Candy Manufacturing Industry

16 CFR Part 186 · 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 These rules and guides are historical: most were rescinded or replaced, so do not assume any is in force.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 Trade Commission

stantially lessen competition or tend to
create a monopoly or to unreasonably
restrain trade, is an unfair trade
practice.

§ 185.15 Aiding or abetting use of un-
fair 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 specified in $$ 185.1 to 185.14.

Group It
§ 185.101 Products to be sold on dry

measure basis.

The industry recommends that be-
cause peat products have high moisture-
absorbing qualities, such products be sold
by industry members on a dry measure
basis (bushels, cubic feet, cubie yards,
etc.) rather than by weight: Provided,
That such recommendation shall not be
construed as disapproval by the industry
of the practice of selling industry prod-
ucts by weight when in immediate con-
junction with the stated weight the dry
measurement is also shown.

PART 186—CANDY MANUFAC-
TURING INDUSTRY

Sec.
186.0 Definition.
Gzour I

186.1 Deception (general).

186.2 Misrepresentation as to character of
business.

186.3 Misuse of the word “free”, ete.

186.4 Imitation or aimulation of trade-

: marks, trade names, etc.

186.5 False invoicing.

186.6 Palse and misleading prio> quota-
tions, ete.

186.7 Tile-in sales; coercing purchase of
one product as 4 prerequisite to
purchase of other products.

186.8 Consignment distribution.

186.9 Commercial bribery.

186.10 Defamation of competitors or dis-
Pparagement of their products.

186.11 Unfair threats of infringements
suits,

186.12 Selling below cost,

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

186.14 Prohibited discrimination.

186.18 Discriminatory returns.

186.16 Inducing breach of contract.

186.17 Enticing away employees of com-
petitors.

186.18 Advertising of candy sold in slack-
filled or short-weight containers,

186.19 Exclusive deals.

97

§ 186.2

Sec.
186.20 Marketing of candy through lottery
or game of chance.
Aiding or abetting use of unfair
trade practices.
Grovr IT
Recording of trade-marks, trade
names, etc., to avoid confusion.
Statistics.
. Dissemination of credit information.
Price Lists.

Policy as to disclosure of quality
guarantee and return of candy.
CoM™MIrrem OW TRADE PRACTICES

186.201 Industry committee.

AvrnHorrrr: The provisions of this Part 188
issued under secs. 6, 5, 88 Stat. 721, 719; 15
U.S.C. 46, 45, unless otherwise noted.

Source: The ons of this Part 186
eppear at 15 F.R. 878, Jan. 24, 1950, unless
otherwise noted.

§ 186.0 Definition.

The term “candy” as used in the rules
in this part is to be understood as in-
cluding all kinds and varieties of candy
(exclusive only of solid or molded choco-
late products) whether sold in bulk,
packaged, or other form.

Group I
§ 186.1 Deception (general).

The practice of selling, advertising, de-
seribing, or otherwise representing
candy in any manner or under any cir-
cumstances having the capacity and
tendency or effect of misleading or de-
ceiving purchasers, prospective pur-
chasers, or the consuming public with re-
spect to the grade, quantity, price, value,
composition, ingredients, nutritional
value, character, nature, size, use, prepa-
ration, manufacture, or distribution of
such candy or in any other material re-
spect, is an unfair trade practice.

Norg: Among the inhibitions of this sec-
tion is “false advertisement”, as defined in
section 15 of the Federal Trade Commission
Act, of any “food” or other product within
the scope of such section. Furthermore,
nothing in the rules in this part is to be
construed as relieving anyone of the neces-
sity 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.

§ 186.2 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

186.21

186.101

186.102
186.103
186.104
186.105


§ 186.3

or sale of candy, to misrepresent the
character, extent, or type of his business.

$186.3 Misuse of the word “free,” ete.

Use of the word “free,” or any word
or term of similar import, in advertising
or otherwise, to designate or describe
any product or service which is not in
truth and in fact a gift or gratuity, or is
not given to the recipient thereof with-
out requiring the purchase of other mer-
chandise or requiring the performance
of some service inuring directly or indi-
rectly to the benefit of the industry
member using such word, is an unfair
trade practice.

$186.4 Imitation or simulation of trade-
marks, trade names, ete.

The imitation or simulation of the
trade-marks, trade names, or other ex-
clusively owned marks of identification
of competitors, with the capacity and
tendency or effect of misleading or de-
ceiving purchasers, prospective purchas-
ers, or the consuming public, is an unfair
trade practice.

$186.5 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 rec-
ord is made, wholly or in part, of the
transactions represented on the face of
such invoices, with the capacity and
tendency or effect of thereby misleading
or deceiving purchasers, prospective
purchasers, or the consuming public.

(b) It is an unfair trade practice to
falsify, remove, or fail to furnish, any
purchase slip, ticket, card, invoice, or
other record, with the capacity and
tendency or effect of thereby misleading
or deceiving purchasers, prospective
purchasers, or the consuming public.

$186.6 False and misleading price quo-
tations, ete.

The publishing or circulating by any
member of the industry of price quota-
tions, price lists, or terms or conditions
of sale which are false or have the ca-
pacity and tendency or effect of mislead-
ing or deceiving purchasers, prospective
purchasers, or the consuming public, is
an unfair trade practice.

$186.7 Tieino sales; coercing parchase
of one product as a prerequisite to
purchase of other products.
The practice of coercing the purchase
of one or more products as a prerequisite

98

Title 16—Commercial Practices

to the purchase of one or more other
products, where the effect may be to sub-
stantially lessen competition or tend to
creato a monopoly or to unreasonably
restrain trade, is an unfair trade
practice.

$186.8 Consignment distribution.

It is an unfair trade practice for any
member of the industry to employ the
practice of shipping candy on consign-
ment or pretended consignment for the
purpose and with the effect of artificially
clogging or closing trade outiets and un-
duty restricting competitors’ use of said
trade outlets in getting their products to
consumers through regular channels of
distribution, thereby injuring, destroy-
ing, or preventing competition, or tend-
ing to create a Monopoly or to unreason-
ably restrain trade. Nothing in this
section shall be construed as restricting
cr preventing consignment shipping or
marketing of candy in good faith where
suppression of competition, restraint of
trade, or undue interference with com-
petitors’ use of the usual channels of
distribution, is not effected.

§ 186.9 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 he given, money or any-
thing of vaiue to agents, employees, or
representatives of customers or pro-
spective customers, or to agents, employ-
ees, or representatives of competitors’
customers or prospective customers,
without the knowledge of their em-
ployers or principals, as an inducement
to influence their employers or prin-
cipals to purchase or contract to pur-
chase candy 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 candy of competitors cr from
dealing or contracting to deal with com-
petitors.

$186.10 Defamation of competitors er
disparagement of their products.

The defamation of competitors by
falsely imputing to them dishonorable
conduct, inability to perform contracts,
questionable credit standing, or by other
false representations, or the false dis-
paragement of the products of com-
petitors in any material respect, or of
their business methods, selling prices,
values, credit terms, policies, or services.
is an unfair trade practice.


Chapter |—Federal Trade Commission

§ 186.11 Unfair threats of infringement
suits,

The circulation of threats of suit for
infringement of patents or trade-marks
among customers or prospective cus-
tomers of competitors, not made in good
faith but for the purpose or with the
effect of thereby harassing or intimidat-
ing such customers or prospective cus-
tomers, or of unduly hampering, injur-
ing, or prejudicing competitors in their
business, is an unfair trade practice.

§ 186.12 Selling below cost.

(a) The practice of selling candy 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. The costs,
however, which are referred to in this
section, are actual costs of the respective
seller, determined in accordance with
good accounting practice, and not some
other figure or average costs in the in-
dustry determined by an industry cost
survey or otherwise.

(b) This section is not to be construed
as prohibiting the selling below cost of
candy when spoilage thereof is imminent
and cannot reasonably be avoided; nor as
prohibiting such other sales below cost as
are not resorted to and pursued as a mo-
nopolistic practice with the wrongful in-
tent referred to and with the effect of
substantially lessening competition,
tending to create a monopoly, or unrea-
sonably restraining trade.

8 186.13 Combination or coercion to fix
prices, suppress com) 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,
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, conspiracy,
or concerted action with one or more
members of the industry, or with one or
More other persons, to unlawfully fix,
maintaln, or enhance prices, suppress
competition, or restrain trade.

99

§ 186.14

§ 186.14 Prohibited discrimination.’

(a) Prohibited discriminatory prices
or rebates, refunds, discounts, credits,
etc., which effect unlawful price discrim-
ination. Itis 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, directiy or indirectly, any rebate,
refund, discount, credit, or other form of
price differential (whether in the guise of
Samples, so-called free deals, allowances
on inventory or floor stock, or otherwise)
where such rebate, refund, discount,
credit, or other form of price differential,
effects 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 competi-
tlon or tend to create a monopoly in any
line of commerce, or to injure, destroy,
or prevent competition with any person
who either grants or knowingly receives
the benefit of such discrimination, or
with customers of either of them: Pro-
vided, however,

(1) That the goods involved in any
such transaction are sold for use, con-
sumption, or resale within any place un-
der the jurisdiction of the United States;

(2) That nothing 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 such
commodities are to such purchasers sold
or delivered;

(3) That nothing contained in this
paragraph shali prevent persons engaged
in selling goods, ware, or merehandise in
commerce frem selecting their own cus-
tomers in bona fide transactions and not
in restraint of trade:

1 As used in this section, the word “com-
merce” meana “trade or commerce among the
several States and with foreign nations, or
between the District of Columbia 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 States, or between
any such lon or place 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 Ter-
ritory or any insular possession or other
place under the jurisdiction of the United
States.”


§ 186.15

(4) That nothing contained in this
paragraph shall prevent price changes
from time to time where made in re-
sponse to changing conditions affecting
the market for or the marketability of
the goods concerned, such as but not
limited to actual or imminent deteriora-
tion of perishable goods, obsolescence of
seasonal goods, distress sales under court
process, or sales in good faith in discon-
tinuance of business in the goods con-
cerned.

(b) Prohfdited brokerage and com-
missions. 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 witk the sale or purchase of
goods, wares, or merchandise, either to
the other party to such transaction or
to an agent, representative, or other in-
termediary therein where such interme-
diary 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 pald.

(ec) Prohibited advertising or promo-
Honal 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 member in the course
of such commerce as compensation or in
consideration for any services or facili-
ties furnished by or through such cus-
tomer in connection with the processing,
handling, sale, or offering for sale of any
products or commodities manufactured,
sold, or offered for sale by such member,
unless such payment or consideration ts
available on proportionally equal terms
to all other customers competing in the

.distribution of such products or com-
Modities.

(d) Prohidited 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 fa-
cilities connected with the processing,
handling, sale, or offering for sale of such

Title 16—Commercial Practices

commodity so purchased upon terms not
accorded to all competing purchasers on
proportionally 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 paragraphs
(a) to (d) 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
libraries, churches, hospitals, and chari-
table institutions not operated for profit.

$186.15 Discriminatory returns.

It is an unfair trade practice for any
member of the industry engaged in com-
merce to discriminate in favor of one
customer-purchaser against another cus-
tomer-purchaser of candy, bought from
such member for resale, by contracting to
furnish, or furnishing in connection
therewith, upon terms not accorded to all
competing customer-purchasers on pro-
portionally equal terms, the service or
facility whereby such favored purchaser
is accorded the privilege of returning
products so purchased and receiving
therefor credit or refund of purchase
price: Provided, however. That nothing
in any of the rules in this part shall pro-
hibit or be used to prevent the return of
candy by purchasers, for credit or refund
of purchase price, when and because
such merchandise has been falsely or
improperly labeled, branded, or repre-
sented, or when and because the mer-
chandise is defective contrary to
warranty or purchase contract.

§ 186.16 Inducing 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 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.

8186.17 Enticing away employees of
competitors.

It is an unfair trade practice for

any member of the industry wilfully
to entice away employees of com-

100


Chapter |—Federal Trade Commission

petitors with the tntent and effect of
thereby undwy hampering or injuring
competitors in their business and de~
stroying or substantially lessening com-
petition: Provided, That nothing in this
section shall be construed as prohibiting
employees or agents from seeking or
obtaining more favorable employment.

8186.18 Advertising of candy sold in
slack-filled or short-weight contain-
ers.

It 1s an unfair trade practice to adver-
tise candy packed in slack-filled or short-
weight containers by any depiction or by
other representation which has the ca-
pacity and tendency or effect of thereby
causing such advertising to be misleading
or deceptive to purchasers, prospective
purchasers, or the consuming public.

$186.19 Exclusive deals.

It fs an unfair trade practice for any
member of the industry to contract to sell
or sell any candy or other product, or fix
a price charged therefor, or discount
from, or rebate upon, such price, on the
condition, agreement, or understanding
that the purchaser thereof shall not use
or deal in the products of a competitor or
competitors of such industry member,
where the effect of such sale or contract
for sale, or of such condition, agreement,
or understanding, may be to substantially
lessen competition or tend to create a
monopoly in any line of commerce.

8186.20 Marketing of candy through
lottery or game of chance.

(a) It is an unfair trade practice for
any member of the industry to sell or
promote the saie of candy by means of 4
game of chance, gift enterprise, or lottery
scheme.

(b) The inhibitions of this section shall
be understood as also extending to the
marketing of candy which is specially
packaged or arranged so as to facilitate
its resale or distribution by a customer of
an industry member to the public by
means of a game of chance or lottery
scheme, and to the marketing or supply-
ing of any lottery device by an industry
member to his customer efther separately
or in conjunction with candy.

§ 186.21 Aiding or abetting use of un-
fair trade practices,

Tt is an unfair trade practice for
any person, firm, or _ corporation
(whether engaged as manufacturer,

seller, buyer, or otherwise) to ald,

§ 186.201

abet, coerce, or induce another, directly
or indirectly, to use or promote the use
of any unfair trade practice specified in
§8 188.1 to 186.20.

Grour If

$ 186.101 Recording of trade-marks,
trade names, ete., ta avoid confusion.

To avoid confusion, the industry
recommends that each industry member
voluntarily file with some person desig-
nated by the industry all trade-marks,
trade names, labels, or brands which
are distinctive of such member’s prod-
ucts and exclusively used by him in
promoting the sale thereof, and that
such information be made equally ayail-
able to all members of the industry and
to the public. (See also $186.4 and
§ 186.11.)

§ 186.102 Statistics.

The industry records its approval of
the compilation and distribution of all
proper and lawful statistica, subject,
however, to the prohibitions and limita-
tions set forth in the provisions of
$§ 186.13 and 186.21.

$ 186.103 Dissemination ef credit in-
formation.

The industry records Its approval of
distributing to its members information
covering delinquent and slow accounts
insofar as this may be lawfully done.

§ 186.104 Price lists.

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

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

§ 186.105 Policy as to disclosure of
quality goarantee and return of
candy.

The industry approves the practice of
members of the industry stating on their
purchase orders and invoices their terms
of quality guarantee and their policy as
to terms applicable to the return of candy
by purchasers to the industry members.

CoMaOTTEE ow Trapz PRacTices
§ 186.201 Industry committee.

The provisions of $16.1 of this sub-
chapter shall be applicable to an industry
committee established under this part.
[21 PR. 1174. Feb. 21. 1986)

101