Cocoa And Chocolate Industry

16 CFR Part 194 · Trade practice rules · in the Code of Federal Regulations 1959-1977 (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 These rules and guides are historical: most were rescinded or replaced, so do not assume any is in force.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, 1977 CFR · Earliest edition: 1959 CFR

Text (1977 edition, OCR)

Chapter I—Federal Trade Commission

public concerning the length or measure
of any such product.

(b) In order to avoid and prevent
deception in the sale of industry prod-
ucts, the linear measure of each industry
product should be indicated clearly and
nondeceptively on the package or other
container of the product, or on a label,
stamp, or tag securely affixed thereto:
Provided, however, That with respect to
industry products of the same length put
up for the industrial or manufacturing
trade and not for individual retail sale
to consumer-purchasers, disclosure of
the linear measure of such industry
products may be made on the box or
other container in which such industry
products are packaged for shipment to
the industrial user, or on a label, stamp,
or tag securely affixed thereto: And pro-
vided further, That the linear measure
so indicated shall be the true length of
the metal or plastic fastener elements
and the stops and separating units, if
any, when the slide fastener is closed,
subject, however, to unavoidable varia-
tions in manufacture not to exceed ap-
plicable length of tolerances provided
for in Federal Specification V-F-106,
dated February 1, 1949.

§ 193.19 Misrepresentation in general.

Ié is an unfair trade practice for any
member of the industry to use, or cause
or promote the use of, any advertising
matter, guarantee, warranty, trade pro--
motional literature, mark, brand, label,
or other representation, however dis-
seminated or published, which has the
capacity and tendency or effect of mis-
leading or deceiving purchasers, pro-
spective purchasers, or the consuming
public with respect to the grade, quality,
length, weight, size, use, colorfastness,
material, composition, construction, fab-
rication, manufacture, distribution,
origin, or price or terms of sale, of any
industry product or any component part
thereof, or with respect to the character,
extent, or type of the business of any
industry member, or which has the ca-
pacity and tendency or effect of mislead-
ing or deceiving purchasers or the con-
suming public in any other material
respect.

COMMITTEE ON TRADE PRACTICES

§ 193.201 Industry committee.

The provisions of § 16.1 of this sub-
chapter shall be applicable to an indus-

§ 194.0
try committee established under this

PART 194—-COCOA AND CHOCO-
LATE INDUSTRY

Bec.
194.0 Definition; industry product.
Grovur I

194.1 Deception (general).

194.2 Misuse of the word “free.”

194.3 Imitiation or simulation of trade-
marks, trade names, etc.

194.4 False invoicing.

194.5 False and misleading price quota-
tions, etc.

194.6 Tie-in sales; coercing purchase of
one product as a prerequisite to
the purchase of other products.

194.7 Consignment distribution.

194.6 Commercial bribery.

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

194.10 Unlawful coercion or combinations
in restraint of trade.

194.11 Prohibited discrimination.

194.12 Exclusive deals.

194.18 Inducing breach of contract.

194.14 Enticing away employees of compet-
itors.

194.15 Marketing of products through lot-
tery or game of chance.

194.16 Selling below cost.

194.17 Aiding or abetting use of unfair trade

practices.
COMMITYEE ON TRADE PRACTICES
194.201 Industry committee.

AvTHORIrr: The provisions of this Part
194 issued under secs. 6, 5, 88 Stat. 721, 719;
15 U.8.C. 46, 45, unless otherwise noted.

Source: The provisions of this Part 194

appear.at 15 P.R. 6548, Sept. 28, 1950, unless
otherwise noted.

§ 194.0 Definition; industry product.

As used in this part, the term “indus-
try product” shall mean any and all
kinds of commercially manufactured or
processed cocoa or chocolate, or cocoa
or chocolate products, which are pack-
aged, designed, or marketed for the
use of consumers either without further
processing or with only such processing
as is usually performed in the home.
Such products shall be those included in
the Definitions and Standards of
Identity for Cacao Products as promul-
gated by the Food and Drug Administra-
tion (21 CFR Part 14), such as baking
chocolate, bitter chocolate, cooking
chocolate, breakfast cocoa, high fat
cocoa, medium fat cocoa, low fat cocoa,
cocoa, sweet chocolate, milk chocolate,
sweet milk chocolate, skim milk choco-

127


§ 194.1

late, sweet skim milk chocolate, butter-
milk chocolate, mixed dairy-product
chocolate; also, cocoa or chocolate-fla-
vored syrups and all kinds of solid or
molded chocolate products. Not in-
cluded, however, in this definition are
the various kinds of chocolate coatings
and other chocolate and cocoa products
sold in bulk to other manufacturers for
further processing.’

Groop I
$194.1 Deception (general).

The practice of selling, advertising, de-
scribing, or otherwise representing an in-
dustry product in any manner or under
any circumstances having the capacity
and tendency or effect of misleading or
deceiving purchasers, prospective pur-
chasers, or the consuming public with
respect to the grade, quantity, price,
value, composition, ingredients, nutri-
tional value, character, nature, size, use,
preparation, manufacture, or distribu-
tion of such product, or in any other
material respect, is an unfair trade
practice.

Norg: Among the inhibitions of this sec-
tion is the false advertisement of any
industry product as the term “false adver-
tlsement” ts defined in section 15 of the
FPederal Trade Commission Act, as amended.

$194.2 Misuse of the word “free.”

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 gratulty, or is not
given to the recipient thereof without
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.

8194.3 Imitation or simulation of trade-
marks, trade names, etc.

The imitation or simulation of the
trade-marks, trade names, or other ex-

1 While §§ 104.2 to 194.17, inclusive, are not
applicable to the business of selling or dis-
tributing cocoa or chocolate, and cocoa or
chocolate products, in bulk to other manu-
facturers for further processing, such fact is
not to be construed as relieving, or purport-
ing to relieve, those engaged in such business
from the obligation of complying with the
requirements of the statutes on which
§§ 194.1 to 194,17, inclusive, are based or any
other legal requirements.

Title 16—Commercial Practices

clusively owned marks of identification
of competitors, with the capacity and
tendency or effect of misleading or de-
ceiving purchasers, prospective pur-
chasers, or the consuming public, is an
unfair trade practice.

§ 194.4 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-
actions represented in the face of such
invoices, with the capacity and tendency
or effect of thereby misleading or deceiv-
ing 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.

$194.5 False and misleading price quo-
tations, etc.

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 capac-
ity and tendency or effect of misleading
or deceiving purchasers, prospective pur-
chasers, or the consuming public, is an
unfair trade practice.

§ 194.6 Tie-in sales; coercing purchase
of one product 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 sub-
stantially lessen competition or tend to
create a monopoly or to unreasonably
restrain trade, is an unfair trade prac-
tice.

§ 194.7 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

128


Chapter I—Federal

to unreasonably restrain trade. Noth-
ing in this section shall be construed as
restricting or preventing consignment
shipping or marketing of industry prod-
ucts in good faith where suppression of
competition, restraint of trade, or un-
due interference with competitors’ use
of the usual channels of distribution, is
not effected.

§ 194.8 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 prospective
eustomers, or to agents, employees, or
representatives of competitors’ custom-
ers or prospective customers, without the
knowledge of their employers or princi-
pals, as an inducement to influence their
employers or principals to purchase or
contract to purchase products manufac-
tured or sold by such industry member or
the maker of such gift or offer, or to in-
fluence such employers or principals to
refrain from dealing in the products -
of competitors or from dealing or con-
tracting to deal with competitors.

§ 194.9 Defamation of competitors or
disparagement of their prodncts.

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

§ 194.10 Unlawful coercion or combina-
tions in restraint of trade.

It js an unfair trade practice for a
member of the industry:

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

(b) To enter into or take part in, di-
rectly or indirectly, any agreement, un-
derstanding, combination, conspiracy, or
concerted action with one or more mem-
bers of the industry, or with one or more
other persons, to unlawfully fix, main-
tain, or enhance prices, suppress com-
petition, or restrain trade.

Trade Commission § 194.11

§ 194.11 Prohibited discrimination."

(a) Prohibited discriminatory prices,
or rebates, refunds, discounts, credits,
etc., which effect unlawful price discrimi-
nation. It 1s 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, where such rebate,
refund, 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
invoived 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 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
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 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
paragraph shall prevent price changes
from time to time where made in re-
sponse to changing conditions affecting

34s used tn 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 Ter-
ritory of the United States and any State,
Territory, or foreign nation, or between any
insular possessions or other places under the
jurisdiction of the United States, or between
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 posseasion or other place under
the jurisdiction of the United States.”

129


§ 194.12

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) Prohibited 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 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 intermedi-
ary is acting in fact for or in behalf, or
is subject to the direct or indirect con-
trol, of any party to such transaction
other than the person by whom such
compensation is so granted or paid.

(ec) 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 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.

(d) Prohibited discriminatory sero-
ices or facilities. It is an unfair trade
practice for any member of the industry
engaged in commerce to discriminate in
favor of one purchaser against another
purchaser or purchasers of a commodity
bought for resale, with or without
processing, by contracting to furnish or
furnishing, or by contributing to the
furnishing of, any services or facilities
connected with the processing, handling,
sale, or offering for sale of such com-
modity so purchased upon terms not ac-
corded to all competing purchasers on
proportionally equal terms.

Title 16-—Commerclal Practices

(e) Inducing or receiving an illegal
discrimination in price. It is an unfair
trade practice for any member of the
industry engaged in commerce, in the
course of such commerce, knowingly to
induce or receive a discrimination in
price which is prohibited by the fore-
going provisions 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.

§ 194.12 Exclusive deals.

It is an unfair trade practice for any
member of the industry to contract to
seil or sell any product, or to fix a price
charged therefor, or discount from, or re-
bate 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 competi-
tors of such industry member, where the
effect of such sale or contract for sale,
or of such condition, agreement, or un-
derstanding, may be to substantially
lessen competition or tend to create a
monopoly in any line of commerce.

§ 194.13 Inducing breach of contract.

Inducing or attemptimg 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, injur-
ing, or prejudicing competitors in their
business, is an unfair trade practice.

§ 194.14 Enticing away employees of
competitors.

It is an unfair trade practice for any
member of the industry wilfully to entice
away employees of competitors with the
intent and effect of thereby unduly ham-
pering or injuring competitors in their
business and destroying or substantially
lessening competition: Provided, That
nothing in this section shall be construed
as prohibiting employees or agents from
seeking or obtaining more favorable
employment.

8194.15 Marketing of products through
lottery or game of chance.

(a) It is an unfair trade practice for
any member of the industry to sell or

130


Chapter !|—Federal

promote the sale of any industry product
by means of a game of chance, gift enter-
prise, or lottery scheme.

(b) The inhibitions of this section
shall be understood as also extending to
the marketing of an industry product
which is specially packaged or arranged
80 a8 to facilitate its resale or distribu-
tion by a customer of an industry mem-
ber to the public by means of a game of
chance or lottery scheme, and to the
marketing or supplying of any lottery
device by an industry member to his cus-
tomer either separately or in conjunction
with an industry product.

$194.16 Selling below coset.

The practice of selling industry prod-
ucts at a price less than the cost thereof
to the seller, with the purpose or intent,
and where the effect may be, to injure,
suppress, or stifle competition or tend to
create a monopoly in the production or
sale of such products, is an unfair trade
practice. As used in this section, the
term “cost’? means the total cost to the
seller, including the costs of acquisition,
processing, preparation for marketing,
sale, and delivery.

$194.17 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
any unfair trade practice specified in
8§§ 194.1 to 194.16, inclusive.

COMMITTEE ON TRADE PRACTICES
$ 194.201 Industry committee.

The provisions of §16.1 of this sub-
chapter shall be applicable to an industry
committee established under this part.
[21 F.R. 1174, Feb. 21, 1956]

PART 195—-BEDDING MANUFACTUR-
ING AND WHOLESALE DISTRIBUT-
ING INDUSTRY

Bec.
195.0 Definition; bedding products.
Group I

196.1 Deception as to used materials and
parts.

198.2 Other deception through misrepre-
sentation or concealment.

195.3 Misuse of the terms “felt,” “felting,”
and “felted.”

195.4 Misuse of the terms “latex,” “foam

rubber,” “latex foam rubber,” eto.

Trade Commission § 195.1

Sec.

195.5 Misuse of terms “Rx,” “posture,”
“posturized,” “posturite,” “cus-
tom built,” “orthopedic,” “germ-
proof,” and “waterproof.”

195.6 Deceptive pricing.

195.7 Guarantees, warranties, etc.

195.8 Deception through fallure to differ-
entiate between wholesale and re-
tail transactions.

195.9 Misuse of the word “free,”

195.10 False invoicing.

195.11 Commercial bribery.

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

195.18 Use of lottery echemes.

195.14 Misrepresentation as to character of
business.

195.15 Prohibited discrimination.

195.16 Discriminatory returns.

195.17 Combination or coercion to fix
prices, suppress competition, or

. restrain trade.

195.18 Imitation or simulation of trade-
marks, trade names, etc.

195.19 Aiding or abetting use of unfair
trade practices.

195.20 Push money.

Group II

195.101 Products to be manufactured, re-
paired, renovated, and sold under
sanitary conditions.

CoMMITTEE ON TradE PRACTICES
195.201 Industry committee.

AvrTsHoriryr: The provisions of this Part 195
issued under secs. 6, 5, 88 Stat. 721, 710; 15
U.S.C. 26, 45, unless otherwise noted.

Source: The provisions of this Part 195 ap-

pear at 15 F.R. 7705, Nov. 14, 1950, unless
otherwise noted.

$195.0 Definition; bedding products.

As used in this part the term “bedding
products” shall embrace mattresses of all
kinds (including baby crib mattresses),
bed pads, bedsprings, box springs, metal
beds, metal cots, studio couches, sofa
beds, and similar sleeping equipment.

Group I

$195.1 Deception as to used materials
and parts.

(a) It is an unfair trade practice to
manufacture for sale, sell, offer for sale,
advertise, or otherwise represent, directly
or indirectly, any bedding product as
being new when such product is not in
fact new and is not composed wholly of
unused materials and parts,

(b) In the marketing of bedding prod-
ucts containing, in whole or in part, sec-
ond-hand materials or parts, it is an
unfair trade practice to fail or refuse to
make full and nondeceptive disclosure,

131