Wholesale Confectionery Industry
16 CFR Part 176 · Trade practice rules · in the Code of Federal Regulations 1949-1977 (13 annual editions)
Scanned CFR pages, OCR text may contain errors; the linked Library of Congress PDF is the authority. Not legal advice; not affiliated with the FTC. These rules and guides are historical: most were rescinded or replaced, so do not assume any is in force.
Latest edition: Library of Congress, 1977 CFR · Earliest edition: 1949 CFR
Text (1977 edition, OCR)
Chapter I—Federal Trade Commission
PART 176—WHOLESALE CONFEC-
TIONERY INDUSTRY
Grovp I
Sec.
176.1 Misrepresentation in general.
176.2 Misrepresentation as to character of
business.
176.8 Deception through failure to differen-
tiate between wholesale and retail
transactions.
176.4 Deception as to avatiiabile supply of
advertised merchandise.
176.5 Misuse of the word “free,” etc.
176.6 Use of lottery schemes.
176.7 Imitation or simulation of trade-
marks, trade names, ete.
176.8 False invoicing.
1769 Palse and misleading price quota-
tions, etc.
176.10 Use of “loss leaders.”
176.11 Coercing purchase of one product as
a prerequisite to the purchase of
other products.
176.12 Consignment distribution.
176.18 Commercial bribery.
176.14 Defamation of competitors or dis-
paragment of thelr products.
176.15 Inducing breach of contract.
176.16 Unfair threats of infringement sults,
176.17 Selling below cost.
176.18 Combination or coercion to fix prices,
suppress competition, or restrain
trade.
176.19 Prohibited discriminatlon.
176.20 Discriminatory returns.
176.21 Aiding or abetting use of unfair trade
practices.
Grovp II
176.101 Statistics.
176.102 Repudiation of contracts.
176.103 Regulatory laws.
176.104 Forms of contract.
COMMITTEE ON TRADE PRACTICES
176.201 Industry committee.
AurHoriry: The provisions of this Part
176 issued under secs. 6(g), 5, 38 Stat. 722,
719; 15 US.C. 46(g), 45, unless otherwise
noted.
Source: The provisions of this Part 176
appear at 13 F.R. 1810, Apr. 2, 1948, unless
-otherwise noted.
Group I
$176.1 Misrepresentation in general.
The practice of selling, advertising, de-
scribing, or otherwise representing in-
dustry products, in a manner which is
calculated to mislead or deceive, or has
the capacity and tendency or effect of
misleading or deceiving, the purchasIng
or consuming public with respect to the
§ 176.5
grade, quantity, price, value, composi-
tion, ingredients, nutritional value,
character, nature, size, use, preparation,
manufacture, or distribution of any
product of the industry, or in any other
material respect, is an unfair trade prac-
tice.
Nore: Among the inhibitions of this rule
is “false advertisement,” as defined in sec-
tion 15 of the Federal Trade Commission Act,
of any “food” or other product within the
scope of such section. Purthermore, nothing
In these rules is to be construed as relieving
anyone of the necessity of complying with
the provisions of the Food, Drug and
Cosmetic Act in respect to labeling or any
other matter coming within the purview of
that act.
$176.2 Misrepresentation as to charac-
ter of business,
It is an unfair trade practice for any
member of the industry, in the course of
or in connection with the distribution or
sale of industry products, to misrepresent
the character, extent, or type of his
business.
8176.3 Deception through failure to
differentiate between wholesale and
retail transactions.
Where industry products are sold at
wholesale and at retail in the same es-
tablishment of a member of the industry,
the commingling of the two types of busi-~
ness in such manner as to have the
capacity and tendency or effect of mis-
leading or deceiving purchasers or pro-
spective purchasers is an unfair trade
practice.
§ 176.4 Deception as to availahle supply
of advertised merchandise.
The advertising or offering for sale of
small or inadequate supplles of well-
known brands or products at greatly
reduced or bargain prices, without dis-
closure of the inadequacy of the supply
available at such prices and with the
capacity and tendency or effect of mis-
leading or deceiving purchasers or pro-
spective purchasers, is an unfair trade
practice.
§ 176.5 Misuse of the word “free,” ete.
Use of the word “free,” or words of
similar import, in advertising to desig-
nate or describe any industry product
which is not in truth and in fact a gift or
gratuity, or is not given to the recipient
thereof without requiring the purchase of
other merchandise or requiring the per-
§ 176.6
formance of some service inuring diractly
or indirectly to the benefit of the in-
dustry member using such word, is an
unfair trade practice.
§ 176.6 Use of lottery schemes.
It is an unfair trade practice for any
member of the industry to sell or dis-
tribute industry products by any methods
involving lottery or game of chance, or
to furnish any means for marketing in-
dustry products by lottery or game of
chance.
§ 176.7 Imitation or simulation of trade-
marks, trade names, etc.
The imitation or simulation of the
trade-marks, trade names, brands, or
labels of competitors, with the capacity
and tendency or effect of misleading or
deceiving purchasers, proSpective pur-
chasers, or the consuming public, is an
unfair trade practice.
§ 176.8 False invoicing.
(a) It is an unfair trade practice to
withhold from or insert in invoices any
statements or information by reason of
which omission or insertion a false record
is made, wholly or in part, of the trans-
action represented on the face of such
invoices, with the purpose or effect of
thereby misleading or deceiving pur-
chasers or prospective purchasers.
(b) It 1s an unfair practice to falsify,
remove, or fail to furnish, any purchase
slip, ticket, card, invoice, or other record,
with the purpose or effect of thereby de-
ceiving or defrauding purchasers or pro-
spective purchasers.
§ 176.9 False and misleading price quo-
tations, etc.
The publishing or circulating by any
member of the industry of false or mis-
leading price quotations, price lists, or
terms or conditions of sale, with the ca-
pacity and tendency or effect of thereby
misleading or deceiving purchasers or
prospective purchasers, is an unfair
trade practice.
§ 176.10 Use of “loss leaders.”
The practice of selling any brand of
confectionery, candy bar, chewing gum,
or other confectionery product below the
seller’s cost as a “loss leader” to induce
the purchase of other merchandise, the
sale of the latter being used to recoup
the loss sustained on the “loss leader”
product so sold, with the capaclty and
tendency or effect of misleadlng or de-
ceiving purchasers, prospective pur-
Title 16—-Commercial Practices
chasers, or the consuming public, is an
unfair trade practice.
§ 176.11 Coercing purchase of one prod-
duct as a prerequisite to the purchase
of other products.
The practice of coercing the purchase
of one or more products as a prerequisite
to the purchase of one or more other
products, where the effect may be to
substantlally lessen competitlon or tend
to create a monopoly or to unreasonably
restrain trade, is an unfair trade
practice.
§ 176.12 Consignment distribution.
It is an unfair trade practice for any
member of the industry to employ the
practice of shipping industry products on
consignment or pretended 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, thereby injur-
ing, destroying, or preventing competi-
tion, or tending to create a monopoly or
to unreasonably restrain trade. Nothing:
in this section shall be construed as re-
stricting or preventing consignment
shipping or marketing of industry prod-
ucts in good faith where suppression of
competition, restraint of trade, or undue
Interference with competitors’ use of the
usual channels of distribution, is not
effected.
§ 176.13 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 per-
mit or cause to be given, money or any-
thing of value to agents, employees, or
representatives of customers or prospec-
tive customers, or to agents, employees,
or representatives of competitors’ cus-
tomers or prospective customers, without.
the knowledge of their employers or
principals, as an inducement to influence
their employers or principals to pur-
chase or contract to purchase products
manufactured or sold by such industry
member or the maker of such gift or
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.
§ 176.14 Defamation of competitors or
disparagement of their products.
The defamation of competitors by
falsely imputing to them dishonorable
Chapter I—Federal
conduct, inability to perform contracts,
questionable credit standing, or by other
false representations, or the false dispar-
agement of the products of competitors
in any respect, or of their business
methods, selling prices, values, credit
terms, policies, or services, is an unfair
trade practice.
§ 176.15 Indncing breach of contract.
Inducing or attempting to induce the
breach of existing lawful contracts be-
tween competitors and their customers,
or their suppliers, by any false or de-
ceptive means whatsoever, or interfer-
ing with or obstructing the performance
of any such contractual duties or services
by any such means, with the purpose and
effect of unduly hampering, injuring, or
prejudicing competitors in their business,
is an unfair trade practice.
$176.16 Unfair threats of infringement
suits.
The circulation of threats of suit
for infringement of patents or trade-
marks among customers or prospective
customers of competitors, not made
in good faith but for the purpose or
with the effect of thereby harassing or
intimidating such customers or prospec-
tive customers, or of unduly hampering,
injuring, or prejudicing competitors in
their business, is an unfair trade prac-
tice,
§ 176.17 Selling below cost.
The practice of selling industry prod-
ucts below the seller’s cost with the
intent and with the effect of injuring a
competitor and where the effect may be
substantially to lessen competition or
tend to create a monopoly or unreason-
ably restrain trade is an unfair trade
practice. The costs, however, which are
referred to in the rule, are actual costs
of the respective seller, determined in
accordance with good accounting prac-
tice, and not some other figure or av-
erage costs in the industry determined
by an industry cost survey or otherwise.
§ 176.18 Combination or coercion to fix
prices, snppress 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 coercion
against any member of the industry or
other person to unlawfully fix, maintain,
=I
or
Trade Commission § 176.19
or enhance prices, suppress competition,
or restrain trade; or
(b) To enter into or take part in,
directly or indirectly, any agreement,
understanding, 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.
$176.19 Prohibited discrimination.
(a) Prohibited discriminatory prices,
or rebates, refunds, discounts, credits,
etc., which effect unlawful price discrim-
ination. It is an unfair trade practice
for any member of the industry engaged
in commerce, in the course of such com-
merce, to grant or allow, secretly or
openly, directly or indirectly, any rebate,
refund, discount, credit, or other form
of price differential (whether in the guise
of samples, or so-called free deals, or
otherwise), where such rebate, refund,
discount, credit, or other form of price
differential, effects a discriminatlon 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
monopoly in any line of commerce, or
to injure, destroy, or prevent competi-
tion with any person who either grants
or knowingly receives the benefit of such
discrimination, or with customers of
either of them; Provided, however,
(1) That the goods involved in any
such transaction are sold for use, con-
sumption, or resale within any place
under the jurisdiction of the United
States;
(2) That nothing contained in this sec-
tion shall prevent differentials which
make only due allowance for differences
in the cost of manufacture, sale, or deliv-
ery resulting from the differing methods
or quantities in which such commodities
are to such purchasers sold or delivered;
Provided, That when all available pur-
. chasers in greater quantities are so few as
to render differentials on account thereof
unjustly discriminatory or promotive of
monopoly in any line of commerce, and
if and when the Federal Trade Com-
mission shall have established quantity
limits pursuant to the provisions of sec-
tion 2 (a) of the Clayton Act (as
amended), the foregoing shall not be
construed to permit differentials based
§ 176.20
on differences in quantities greater than
those so estabiished;
(3) That nothing contained in this sec-
tion shall prevent persons engaged in
selling goods, wares, or merchandise in
commerce from selecting their own cus-
tomers in bona fide transactions and not
in restraint of trade;
(4) That nothing contained in this sec-
tion shall prevent price changes from
time to time where made in response to
changing conditions affecting either (1)
the market for the goods concerned, or
(i) the marketability of the goods, such
as, but not limited to, actual or imminent
deterioration of perishable goods, ob-
solescence of seasonal goods, distress
sales under court process, or sales in good
faith in discontinuance of business in the
goods concerned.
(b) Prohibited brokerage and commis-
stons. It is an unfair trade practice for
any member of the Industry engaged in
commerce, in the course of such com-
merce, to pay or grant, or to receive or
accept, anything of value as a commis-
sion, brokerage, or other compensation,
or any allowance or discount in lieu
thereof, except for services 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 inter-
mediary therein where such intermediary
is acting in fact for or in behalf, or fs
subject to the direct or Indirect control,
of any party to such transaction other
than the person by whom such compen-
sation is so granted or paid.
(c) Prohibited advertising or promo-
tional allowances, etc. It is an unfair
trade practice for any member of the in-
dustry engaged in commerce to pay or
contract for the payment of advertising
or promotional allowances or any other
thing of value to or for the benefit of a
customer of such niember in the course of
such commerce as compensation or in
consideration for any services or facilities
furnished by or through such customer
in connection with the processing, han-
dling, sale, or offering for sale of any
products or commodities manufactured,
sold, or offered for sale by such member,
unless such payment or consideration is
available on proportionally equal terms
to all other customers competing in the
distribution of such products or com-
moditles.
(d) Prohibited discriminatory services
or facilities. It is an unfair trade prac-
tice for any member of the industry to
76
Title 16—Commercial Practices
discriminate in favor of one purchaser
against another purchaser or purchasers
of a commodity bought for resaie, with
or without processing, by contracting to
furnish or furnishing, or by contributing
to the furnishing of, any services or fa-
cilities 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 in-
dustry engaged in commerce, in the
course of such commerce, 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
schools, colleges, universities, public li-
braries, churches, hospitals, and chari- ‘
table institutions not operated for profit.
(Sec. 2, 88 Stat. 739, as amended, secs. 2, 3, 4,
49 Stat. 1527, 1528, ch. 288, 52 Stat. 446;
16 U. 8S. C. 18, 18a, 18b, 19¢, 21a)
§ 176.20 Discriminatory retarns.
It ls an unfair trade practice for any
member of the industry engaged in com-
merce to discriminate in favor of one cus-
tomer-purchaser against another cus-
tomer-purchaser of industry products,
bought from such member for resale, by
contracting to furnish, or furnishing in
connection therewith, upon terms no ac-
corded to all customer-purchasers on
proportionately equal terms, the service
or facillty 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: Provided, however, Nothing
in any of the sections of this part shall
prohibit or be used to prevent the return
of merchandise by purchasers, for credit
or refund of purchase price, when and
because such merchandise has been
falsely or improperly labeled, branded, or
represented, or when and because such
merchandise is defective contrary to
warranty or purchase contract.
§ 176.21 Aiding or abetting use of un-
fair trade practices.
It is an unfair trade practice for any
person, firm, or corporation to aid, abet,
coerce, or induce another, directly or
indirectly, to use or promote the use of
Chapter I—Federal
any unfair trade practice specified in
this part.
Group II
§ 176.101 Statistics.
The industry records its approval of
the compilation and distribution of all
proper and lawful statistics, subject,
however, to the prohibitions and limita-
tions set forth in §§ 176.18 and 176.21.
§ 176.102 Repndiation of coutracts.
Contracts, either written or oral, are
business obligations which should be per-
formed in letter and in spirit. The re-
pudiation of contracts by sellers on a
rising market or by buyers on a declin-
ing market is equally reprehensible and
is condemned by the industry.
§ 176.103 Regulatory laws.
The industry hereby records its ap-
proval of proper cooperation of industry
members in affording such mutual as-
sistance to each other as is consonant
with law in complying with applicable
Federal and State requirements for, and
the proper preparation of, information
and records required or in aid of such
compliance.
§ 176.104 Forms of contract.
The industry records its approval of
the preparation and publication, in co-
operation with suppliers and customers,
of proper and lawful forms of contracts
for voluntary use, which forms will leave
open for negotiation by the respective
parties all terms and conditions thereof,
including prices, discounts, and other
terms or conditions of sale; and provided
further, that such forms, and the use
thereof or any action in relation thereto,
shali not be in restraint of trade.
COMMITTEE ON TRADE PRACTICES
§ 176.201 Industry committee.
The provisions of §16.1 of this sub-
chapter shall be applicable to an indus-
try committee established under this
part.
{21 P.R. 1174, Feb. 21, 1956)
PART 177—-HAND KNITTING YARN
INDUSTRY
Group I
Sec.
177.0 Definitions.
177.1 Misrepresentatlon as to character of
business,
1772 Deceptive labeling and misrepresen-
tation of product,
7
Trade Commission $177.1
Sec,
177.3 Deception as to place of origin.
177.4 Identification and disclosure of fiber
or material content.
1775 Misuse of words “zephyr”, “tweed”,
“crepe”, “cashmere”, “mohair”,
“angora rabbit”, and “angora rab-
bit hair’.
177.6 Short welght, short measure, and
misrepresentation as to quantity.
177.7 Representing retail prices as wholee
sale,
177.8 False invoicing.
177.9 Commercial bribery.
177.10 Coercing purchase of one product as
@ prerequisite to the purchase of
other products,
177.11 Consignment selling.
177.12 Exclusive deals.
177.18 Imitatlon or simulation of trade-
marks, trade names, etc,
177.14 Defamation of competitors or dis-
paragement of their products.
177,15 Discriminatory returns.
177.16 Prohibited discriminatlon,
177.17 Aiding or abetting use of unfair trade
practices.
COMMITTEE ON TRADE PRACTICES
177.201 Industry committee.
AvuTHorIry: The provisions of this Part
177 issued under secs. 6(g), 5, 38 Stat. 722,
719; 15 U.S.C. 46(g), 45, unless otherwise
noted.
Source: The provisions of this Part 177
appear at 138 F.R. $295, June 18, 1948, unless
otherwise noted.
Group I
§ 177.0 Definitions.
As used in §§ 177.1 to 177.17 the terms
“hand knitting yarn” and “consumer
unit” have the foliowing meanings, re-
spectively:
(a) Hand knitting yarn. Any yarn
used in hand knitting, hand crocheting,
hand weaving, hand rug making, hand
tapestry making, or similar handiwork,
which contains, purports to contain, or
in any way is represented as contain-
ing wool, reprocessed wool, or reused
wooi.
(b>) Consumer unit. Any bali, bundle,
sKein, tube, or package which contains
a quantity of hand knitting yarn (as
hand knitting yarn is above defined)
and in such form is sold to consumers
for use. ;
§ 177.1 Misrepresentation as to charac-
ter of business.
It is an unfair trade practice for any
member of the industry to represent, di-
rectly or indirectly, through the use of