Gummed Paper And Sealing Tape Industry
16 CFR Part 19 · Trade practice rules · in the Code of Federal Regulations 1959-1976 (11 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 These rules and guides are historical: most were rescinded or replaced, so do not assume any is in force.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, 1976 CFR · Earliest edition: 1959 CFR
Text (1976 edition, OCR)
$19.0 States or uses the mails or any instrumen- tality of interstate commerce for the purpose of sending or bringing into any State or Ter- ritory any set of artificial teeth or prosthetic dental appliance or other denture, con- structed from any cast or impression made by any person other than, or without the authorization or prescription of, a person Icensed to practice dentistry under the laws of the place into which such denture is sent or brought, where such laws prohibit; (1) The taking of impressions or casts of the human mouth or teeth by a person not Mcensed under such laws to practice den- tistry; (2) The construction or supply of dentures by & person other than, or without the au- thorization or prescription of, a person li- censed under such iaws to practice dentistry; or (3) The construction or supply of dentures from impressions or casts made by a person not licensed under such laws to practice dentistry— shall be fined not more than $1,000 or im- prisoned not more than one year, or both. PART 19--GUMMED PAPER AND SEALING TAPE INDUSTRY Sec. 19.0 Definition. Group I 19.1 Misrepresentation of products. 19.2. Misrepresentation as to character of business. 19.3. Prohibited sales below cost. 19.4 False invoicing. 19.5 False and misleading price quotations, etc. 19.6 Prohibited discrimination. 19.7 Substitution of products. 19.8 Deceptive use of trade or corporate name, trademarks, etc. 19.9 Inducing breach of contract. 19.10 Defamation of competitors or false disparagement of their products. 19.11 Commercial bribery. 19.12 Procurement of competitors’ confl- dential information. 19.18 Prohibited forms of trade restraints (unlawful price fixing, etc.) 19.14 Enticing away employees of competi- tors. 19.15 Misrepresenting products as conform- ing to standard. 19.16 Push money. 19.17 Aiding or abetting use of unfair trade practices. COMMITTEE ON TRADE PRACTICES 19.201 Industry committee. AurnHorriry: The provisions of this Part 19 issued under secs. 6, 5, 38 Stat. 721, 719; 16 U.S.C. 46, 45, unless otherwise noted. Source: The provisions of this Part 19 appear eat 20 FR. 4440, June 24, 1955, unless otherwise noted. Title 16—Commercial Practices § 19.0 Definition. As used in §§ 19.0 to 19.17, the term “industry products” or “products of the industry’’ includes the following: Water- activated gummed paper sealing tapes, gummed stay papers, gummed cloth tapes, gummed reinforced tapes, both plain and/or printed, gummed flat papers, gummed hollands, gummed ve- neer tapes, and such other gummed Paper specialties, gummed reinforced paper specialties, and gummed cloth specialties as are natural affiliates. Group I § 19.1 Misrepresentation of products. It is an unfair trade practice to use, or cause or promote the use of, any trade promotional literature, advertising matter, mark, brand, label, designation, or other representation, however dis- seminated or published, which has the capacity and tendency or effect of mis- leading or deceiving purchasers or pro- spective purchasers with respect to the grade, quality, quantity, price, value, origin, weight, strength, width, compo- sition or packing, count, finish, manu- facture, or distribution of any product of the industry, or in any other material respect. § 19.2 Misrepresentation as to character of business. It is an unfair trade practice for any industry member, in the course of or in connection with the distribution of in- dustry products, to represent, directly or indirectly, that he is a manufacturer of industry products, or that he owns or controls a factory making such products, when such is not the fact, or m any other manner to misrepresent the character, extent, or type of his business. § 19.3 Prohibited sales below cost. (a) The practice of selling products of the industry at a price less than the cost thereof to the seller, with the pur- pose or intent, and where the effect is, or where there is a reasonable prob- ability that the effect will be, to sub- stantially injure, suppress, or stifle com- petition or tend to create a monopoly, is an unfair trade practice. (b) 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 with the wrongful intent or purpose referred to and where the effect is, or where there 266 Chapter I1—Federal Trade Commission js reasonable probability that the effect will be, to substantially injure, suppress, or stifle competition or to create a mo- nopoly. Among the situations in which the requisite purpose or intent would ordinarily be lacking are cases in which such sales were: (1) Of seasonal goods near the conclusion of the season; (2) of perishable goods in respect to which deterioration is imminent; (3) of obso- lescent goods; (4) made under judicial process; or (5) made in bona fide discon- tinuance of business in the goods concerned. (c) As used in paragraphs (a) and (b) of this section, the term “cost” means the respective seller’s cost and not an average cost in the industry whether such average cost be determined by an industry cost survey or some other method. It consists of the total outlay or expenditure by the seller in the acqui- sition, production, and distribution of the products involved, and comprises all elements of cost such as labor, material, depreciation, taxes (except taxes on net income and such other taxes as are not properly applicable to cost), and general overhead expenses, incurred by the seller in the acquisition, manufacture, processing, preparation for marketlng, sale, and delivery of the products. Not to be included are dividends or interest on borrowed or invested capital, or non- operating losses, such as fire losses and losses from the sale or exchange of capital assets. Operating cost shouid not be reduced by items of nonoperating income, such as income from invest- ments, and gain on the sale of capital assets. (d) Nothing in this section shall be construed as relieving an mdustry mem- ber from compliance with any of the re- quirements of the Robinson-Patinan Act. § 19.4 False invoicing. Withholding from or inserting in in- voices or sales slips any statements or information by reason of which omission or insertion a false record is nade, wholly or m part, of the transactions repre- sented on the face of such invoices or sales siips, with the effect of thereby misleading or deceiving purchasers, pro- spective purchasers, or the consuming public, is an unfair trade practice. § 19.5 False and misleading price quo- tations, etc. It is an unfair trade practice for any industry member, in the course of or in § 19.6 connection with the offering for sale, sale, or distribution of industry products, to publish or circulate to or among pur- chasers or prospective purchasers false price quotations, price lists, or terms or conditions of sale; or to publish, or circulate among purchasers or prospec- tive purchasers, any price quotations, price lists, or terms or conditions of sale which have the capacity and tendency or effect of thereby misleading or deceiving purchasers or prospective purchasers in any material respect. [24 F-R. 4327, May 29, 1959] § 19.6 Prohibited discrimination.’ (a) Prohibited discriminatory prices, rebates, refunds, discounts, credits, etc., which effect unlawful price discrimina- tion. 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, directiy or indirectiy, any rebate, refund, discount, credit, or other form of price differential, where such rebate, re- fund, discount, credit, or other form of price differential,. effects a discrimina- tion in price between different purchas- ers of goods of like grade and quality, where either or any of the purchases in- volved therein are in commerce, and where the effect thereof may be substan- tially to lessen competition or tend to create a monopoly in any line of com- merce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with custom- ers of either of them: Provided, how- ever: (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, and are not purchased by schools, colleges, universities, public libraries, churches, hospitals, or charitable insti- 1As used in this section, the word “com- merce” means “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 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 jurisdiction of the United States.” 267 § 19.6 tutions not operated for profit, as sup- plies for their own use; (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; Note: Cost justification under the above proviso depends upon net savings in cost based on all facts relevant to the transac- tions under the terms of subparagraph (2) of this paragraph. For example, if a seiler regularly grants a discount based upon the purchase of a specified quantity by a single order for a single delivery, and this discount is justified by cost differences, it does not follow that the same discount can be cost justified if granted to a purchaser of the same quantity by multiple orders or for multiple deliveries. (3) That nothing contained in this section shall prevent persons engaged in selling goods, wares, or merchandise in comerce from selecting their own customers in bona fide transactions and not m restraint of trade; (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 obsolescence of seasonal goods, imminent deterioration of perishable goods, distress sales under court process, or sales in good faith in discontinuance of business in the goods concerned; (5) That nothing contained in this section shall prevent the meeting in good faith of an equally low price of a com- petitor, or the services or facilities fur- nished by a competitor (see paragraphs (d) and (e) of this sectlon) . Nore: In complaint proceedings, justifica- tion of price differentials under subpara- graphs (2), (4), and (5) of this paragraph is a matter of affirmative defense to be estab- shed by the person or concern charged with price discrimination. (b) Price differential practices. The following are examples of price differen- tial practices to be considered as subject to the prohibitions of paragraph (a) of this section when involving goods of like grade and quality which are sold for use, consumption, or resale within any place under the jurisdiction of the United States, and which are not purchased by schools, colleges, universities, public Title 16—Commercial Practices libraries, churches, hospitals, or chari- table institution, not operated for profit as supplies for their own use, and when: (1) The commerce requirements spec- ified in paragraph (a) of this section are present; and (2) The price differential has a rea- sonable probability of substantially les- sening competition or tending to create a& monopoly in any line of commerce, or of injuring, destroying, or preventing competition with the industry member or with the customer receiving the bene- fit of the price differential, or with cus- tomers of either of them; and (3) The price differential is not justi- fied by cost savings (see paragraph (a) (2) of this section) ; and (4) The price differential is not made in response to changing conditions affecting the market for or the market- ability of the goods concerned (see para- graph (a) (4) of this section) ; and (5) The lower price was not made to meet in good faith an equally low price of a competitor (see paragraph (a) (5) of this section). Ezample No. I. At the end of a given pe- riod an industry member grants a discount to @ customer equivalent to a fixed percentage of the total of the customer’s purchases during such period and fails to grant such discount to other customers under like conditions, Example No. II. An industry member sells goods to one or more of his customers at a higher price than he charges other cus- tomers for like merchandise. It is imma- terial whether or not such discrimination is accomplished by inisrepresentation as to the grade and quality of the products sold. Ezample No. UI. An industry member makes a sale of industry products to a pur- chaser under an arrangement whereby the products are shipped by the industry mem- ber’s supplier directly to such purchaser and charges a lower price than that charged other purchasers under similar circum- stances, or a price which, when coinpared with the price charged purchasers on sales made out of the stock of the industry mem- ber, constitutes a discount greater than can be justified by the difference in costs result- ing from the differing quantities or method of sale or delivery. Ezample No. IV. An industry member sells to some customers industry products at prices of drop shipments when in fact such transactions are out-of-stock sales which are inade to other customers at higher prices, even though the quantities involved are large enough to be delivered on a direct shipment basis. (As here used an “out-of- stock” sale is one from the industry mem- ber’s stock on hand and a “drop shipment’ sale is one in which the industry member 268 Chapter |—Federal Trade Commission arranges to have the goods shipped by the industry member’s suppller directly to the industry member’s customer.) Ezample No. V. Terms of 2 percent 10 days are granted by an industry member to some customers on goods purchased by them from the industry member. Another customer or customers are, nevertheless, al- lowed to take a 5 percent Instead of a 2 percent discount when making payment to the industry member within the time prescribed. (ec) Prohibited brokerage and commis- sions. 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 intermediary therein where such inter- mediary is acting in fact for or in behalf, or is 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. (d) 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 promotlonal allowances of any other thing of value to or for the benefit of a custoiner 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 manufac- tured, sold, or offered for sale by such member, unless such payment or consid- eration is available on proportionally equal terms to all other customers com- peting in the distribution of such prod- ucts or commodities. . (e) Prohibited discriminatory services or facilities. It is an unfair trade prac- tice for any member of the mdustry en- gaged in commerce to discriminate m favor of one purchaser against another purchaser or purchasers of a commodity bought for resale, with or without proc- essing, by contracting to furnish or fur- nishing, or by contributing to the furnishing of, any services or facilities connected with the processing, handling, sale, or offering for sale of such com- § 19.7 modity so purchased upon terms not ac- corded to all competing purchasers on proportionally equal terms. (f) 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 fore- going provisions of this section. Nore: The foregoing paragraph (f) of this section is a restatement of section 2(f) of the Clayton Act as amended. In a com- plaint proceeding under this section, in order to make out a prima facie violation, the Commission must show that the favored buyer induced or received the lower price knowing, or knowing facts from which he should have Known, that such price was violative of section 2(a) of said act and not justified under paragraph (a) (2), (4) or (5) of this section. When, In any such proceeding, the issue is limlted to the ques- tion of whether the price differential in- volved made only due allowance for differ- ences in cost of manufacture, sale, or delivery resulting from the differing methods or quantities in which the goods were sold and delivered, the Commission may establish a prima facie case in a number of ways, including: (1) By showing that the buyer paying the lower price knew that the methods by, and quantities in, which the goods were sold and delivered to him by the seller, were the same as in the case of the competing buyer or buyers paying the higher price or prices; or (2) By showing, when there is a difference in the methods or quantities in which the goods were sold and delivered by the seller to the buyer than in the case of the com- peting buyer or buyers paying the higher price or prices, that the buyer paying the lower price or prices knew the nature and extent of such differences and knew or should have known that they could not have resulted in sufficient cost savings of the kind and character specified as to justify the price differential. § 19.7 Substitution of products. The practice of shipping or delivering products which do not conform to sam- ples submitted, to specifications upon which the sale is consummated, or to representations made prior to securing the order, without advising the pur- chasers as to said substitution and ob- taining their consent thereto at or be- fore the time of shipment or delivery, is an unfair trade practice. Norte: Nothing in this section shall be con- strued as preventing the application of such tolerances as are agreed upon between buyer 269 § 19.8 and seller or are otherwise deemed reason- able and proper and where no misrepresenta- tion or deception of the purchasing public is practiced or promoted in relation to the product or its deviation from samples or specifications. § 19.8 ‘Deceptive use of trade or corpo- rate name, trademarks, etc. The use of any trade name, corporate name, trademark, or other trade desig- nation which has, the capacity and tendency or effect of misleading or de- ceiving the purchasing or consuming public as to the name, nature, or origin of any product of the industry, or of any material used therein, or which is false or misleading in any other respect, is an unfair trade practice. , §19.9 Inducing breach of contract. (a) Knowingly inducing or attempt- ing to induce the breach of existing law- ful contracts between competitors and their customers or their suppliers, or in- terfermg with or obstructing the per- formance of any such contractual duties or service, under any circumstance hay- ing the capacity and tendency or effect of substantially injuring or lessening present or potential competition, is an unfair trade practice. (b) Nothing in this section is intended to imply that it is improper for any in- dustry member to solicit the business of a customer of a competing industry mem- ber; nor is the section to be construed as in any wise authorizing any agreement, understanding, or planned common course of action by two or more industry members not to solicit business froin the customers of either of them, or from cus- tomers of any other industry member. § 19.10 Defamation of competitors or false disparagement of their prod- ucts. It is an unfair trade practice— (a) To defame competitors by falsely imputing to them dishonorable conduct, inability to perform contracts, question- able credit standing, or by other false representations; or (b) To falsely disparage a competi- tor’s products, business methods, selling prices, values, credit terms, policies, or services. § 19.11 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 permit or cause to be given, money or anything Title 16——Commercial Practices of value to agents, employees, or repre- sentatives of customers or prospective 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 products manu- factured or sold by such industry mem- ber or the make 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 con- tracting to deal with competitors. § 19.12 Procurement of competitors’ confidential information. It is an unfair trade practice for any member of the industry to obtain infor- mation concerning the business of a com- petitor by bribery of an employee or agent of such competitor, by false or misleading statements or representa- tions, by the impersonation of one in au- thority, or by any other unfair means, and to use the information so obtained in such manner as to injure said com- petitor in his business or to suppress competition or unreasonably restrain trade. § 19.13 Prohibited forms of trade, re- straints (unlawful price fixing, etc.)* It is an unfair trade practice for any member of the industry, either directly or indirectly, to engage in any planned common course of action, or to enter into ?The inhibitions of this section are sub- ject to Public Law 542, approved July 14, 1952—66 Stat. 632 (the McGuire Act) which provides that with respect to a commodity which bears, or the label or container of which bears, the trade-mark, brand, or name of the producer or distributor of such com- modity and which 1s in free and open com- petition with commodities of the same gen- eral class produced or distributed by others, & seller of such a commodity may enter into a contract or agreement with a buyer thereof which establishes a minimum or stipulated price at which such commodity may be resold by such buyer when such contract or agreement is lawful as applied to intrastate transactions under the laws of the State, Territory, or territorial jurisdiction in which the resale 1s to be made or to which the commodity is to be transported for such re- sale, and when such contract or agreement is not between manufacturers, or between wholesalers, or between brokers, or between factors, or between retailers, or ‘between persons, firms, or corporations in competition with each other. 270 Chapter |—Federal Trade Commission or take part in any understanding, agreement, combination, or conspiracy, with one or more members of the indus- try, or with any other person or persons, to fix or maintain the price of any goods or otherwise unlawfully to restrain trade; or to use any form of threat, in- timidation, or coercion to induce any member of the industry or other person or persons to engage in any such planned common course of action, or to become a party to any such understanding, agree- ment, combination, or conspiracy. § 19.14 Enticing away employees of competitors. Knowingly enticing away employees or sales representatives of competitors un- der any circumstances having the capac- ity and tendency or effect substantially injuring or lessening present or potential competition is an unfair trade practice: Provided, That nothing in this section shall be construed as prohibiting em- ployees from seeking more favorable em- ployment, or as prohibiting employers from hiring or offering employment to employees of competitors in good faith and not for the purpose of injuring, destroying, or preventing competition. § 19.15 Misrepresentmg products as conforming to standard. Representing, through advertising, personal solicitation, or otherwise, that any product of the industry conforms to a standard recognized in or applicable to the industry when such is not the fact, is an unfair trade practice. § 19.16 Pusb money. It is an unfair trade practice for any industry member to pay or contract to pay anything of value to a salesperson employed by a customer of the industry member, as compensation for, or as an inducement to obtain, special or greater effort or service on the part of the sales- person in promoting the resale of prod- ucts supplied by the industry member to the customer: (a) When the agreement or under- standing under which the payment or payments are made or are to be inade is without the knowledge and consent of the salesperson’s employer; or (b) When the terms and conditions of the agreement or understanding are such that any benefit to the salesperson or customer is dependent on lottery or chance; or § 19.201 (c) When any provision of the agree- ment or understanding requires or con- templates practices or a course of con- duct unduly and intentionally hampering sales of products of competitors of an industry member; or (d) When, because of the terms and conditions of the understanding or agreement, including its duration, or the attendant circumstances, the effect may be to substantially lessen competition or tend to create a monopoly; or (e) When similar payments are not accorded to salespersons of competing customers on proportionally equal terms in compliance with sections 2 (d) and (e) of the Clayton Act. Nore: Payments made by an industry member to & salesperson of a customer under any agreement or understanding that all or any part of such payments is to be trans- ferred by the salesperson to the customer, or is to result in @ corresponding decrease in the salesperson's salary, are not to be considered within the purview of this section, but are to be considered as subject to the require- ments and provisions of section 2(8) of the Clayton Act. § 19.17 Aiding or abetting use of unfair trade practices. It is an unfair trade practice for any person, firm, or corporation to aid, abet, coerce, or induce another, directly or in- directly, to use or promote the use of any unfair trade practice specified in the rules in this part. COMMITTEE ON TRADE PRACTICES § 19.201 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. 3218, May 16, 1956) PART 20—PUBLIC SEATING INDUSTRY Grovur I Sec. 20.1 Misrepresentation of industry prod- ucts. 20.2 False invoicing. 20.3 Use of false or deceptive selling methods, etc. 20.4 Misuse of terms “‘close-outs,” “obso- lete items,” ‘“‘discontinued lines,” etc. 20.5 Defamation of competitors or dis- paragement of their products. 20.6 Commercial bribery. 20.7 Unfair threats of infringement suits. o71