.105 Sharing of improved techniques.

AvrTnHonrity: Secs. 6(g), 5, 37 Stat. 722, 719;
15 U.S.C. 46(g), 45, unless otherwise noted.

Source: 11 FR 4147, Apr. 16, 1946, unless
otherwise noted.

Grovur I

§ 165.1 Deception (general).

(a) It is an unfair trade practice to
seli, offer for sale, or distribute any in-
dustry product, or promote the sale or
distribution thereof, by any method or
under any circumstance or condition
which has the capacity and tendency
or effect of deceiving purchasers or
prospective purchasers as to the con-
struction, composition, design, model,
origin, manufacture, value, quallty,
weight, absence of noise in operation,
strength, durability, life expectancy,
appearance, fit, comfort, allgnment,
utility, ease of operation, or safety to
wearer, of such product, or in any
other material respect; or to mislead
purchasers or prospective purchasers
with respect to the need for repair,
maintenance, or replacement of parts,
of such product aftor its purchase and
use, or with respect to any service of-
fered concerning maintenance of prod-
uct or training of purchaser in the use
thereof.

(b) In this connection, under para-
graph (a) of this section, it is an unfair
trade practice to represent or infer,
unless such be wholiy true and nonde-
ceptive, that the product:

(1) Wili give use and satisfaction to
wearer equivalent or nearly equivalent
to that afforded by the human limb or
other body member for which the
product is proposed as a substitute; or
that such product

(2) Has the appearance of, or cannot
be detected from the human limb or
body member; or :

(3) Is in compliance with any Gov-
ernment specifications or standard; or

44