Dolls And Stuffed Toy Industry
16 CFR Part 173 · Trade practice rules · in the Code of Federal Regulations 1947-1947 (1 annual editions)
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Latest edition: Library of Congress, 1947 CFR · Earliest edition: 1947 CFR
Text (1947 edition, OCR)
§ 172.14'
factured, sold, or offered for sale by such
member, unless such payment or con-
sideration is available on proportionally
equal terms to all other customers com-
peting in the distribution of such prod-
ucts or commodities.
(a) Prohibited discriminatory services
or facilities, It is an unfair trade prac-
tice for any member of the industry to
discriminate in favor of one purchaser
against another purchaser or purchasers
of a commodity bought for resale, with
or without processing, by contracting to
furnish or furnishing, or by contributing
to the 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 propor-
tionally equal terms.
(e) Inducing or receiving an illegal
discrimination in price. It is an unfair
trade practice for any member of the
industry engaged in commerce,’ in the
course of such commerce, knowingly to
induce or receive a discrimination in
price which is prohibited by the forego-
ing provisions of this section.
(f) Purchases by schools, colleges, uni-
versities, public libraries, churches, hos-
pitals, and charitable institutions not
operated for profit. The foregoing pro-
visions of this section relate to practices
within the purview of the Robinson-
Patman Antidiscrimination Act, which
act and the application thereunder of
this section are subject to the Ilmitations
expressed in the amendment to such
Robinson-Patman Antidiscrimination
Act, which amendment was approved
May 26, 1938, and reads as follows:
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 (Pub-
lic, Numbered 692, Seventy-fourth Congress,
second sesion), known as the Robinson-Pat-
man Antidiscrimination Act, shall apply to
purchases of their supplies for their own use
by schools, colleges, universities, public
libraries, churches, hospitals, and charitable
institutions not operated for profit. (52 Stat.
446; United States Code, 1940 edition, Title
15, sec. 18¢.)
{Rule 13]
§ 172.14 Combination or coercion to
fix prices, suppress competition, or re-
strain trade, It is unfair trade practice
1See footnote on page 2818.
Page 2814 ‘
Title 16—Commercial Practices
for a member of the industry, or any
other person:
(a) To use, directly or indirectly, any
form of threat, intimidation, or coercion
against any member of the industry 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, un-
derstanding, combination, conspiracy, or
concerted action with one or more mem-
bers of the industry, or with one or more
other persons, to unlawfully fix, main-
tain, or enhance prices, suppress com-
petition, or restrain trade. [Rule 14]
§ 172.15 Aiding or abetting use of un-
fair trade practices. Itis an unfair trade
practice for any person, firm, or corpora-
tion to aid, abet, coerce, or induce an-
other, directly or indirectly, to use or
promote the use of any unfair trade
practice specified in this part. [Rule
15)
Nore: For Group II rules, see 12 F.R. 3915.
PART 173—DOLL AND STUFFED TOY
INDUSTRY [ADDED]
Nore: The term “dolls or stuffed toys,” as
used in these regulations, shall be under-
stood to include not only dolls and stuffed
toys, but also parts and accessories therefor.
GROUP I
Sec.
178.0 General statement.
173.1 Imitation or simulation of trade-
marks, trade names, etc.
173.2 Defamation of competitors or dis-
paragement of their products.
178.3. Discrimination.
173.4 Unfair threats of infringement suits,
173.6 Commercial bribery,
173.6 Selling below cost.
173.7 Consignment distribution.
173.8 Enticing away employees of com-
petitors.
173.9 Use of lottery schemes.
173.10 Combination or coercion to fix
prices, suppress competition, or
restrain trade,
178.11 Tie-in sales.
173.12 Deception in general.
173.18 Deception as to used material or
merchandise.
173.14 Deception as to status of distributor
178.15 Discriminatory returns.
173.16 False invoicing.
GROUP II
173.100 General statement,
173.101 Return of merchandise.
178.102 Arbitration.
Chapter I—Federal Trade Commission
AUTHORITY: §§ 173.0 to 173.102, inclusive,
issued under 38, Stat. 717, as amended, 15
USC. 41, et seq.
Source: §§ 173.0 to 173.102, inclusive, con-
tained in File No, 21-403, Federal Trade Com-
mission, June 28, 1947, 12 F.R. 4225.
GROUP I
3173.0 General statement. The un-
fair trade practices embraced in § 173.0
to 173.16, inclusive, are considered to be
unfair methods of competition, unfair
or deceptive acts or practices, or other
illegal practices, prohibited under laws
administered by the Federal Trade Com.
mission; and appropriate proceedings in
the public interest will be taken by the
Commission to prevent the use, by any
person, partnership, corporation, or
other organization subject to its jurisdic-
tion, of such unlawful practices in com-
merce.
§173.1 Imitation or simulation of
trade-marks, trade names, etc. The im-
itation or simulation of the trade-marks,
trade names, brands, or labels of com-
petitors, with the capacity and tendency
or effect of misleading or deceiving pur-
chasers, prospective purchasers, or the
consuming public, is an unfair trade
practice. [Rule 1]
§ 173.2 Defamation of competitors or
disparagement of their products. The
defamation of competitors by falsely
imputing to them dishonorable business
conduct, inability to perform contracts,
questionable credit standing, or by other
false representations, or the false dis-
paragement of the grade, quality, or
manufacture of the products of competi-
tors, or of their business methods, sell-
Ing prices, values, credit terms, policies,
or services, is an unfair trade practice.
[Rule 2)
§ 173.3 Discrimination—(a) Prohib-
ited discriminatory prices, or rebates,
refunds, discounts, credits, etc., which
effect unlawful price discrimination, In
the marketing in commerce’ of dolls or
stuffed toys of like grade and quality for
use, consumption, or resale within the
jurisdiction of the United States, and
subject to subdivisions (i), Gi), and (ili)
of subparagraph (1) of this paragraph, it
is an unfair trade practice for any mem-
ber of the industry engaged therein to
discriminate in price between different
purchasers where the effect thereof may
be substantially to lessen competition or
tend to create a monopoly in any line of
commerce, or to injure, destroy, or pre-
, 128472—48—sUPP, X—BK. 2—79
§ 173.3
vent competition with such industry
member or with any person who know-
ingly receives the benefit of such dis-
crimination or with their customers.
(1) The inhibitions against such dis-
crimination in price shall be applicable
irrespective of whether the discrimina-
tion in the price itself is effected in the
form, or through the means, of rebates,
refunds, discounts, credits, allowances,
or other form of price differential, and
whether such discounts, refunds, or
other form of price differential, are given
for early buying or are accomplished
through false dating of deliveries or by
any other means or in any other manner.
(i) However, nothing contained in
this section shall prevent differentials
which make only due allowance for dif-
ferences in the cost of manufacture, sale,
or delivery resulting from the differing
methods or quantities in which dolls or
stuffed toys are sold or delivered to said
purchasers.
(ii) Nor shall anything contained in
this section prevent persons engaged in
selling such products in commerce’ from
selecting their own customers in bona
fide transactions and not in restraint of
trade. :
dii) Nor shall anything contained in
this section prevent price changes from
time to time where made in response to
changing conditions affecting either (a)
the market for the products concerned,
or (b) the marketability of the products,
such as, but not limited to, actual or 1m-
minent deterioration of perishable goods,
obsolescence of seasonal goods, distress _
sales under court process, or sales in good
faith in discontinuance of business in the
products concerned. .
(b) Prohibited brokerage or commis-
sions. In the selling of dolls or stuffed
toys in commerce,’ it is an unfair trade
practice for any member of the industry
engaged therein to pay or grant, or to
14s here used, the word “commerce”
means “trade or commerce among the sev-
eral States and with foreign nations, or be-
tween the District of Columbia or any Ter-
ritory of the United States and any State,
Territory, or foreign nation, or between any
insular possessions or other places under the
jurisdiction of the United States, or between
‘ amy such possession or piace and any State
or Territory of the United States or the Dis-
trict of Columbia or any foreign nation, or
within the District of Columbia or any Terri-
tory or any insular possession or other place
under the jurisdiction of the United States”.
Page: 2815
§ 173.4
receive or accept, any commission,
brokerage, or other compensation, or any
allowance or discount in lieu thereof, ex-
cept for services rendered in connection
with the sale or purchase of such prod-
ucts, either to the other party to such
transaction or to an agent, representa-
tive, resident buyer, or other intermedi-
ary therein, where such agent, repre-
sentative, resident buyer, or other inter-
mediary is acting in fact for or in behalf,
or is subject to the direct or indirect con-
trol, of any party to such transaction
other than the person by whom such
compensation is so granted or paid.
(c) Prohibited advertising or promo-
tional allowances, etc. In the selling of
dolis or stuffed toys in commerce’ by any
member of the industry, and in the
course thereof, it is an unfair trade prac-
tice for such member to pay or contract
for the payment of any advertising or
Promotional allowances or any other
thing of value to or for the benefit of his
customer as compensation or in consld-
eration for certain services or facilities
furnished by or through such customer,
unless such payment or consideration is
available on proportionally equal terms
to all other customers of such member
competing in the distribution of such
products,
(1) As used in this paragraph, the
certain services or facilities referred’ to
are such as are furnished by or through
the customer in connection with the
processing, handling, sale, or offering for
sale, of such industry member’s prod-
ucts.
(ad) Prohibited discrimination in serv-
ices or facilities. In the sale of dolls or
stuffed toys bought for resale, with or
without processing, it is an unfair trade
practice for any member of the industry
to discriminate in favor of one purchaser
against another purchaser by furnishing
certain services or facilities upon terms
not accorded to all purchasers on pro-
portionaliy equal terms.
(1) The services or facilities referred
to in this paragraph are such as are con-
nected with the processing, handling,
sale, or offering for sale, of the products
purchased, and the term “furnishing” as
used in this paragraph shall be con-
strued as including contracting to fur-
nish, and contributing to the furnishing
of, the services or facilities.
(e) Inducing or receiving an illegal
discrimination in price. It is an unfair
trade practice for any member of the
Page 2816
Title 16—Commercial Practices
industry, in the course of commerce’ in
which he is engaged, knowingly to induce
or receive a discrimination in price
which is prohibited by the foregoing pro-
visions of this section.
(f) Exemptions. The inhibitions of
this section shall not apply to purchases
of their supplies for their own use by
schoois, colleges, universities, public li-
braries, churches, hospitals, and chari-
table institutions not operated for profit.
[Rule 3]
§173.4 Unfair threats of infringe-
ment suits. The circulation of threats
of suit for infringement of patents or
trade-marks among customers or pro-
spective customers of competitors, not
made in good faith but for the purpose
or with the effect of thereby harassing or
intimidating such customers or prospec-
tive customers, or of unduly hampering,
injuring, or prejudicing competitors in
their business, is an unfair trade practice.
[Rule 4]
§173.5 Commercial bribery. It is an
unfair trade practice for a member of the
industry to give, or offer to give, or per-
mit or cause to be given, directly or indi-
rectly, money or anything of value to
agents, employees, or representatives of
customers or prospective customers, or
to agents, employees, or representatives
of competitors’ customers or prospective
customers, without the knowledge of
their employers or principals, as an in-
ducement to infiuence their employers or
principals to purchase or contract to pur-
chase dolls or stuffed toys manufactured
or sold by such industry member or the
maker of such gift or offer, or to influ-
ence such employers or principals to re-
frain from dealing in the products of
competitors or from dealing or contract-
ing to deal with competitors. [Rule 5]
§ 173.6 Selling below cost. The prac-
tice of selling dolls or stuffed toys below
the seller’s.cost, when pursued with
wrongful intent of thereby injuring a
competitor and where the effect of such
practice is to umreasonably restrain
trade, tend to create a monopoly, or sub-
stantially lessen competition, is an un-
fair trade practice.
This section is not to be construed as
prohibiting all sales below cost, but only
such selling below the seller’s cost as
is resorted to and pursued as a Monopo-
listic practice with the wrongful intent
referred to and coupled with the effect
1See footnote on page 2815.
Chapter I—Federal Trade Commission
of unreasonably restraining trade, tend-
ing to create a monopoly, or substantially
lessening competition.
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. [Rule
6]
§ 173.7 Consignment distribution. It
is an unfair trade practice for any mem-
ber of the industry to employ the prac-
tice of shipping dolls or Stuffed toys on
consignment or pretended consignment
for the purpose and with the effect of
artificially clogging or closing trade out-
lets and unduly restricting competitors’
use of said trade outlets in getting their
products to consumers through regular
channels of distribution, and with the
effect of thereby injurying, destroying, or
preventing competition, or tending to
create a monopoly or to unreasonably
restrain trade. However, nothing in this
section shall be construed as restricting
or preventing consignment shipping or
marketing of dolls or stuffed toys in good
faith where suppression of competition,
restraint of trade, or undue interference
with competitors’ use of the usual chan-
nels of distribution, is not effected.
{Rule 7]
§ 173.8 Enticing away employees of
competitors. It is an unfair trade prac-
tice for any member of the industry wil-
fully to entice away employees of com-
petitors with the intent and effect of
thereby unduly hampering or injuring
competitors in their business and de-
stroying or substantially lessening com-
petition: Provided, That nothing in this
rule shall be construed as prohibiting
employees or agents from seeking or ob-
taining more favorable employment.
[Rule 8]
$173.9 Use of lottery schemes. It is
an unfair trade practice for any member
of the industry to sell, distribute, or pro-
mote the sale or distribution of dolls or
stuffed toys by means of a game of
chance, gift enterprise, or lottery scheme.
(Rule 9]
§ 173.10 Combination or coercion to
fix prices, suppress competition, or re-
strain trade. It is an unfair trade prac-
tice for a member of the industry, or
any other person:
(a) To use, directly or indirectly, any
form of threat, intimidation, or coercion
against any member of the industry or
§ 173.13
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, un-
derstanding, combination, conspiracy,
or concerted action with one or more
members of the industry, or with one or
more other persons, to unlawfully fix,
maintain, or enhance prices, suppress
competition, or restrain trade. {Rule
10)
$173.11 Tie-in sales. The practice of
coercing or requiring the purchase of one
or more products as a prerequisite or con-
dition to the purchase of one or more
other products, where the effect may be
to substantially lessen competition or
tend to create a monopoly or to unrea-
sonably restrain trade, is an unfair trade
practice. (Rule 11]
§ 173.12 Deception in general. It is
an unfair trade practice for any member
of the industry to use, or cause or pro-
mote the use of, any trade promotional
literature, advertising matter, guarantee,
warranty, mark, brand, label, designa-
tion, or representation, however dissem-
inated or published, which has the capac-
ity and tendency or effect of misleading
or deceiving purchasers, prospective pur-
chasers, or the consuming public:
(a) With respect to the grade, quality,
quantity, weight, size, type, kind, brand,
color, design, characteristics, workman-
ship, construction, composition, mate-
rial, finish, washability, sanitary prop-
erties, performance, durability, or origin
of any doll or stuffed toy; or
(b) With respect to the price, value, or
terms or conditions of sale, of any doll
or stuffed toy; or
(ec) With respect to the manufacture,
distribution, or marketing of any such
product; or
(d) In any other material respect.
[Rule 12]
§ 173.13 Deception as to used mate-
rial or merchandise. (a) It is an unfair
trade practice to sell, offer for sale, ad-
vertise, or otherwise represent, directly
or indirectly, any doll or stuffed toy as
being new when such product is not in
fact new or is not composed wholly of
new parts and materials. «
(b) In the marketing of dolls or
stuffed toys containing used or second-
hand parts, materials or accessories, it
is an unfair trade practice to fail or re-
fuse to make full and nondeceptive dis-
Page 2817
§ 173.14
closure, by tag or label attached to the
merchandise and in all advertising and
trade promotional literature, of the fact
that such dolls or stuffed toys, or parts
or materials or accessories, are not new
but are used or secondhand, such failure
or refusal to disclose having the capacity
and tendency or effect of misleading or
deceiving purchasers, prospective pur-
chasers, or the consuming public.
(c) Nothing in this section shall be
construed as permitting the sale or dis-
tribution of dolls or stuffed toys which
contain any unsanitary materials.
[Rule 13]
§ 173.14 Deception as to status of dis-
tributor. The practice by a member of
the industry of selling or marketing dolls
or stuffed toys through a pretended in-
dependent distributor, in such manner
or under such circumstances as to lead |
purchasers or prospective purchasers to
believe that such distributor is independ-
ent of such industry member when such
is not the fact, is an unfair trade prac-
tice. [Rule 14]
§ 173.15 Discriminatory returns. It is
an unfair trade practice for any member
of the industry engaged in commerce’
to discriminate in favor of one customer-
purchaser against another customer-
purchaser of dolls or stuffed toys, bought
from such member for resaie, by con-
tracting to furnish, or furnishing in con-
nection therewith, upon terms not ac-
corded to ali customer-purchasers on
proportionally equal terms, the service
or facility whereby such favored pur-
chaser is accorded the privilege of re-
turning products so purchased and re-
ceiving therefor credit or refund of pur-
chase price.
However, nothing in §§ 173.1 to 173.16,
inclusive, shall be construed as prohibit-
ing the return of merchandise by pur-
chasers for credit or refund of purchase
price because such merchandise is de-
fective in material, workmanship, or in
any other respect, contrary to guarantee,
warranty, or purchase contract. [Rule
15)
1See footnote on page 2815.
Page 2818
Title 16—Commercial Practices
§173.16 False invoicing. Withhold-
ing from or inserting in an invoice, bill-
ing, or statement any material informa-
tion by reason of which omission or in-
sertion a false record is made, wholly or
in part, of the transaction which such
invoice, billing, or statement purports to
represent, with the effect of thereby mis-
leading or deceiving purchasers, pro-
spective purchasers, or the consuming
public, is qn unfair trade practice.
[Rule 16]
GROUP II
§ 173.100 General statement. Com-
pliance with trade practice provisions
embraced in §§ 173.101 and 173.102 is
considered to be conducive to sound
business methods and is to be-encour-
aged and promoted individually or
through voluntary cooperation exercised
in accordance with existing law. Non-
observance of such rules does not per se
constitute violation of law. Where, how-
ever, the practice of not complying with
§ 173.101 or § 173.102 is followed in such
manner as to result in unfair methods of
competition, or unfair or deceptive acts
or practices, corrective proceedings may
be instituted by the Commission as in
the case of violation of §§ 173.1 to 173.16,
inciusive.
§173.101 Return of merchandise.
The practice, by members of the indus-
try, of seiling any doll or stuffed toy and
later permitting the purchaser to return
it for credit or refund of purchase price,
without just cause, creates waste and
loss, increases the cost of doing business
to the detriment of both the industry and
the public, and is condemned by the in-
dustry, subject, however, to the require-
ments and limitations set forth in the
provisions of §§ 173.3 and 1973.15.
§ 173.102 Arbitration. The industry
approves the practice of handling busi-
ness disputes between members of the
industry and their customers in a fair
and reasonable manner, coupled with a
spirit of moderation and good will, and
every effort should be made by the dis-
putants themselves to compose their dif-
ferences. If unable to do so they should,
if possible, submit these disputes to arbi-
tration.