Handkerchief Industry

16 CFR Part 181 · Trade practice rules · in the Code of Federal Regulations 1959-1977 (12 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 These rules and guides are historical: most were rescinded or replaced, so do not assume any is in force.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: 1959 CFR

Text (1977 edition, OCR)

Chapter |-—Federal

(d) Prohibited discrimination in serv-
ices or facilities. In the sale of hand
knitting yarns bought or resale, with
or without processing, it 1s 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 pur-
chasers on proportionally equai terms,

(1) Said 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 hand
knitting yarn purchased, and the term
“furnishing” as used in this paragraph
shall be construed as including contract-
ing to furnish, 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
dndustry, in the course of commerce in
which he is engaged, knowingly to in-
‘duce or receive a discrimination in price
which ts prohibited by the foregoing pro-
visions of this section.

(f) Exemptions. The inhibitions of
this section shail not apply to purchases
of their supplies for their own use by
schools, colleges, universities, public
libraries, churches, hospitals, and chari-
table institutions not operated for profit.
(Sec. 2, 88 Stat. 730, as amended, secs. 2, 8, 4,
49 Stat. 1527, 1528, ch. 283, 52 Stat. 446; 15
U.S.C. 18, 18a, 18b, 18¢, 218)

$177.17 Aiding or abetting use of an-
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
any unfair trade practice specified in
$8 .177.1 to 177.17.

CoMMITTEE ON TRADE PRACTICES
§ 177.201 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 181—HANDKERCHIEF
INDUSTRY

Definition.

Sec.
181.0

Trade Cammission § 181.0

Group I

Sec.

181.1 Fiber identification.

181.2 Fictitious prices.

1813 Exclusive dealing arrangements to
exclude sale of competitors’ prod-
ucts.

181.4 Selling below cost.

181.5 Palse invoicing.

181.6 Inducing breach of contract.

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

181.8 Misrepresentation of tndustry prod-
ucts.

181.9 Misrepresentation of business sta-
tus.

181.10 Commercta] bribery.

181.11 Consignment distribution.

181.12 Unlawful combination in restraint
of trade.

181.13 Use of “loss leaders.”

181.14 Prohibited discrimination.

181.15 Decepetive labeling or marking.

181.16 Disclosure in respects to “seconds.”

181.17 Misrepresentation of men’s hand-

kerchiefs tn respect to size.

181.18 Use of term “hand-rolied.”

181.19 Imitation of trade-marks, trade
names, etc.

181.20 Discriminatory returns.

181.21 Tie-in sales.

Group II

181.101 Record keeping.

181.102 Forms of contract.

181.103 Repudiation of contracts.

181.104 Dissemination of credit informa-
tion

181.105 Recording of trade-marks.

COMMITTER ON TRADE PRACTICES
181.201 Industry committee.

AuTHoRITY: The provisions of this Part
181 issued under secs. 6, 5, 88 Stat. 731, 719:
15 U.S.C, 46, 45, unless otherwise noted.

Source: The provisions of this Part 181 ap-

pear at 14 F.R. 784, Feb. 18, 1949, unless
otherwise noted.

§ 181.0 Definition.

Handkerchiefs, as referred to in this
part, include all types and kinds of hand-
kerchiefs for men, women and children
made in whole or in part of cotton, linen,
rayon, silk, nylon, wool, or other textile
fiber.

Nore: Paper products, including facta!
tissue made of paper, or the manufacture
and marketing thereof, are not to be con-
sidered as coming within the scope of these
rules. Such exclusion, however, shall not be
regarded as a determination, express or im-
plied, of the propriety or impropriety of the
application of the word “handkerchief” to

83


§ 181.1

any paper product, nor ehall such exclusion
from these rules be construed as relieving
any one of the necessity of avoiding the use
of unfair trade practices of the type herein
referred to and falling within the tnhibitions
cf the law as applied to paper tissues or
other products,

Group I
§ 181.1 Fiber identification.

(a) In the sale, offering for sale, or
distribution of handkerchiefs, it 1s an
unfair trade practice to misrepresent or
deceptively conceal the fiber or material
content of any such product.

(b) Handkerchiefs containing rayon,
silk, or linen shall be identified as to
their fiber and material content in la-
bels, invoices, and advertisements, in ac-
cordance with the requirements of
trade practice rules heretofore promul-
gated by the Commission for the rayon
industry, linen industry, and silk in-
dustry; also, handkerchiefs containing,
purporting to contain, or in any way
represented as containing, wool, reproc-
essed wool, or reused wool, shall be
labeled in accordance with the require-
ments of the Wool Products Labeling
Act of 1939 and the rules and regulations
issued thereunder (Part 300 of this
chapter).

Note: A copy of the above-mentioned
trade practice rules, and of the Wool Prod-
ucts Labeling Act of 1939 and regulations
issued thereunder, will be sent by the Com-
Mission to any industry member making re-
quest therefor.

§ 181.2 Fictitious prices.

It is an unfair trade practice to sell
or offer for sale handkerchiefs at prices
purported to be reduced from what are
in fact fictitious prices, or to sell or offer
to sell such handkerchiefs at a purported
reduction in price when such purported
reduction is in fact fictitious or is other-
wise misleading or deceptive.

§ 181.3 Exclusive dealing arrangements
to exclude sale of competitors’ prod-
ucts.

It is an unfair trade practice to sell or
contract for the sale of handkerchiefs,
or to fix a price charged therefor, or to
allow a discount from or rebate upon
such price, on the condition, agreement
or understanding that the purchaser
shall not deal in the products of a com-
petitor or competitors of the seller,
where the effect of such sale, or contract
for sale, or such condition, agreement, or
understanding, may be to substantially

84

Title 16—Commercial Practices

lessen competition or tend to create a
monopoly.

§ 181.4 Selling below cost.

The practice of selling handkerchiefs
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 unreasonably restrain trade
is an unfair trade practice. All elements.
recognized by good accounting practice
as proper elements of such cost shall be
included in determining cost under this.
section. The costs, however, which are
referred to in this section, are actual
costs of the respective seller and not some
other figure or average costs in the in-
dustry determined by an industry cost
survey or otherwise.

§ 181.5 False invoicing.

Withholding from or inserting in an
invoice any statements or information by
reason of which omission or insertion a
false record is made, wholly or in part, of
the transaction represented on the face
of such invoice, with the purpose or effect
of thereby misleading or deceiving pur-
chasers, prospective purchasers, or the
consuming public, is an unfair trade
practice.

§ 181.6 Inducing breach of contract.

Inducing cr attempting to induce the.
breach of existing lawful contracts be-
tween competitors and their customers.
or their suppliers by any false or decep-
tive means whatsoever, or interfering
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.

8181.7 Defamation of competitors or
disparagement of their products.

The defamation of competitors by
faisely imputing to them dishonorable
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, selling
prices, values, credit terms, policies, or
services, is an unfair trade practice.

§ 181.8 Misrepresentation of industry.
products.

Making or causing to be made or pub-
lished, directly or indirectly, any false,


Chapter 1—Federal

misleading, or deceptive statement or
representation, by way of advertisement
or otherwise, concerning the grade,
quality, quantity, substance, content,
character, nature, origin, size, manufac-
ture, decoration, preparation, distribu-
tion, or sale of any handkerchiefs of the
industry, or in any other material re-
spect, is an unfair trade practice.

$181.9 Misrepresentation of business
statas,

It is an unfair trade practice for any
person, partnership, corporation, or
organization, directly or indirectly, to
represent himself or itself as being the
owner or operator of a factory or produc-
ing company making handkerchiefs ad-
vertised, offered for sale, sold or distrib-
uted, when such person or concern does
not in fact own or operate such a factory
or producing company making such
handkerchiefs. The use of any other
deceptive or misleading device or method
respecting the character, nature, or
status of the business of any person, con-
cern, or organization engaged in selling
or promoting the sale of handkerchiefs
is Mkewise an unfair trade practice.

§ 181.10 Commercial bribery.

It is an unfair trade practice for a
member of the industry, directly or indi-
rectly, to give, or offer to give, or permit
or cause to be given, money or anything
of value to agents, employees, or repre-
sentatives of customers or prospectlve
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 purchase
or contract to purchase, handerchiefs
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.

§ 181.11 Consignment distribution.

It is an unfair trade practice for any
member of the industry to use the prac-
tice of shipping handkerchiefs on con-
signment or pretended consignment for
the purpose and with the effect of arti-
ficially clogging or closing trade outlets
and unduly restricting competitors’ use
of said trade outlets in getting their
Products to consumers through regular

Trade Commission § 181.14
channels of distribution, thereby injur-
ing, destroying, or preventing competi-
tion or tending to create a monopoly or to
unreasonably restrain trade: Provided,
however, That nothing in this section
shall be construed as restricting or pre-
venting consignment shipping or mar-
keting of handkerchiefs in good faith
where suppression of competition, re-
straint of trade, or undue interference
with competitors’ use of the usual chan-
nels of distribution, is not effected.

§ 181.12 Unlawful combination in re-
straint of trade.

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

(a) To use, directly or indirectly, any
form of threat, intimidation, or coercion
against any member of the industry or
other person unlawfully to fix, maintain,
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, unlawfully to fiz,
maintain, or enhance prices, suppress
competition, or restrain trade.

§ 181.13 Use of “loss leaders.”

The practice of selling any type of
handkerchiefs below the seller’s cost as a
‘loss leader” to induce the purchase of
other merchandise, the sale of the latter
belng used to recoup the loss sustained on
the “loss leader” product so sold, with the
capacity and tendency or effect of mis-
leading or deceiving purchasers, pro-
spective purchasers, or the consuming
public, is an unfair trade practice.

§ 181.14 Prohibited discrimination.’

(a) Prohibited discriminatory prices,
or rebates, refunds, discounts, credits,

1 As used throughout this section, the word
“commerce” means “trade or commerce
among the several States and with foreign
nations, or between the District of Colum-
bia or any Territory 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
Btates, or between any such possession or
place and any State or Territory of the
United States or the District of Columbia
or any foreign nation, or within the District
of Columbia or any Territory or any insular
possession or other place under the Juris-
diction of the United States.”


§ 181.14

etc., which effect unlawful price discrimi-
nation. In the marketing in commerce
of handkerchiefs of like grade and qual-
ity for use, consumption, or resale within
the jurisdiction of the United States, and
subject to subdivisions (1), (ii), and (il)
of subparagraph (1) of this paragraph, it
ts 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 substantialiy to lessen competition or
tend to create a monopoly in any line of
commerce, or to injure, destroy, or pre-
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 applicabie
irrespective of whether the discrimina-
tion in the price itself ts effected in the
form, or through the means, of rebates,
refunds, discounts, credits, allowances,
or other form of price differential.

(4) Nothing, however, contained in this
paragraph 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 the hand-
kerchiefs are sold or delivered to said
purchasers.

di) Nor shall anything contained in
this paragraph prevent persons engaged
in selling products in commerce from
selecting their own customers in bona
fide transactions and not in restraint of
trade.

(ii) Nor shall anything contained in
this paragraph prevent price changes
from time to time where made in re-
sponse to changing conditions affecting
either (a) the market for the products
concerned, or (b) the marketabliiity of
the products, such as, but not limited to,
actual or imminent deterioration of per-
ishable goods, obsolescence of seasonal
goods, distress sales under court process,
or sales in good faith in discontinuance
of business in the products concerned.

(bo) Prohibited brokerage or commis-
sions. In the selling of handkerchiefs
in commerce, it is an unfair trade prac-
tice for any member of the industry en-
gaged therein to pay or grant, or to re-
ceive or accept, any commission, broker-
age, or other compensation, or any allow-
ance or discount in lieu thereof, except

86

Title 16—Commercial Practices

for services rendered in connection with
the sale or purchase of such products,
either to the other party to such transac-
tion or to an agent, representative, or
other intermedtary therein, where such
intermediary is acting in fact for or in
behalf, or ts subject to the direct or
indirect control, 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
handkerchiefs in commerce by any
member of theindustry,and in the course
thereof, it is an unfair trade practice
for such member to pay or contract for
the payment of anything of value to or
for the benefit of his customer as com-
pensation or in consideration for certaln
services or facilities furnished by or
through such customer, unless such pay-
ment or consideration is available on pro-
portionally equal terms to ali other cus-
tomers of such member competing in the
distribution of such products.

(1) As used in this paragraph, the cer-
tain services or facliities referred to are
Such as are furnished by or through the
customer in connection with the process-
ing, handling, sale, or offering for sale,
of such industry member's products.

(d) Prohibited discrimination in serv-
ices or facilities. In the sale of hand-
kerchiefs bought for resale, with or with-
out processing, it is an unfair trade prac-
tice for any member of the industry to
discriminate in favor of one purchaser
against aauther purchaser by furnishing
certain services or facilities upon terms
not accorded to all purchasers on pro-
portionally equal terms.

(1) Said services or facilities referred
to in this paragraph are such as are con-
nected with the processing, handilng,
sale, or offering for sale, of the handker-
chiefs purchased, and the term “furnish-
ing” as used in this paragraph shall be
construed as including contracting to
furnish, and contributing to the furnish-
ing of. the services or facilities.

(e) Inducing or receiving an tMegal
discrimination tn price. It is an unfair
trade practice for any member of the
industry, in the course of commerce in
which he is engaged, knowingly to in-
duce or receive a discrimination in price
which is prohibited by the provisions in
paragraphs (a) to (da) of this section.


Chapter l—Federal Trade Commission

(f) Exemptions. The inhibitions of
this section shall not apply to purchases
of their supplies for their own use by
schools, colleges, universities, public
libraries, churches, hospitals, and chari-
table institutions not operated for profit.

§ 181.15 Deceptive labeling or marking.

It is an unfair trade practice to label
any hankerchiefs or to mark any con-
tainer of handkerchiefs or any package
containing handkerchiefs in such man-
ner as to be misleading or deceptive
to the purchasing or consuming public.
Under this section words, representa-
tions, and devices used must not only in
themselves be free from deception or
misleading tendencies or effects, but also
shall not be set forth in such obscure,
remote, inconspicuous, or other manner
as to have the capacity and tendency or
effect of causing the public to be misled
or deceived or of aiding others to cause
the public to be so misled or deceived.
(For other provisions regarding required
marking, see also §$ 181.1 and 181.16)

8181.16 Disclosure in respect to “sec-
onds.”

(a) Handkerchiefs which are seconds
or which are represented as being sec-
onds shall be so marked, clearly and con-
spicuously, to the end that confusion,
misunderstanding, or deception of the
purchasing or consuming public may be
avoided and prevented. Such disclo-~
sure of seconds shall also be made in
invoices as well as on the product it-
self and the immediate package in which
it is sold to the consumer, and on dis-
play cards, advertisements, or other rep-
resentations under which such seconds
are offered for sale or advertised to the
purchasing or consuming public. For
purposes of this section, the term “sec-
onds” shall include so-called rejects and
irregulars. This section, however, shall
not be deemed to require that the mark
of “seconds” be placed on the handker-
chief itself in instances where the pur-
chasing and consuming public is fully
informed by placards and signs displayed
in immediate conjunction with the hand-
kerchiefs and disclosing that they are
seconds: Provided, That ail other re-
quirements of the section are met and ne
deception, directly or by reason of con-
cealment, Is involved.

90-059-——77——7

87

§ 181.19

(b) It is an unfair trade practice to
deceptively conceal the fact that said
handkerchiefs are seconds, or to fail or
refuse to make said disclosure of sec-
onds as and to the end specified in para-
graph (a) of this section.

§ 181.17 Misrepresentation of men’s
handkerchiefs in respect to size.

(a) It is an unfair trade practice to
offer for sale, sell, or distribute any hand-
Kerchiefs as ‘men’s handkerchiefs,” or to
use such term, or term of similar import,
in advertising, labeling, or other rcpre-
sentation as descriptive of handkerchiefs,
when any one of the two dimensions of
the respective handkerchiefs is less than
16 inches in its finished state, or when
such products are not otherwise “men’s
handkerchiefs.”

(b) To the end of preventing con-
fusion, misunderstanding, and deception
of the purchasing and consuming public,
handkerchiefs which are rec ,
and not square as customarily produced
in the industry, shall not be so boxed
or packaged as to present only the long
side to purchasers or consumers when
buying the handkerchiefs in retail stores
or other marketing channels. Both sides
or dimensions of the handkerchiefs
should be equally accessible to the pur-
chaser in order that the probabilities of
deception and misunderstanding may be
eliminated.

§ 181.18 Use of term “hand-rolled.”

It is an unfair trade practice to label
handkerchiefs or the package or the con-
tainer of handkerchiefs with the word
“hand-rolled,” or to use that term in
advertising representations, unleas the
entire hem of the handkerchiefs so de-
scribed has in fact been rolled by hand
labor.

§ 181.19 Imitation of trade-marks, trade
names, etc.

The practice of imitating, or causing
to be imitated, the trade-marks, trade
names, or other exclusively owned sym-
bois, marks of identification, designs, or
patterns of competiters, which have not
been dedicated to the public either di-
rectly or by operation of law, and where
such imitation has the capacity and tend-
ency or effect of misleading or deceiving
the purchasing or consuming public, is
an unfair trade practice.


§ 181.20

$181.20 Discriminatory returns.

It is an unfair trade practice for any
member of the industry to discriminate
in favor of one customer-purchaser
against another customer-purchaser of
handkerchiefs, bought from such mem-
ber of the industry for resale, by offering
or permitting such favored purchaser the
privilege of returning handkerchiefs so
purchased and receiving therefor credit
or refund of purchase price: Pr .
however, That nothing in §$§181.1 to
181.12 shall prohibit or be used to prevent
the return of merchandise by purchaser,
for credit or refund of purchase price,
when and because such merchandise has
been improperly labeled by the seller as
to fiber content, or has been otherwise
falsely or deceptively labeled or repre-
sented, or when and because such
merchandise is defective in material,
workmanship, or in any other respect is
contrary to warranty or purchase con-
tract.

$181.21 Tie-in sales.

The practice of coercing or requiring
the purchase of one or more products asa
prerequisite or condition 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 unreasonably restrain trade, is an
unfair trade practice.

GRovur I
§ 181.101 Record keeping.

The industry approves the practice of
each seller of handkerchiefs independ-
ently keeping an accurate record of all
handkerchiefs sold, showing date of sale,
make, type, quantity, and price, which
record should be kept for a period of not
less than two years after date of sale:
Provided, however, That such records, or
the keeping thereof, shall in no way be
used, directly or indirectly, as part of
or in connection with any practice, meth-
od or plan contrary to § 181.12: And
provided further, That nothing in this
section shall be construed to limit or to
modify the record-keeping requirements
of the Wool Products Labeling Act of
1939 and the rules and regulations there-
under in respect to, and on the part of
manufacturers of, handkerchiefs or other
products containing, purporting to con-

88

Title 16—-Commercial Practices

tain, or represented as containing, woolen
fiber and subject to the act mentioned.

$181.102 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 contracte
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,
shall not be in restraint of trade.

$181.103 Repudiation of contracts.

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

§ 181.104 Dissemination of credit in-
formation.

The industry records its approval
of the distribution among members
of the industry of information cov-
ering delinquent and slow credit accounts
insofar as such may be lawfully done.

§ 181.105 Recording of trade-marks.

To avoid confusion the industry
recommends that each member thereof
voluntarily file with some person desig-
nated by the industry all trade-marks,
trade names, labels, or brands belonging
to and used by such member, and that
such information be made equally avail-
able to all members of the industry and
to the public.

COMMITTER ON TRADE PRACTICES
8 181.201 Industry committee.

The provisions of §16.1 of this sub-
chapter shall be applicable to an industry
committee established under this part.
(21 P. BR. 1174, Feb. 21, 1956}

PART 182—YEAST INDUSTRY

Sec.
182.0 Definition.
Grour I

182.2 Making of gifts, loans, or other
special inducements to purchase.
182.2 Commercial bribery.