Canvas Cover Industry

16 CFR Part 199 · 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 These rules and guides are historical: most were rescinded or replaced, so do not assume any is in force.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 |l—Federal Trade Commission

nothing contained in this section shall pre-
vent a seller rebutting the prima facie case
thus made by showing that his lower price,
or the furnishing of services or facilities to
any purchaser or purchasers, was made in
good faith to meet an equaliy low price of
a competitor or the services or facilities fur-
nished by a competitor.

§ 198.18 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
customer-purchaser of industry prod-
ucts, bought from such member of the
industry for resale, by contracting to
furnish, or furnishing in connection
therewith, upon terms not accorded to
all competing customer-purchasers on
proportionally equal terms, the service
or facility whereby such favored pur-
chaser is accorded the privilege of re-
turning products so purchased and
receiving therefor credit or refund of
purchase price: Provided, however, That
nothing in any of the sections in this
part 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 falsely or deceptively represented,
or when and because such merchandise
is defective in material, workmanship,
or in any other respect is contrary to
warranty or purchase contract.

Group It
§ 198.101 Price lists.

(a) The industry approves the practice
of each individual member of the indus-
try independently publishing and cir-
culating to the purchasing trade his own
price lists.

(b) The industry approves the practice
of making the terms of sale a part of all
published price schedules.

§ 198.102 Repudiation of contracts.

Lawful contracts are business obliga-
tions which should be performed in Jetter
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.

§ 198.103 Maintenauce of accurate rec-
ords.

It is the judgment of the industry
that each member should independ-

ently keep proper and accurate records
for determining his costs.

1 See footnote to § 198.17.

$ 198.105

§ 198.104 Disputes,

The industry approves the practice
of handling business disputes between
Members of the industry and their
customers in a fair and reasonable
manner, coupled with a spirit of mod-
eration and good will, and every
effort should be made by the disputants
themselves to compose their differences.
If unable to do so they should, if possible,
submit these disputes to arbitration.
§ 198.105 Coercion in sales.

The use of buying power to force un-
economic or unjust terms of saie upon
sellers, and the use of selling power to
force uneconomic or unjust terms of
sale upon buyers, are condemned by the
industry.

PART 199—CANVAS COVER

INDUSTRY

Bec.

199.0 Definitions.

Grour I

199.1 Misrepresentation respecting ability
to resist fre and flame, water pas-
sage, and deterioration due to the
sun, weather, or mildew.

199.2 Disclosure as to sime of product and
kind and weight of fabric.

1993 Resort to harmful and excessive
stretching prohibited.

199.4 Misuse of term “custom-made” or
“custom-tallored.”

199.5 Use of terms “shrunk,” “preshrunk,”
etc.

199.6 Loading or adulterating industry
products.

199.7 Misrepresentation as to origin.

199.8 Deception as to being nsw.

199.9 Misrepresentation not specificaliy
prohibited above, .

199.10 Deceptive guarantees, warranties, atc.

199.11 Misrepresentation as to character of
business.

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

199.13 False invoicing.

199.14 Use of lottery sehomes,

199.15 Defamation of competitors or false
disparagement of their products.

199.16 Procurement of competitors’ confi-
dential information by unfair
means and wrongful use thereof.

199.17 Unfair threats of infringement suits.

199.18 Inducing breach of contract,

199.19 Commercial bribery.

199.20 Ooercing purchase of one product as
& prerequisite to purchase of other
products.

199.21 Gelling below cost.

199.22 Prohibited discrimination.

199.28 Discriminatory returns.

199.24 Aiding or ebetting use of unfair trade
practices.

147


§ 199.0

Grovr I
Sec.
199.101 Disclosure of manufacturer's iden-
tity.
Return of merchandise.
Repudiation of contracts.
Manner of disclosure of type of
canvas material.

AvurHorITY: The provisions of this Part 199
issued under secs. 6, 6. 38 Stat. 721, 719; 15
US.C, 46, 45, unless otherwise noted.

Sourcr: The provistons of this Part 199 ap-
pear at 16 F.R. 3362, Apr. 18, 1951, unless
otherwise noted.

§ 199.0 Definitions.

(a) “Canvas cover”: For the purpose of
this part the term “canvas cover’ as used
in this part shall mean a cover, made
wholly or principally of canvas material,
which is adapted for use as a portable or
stationary shelter or protection from the
sun, water, rain, weather, or other con-
dition, such as tarpaulins, truck covers,
flat covers, drop cloths, tents, canopies,
awnings, and similar articles.

(b) “Canvas material’: As used in this
part the words “canvas material” shall
be deemed to mean all kinds and types of
canvas, including, but not limited to, all
kinds of duck, drill, jean, twill, osnaburg,
sheeting, or any substitute fabric from
which a canvas cover may be made.

Group I

§ 199.1 Misrepresentation respecting
ability to resist fire and flame, water
Passage, and deterioration due to the
sun, weather, or mildew.'

(a) In general. In the sale, offering
for sale, or distribution of canvas covers,
it is an unfair trade practice to use any
mark, brand, tag, label, advertisement, or
other representation, which has the ca-
pacity and tendency or effect of mislead-
ing or deceiving purchasers, prospective
purchasers, or the public into the belief:

(1) That such covers have been
treated so as to be immune or resistant
to fire or flame when such is not the fact,
or into the belief that covers so treated
have a greater degree of resistance to
fire or flame, or will retain their fire or

199.102
199.103
199.104

18pecifiC guidance to industry members
respecting the use of words, terms, or repre-
sentatlons importing resistance to fire, water,
weather, and mildew as dsscriptive of can-
vas covers ts dependent upon formulation
of minimum standards and test methods
which will afford adequate consumer pro-
tection. When such have been established,
the Commission will give consideration to
amending this part by incorporating the
same.

Title 16-——Commercial Practices

flame-resistant properties for a longer
period of time, than is in fact true; or

(2) That such covers have been so
treated as to be impermeable or resist-
ant to water passage when such is not
the fact, or into the belief that treatod
covers have a greater degree of resist-
ance to water passage, or will retain
their resistance to water passage for a
longer period of time, than is in fact
true; or

(3) That such covers have been so
treated as to be immune or resistant to
deterioration due to exposure to the sun,
weather, or mildew when such is not the
fact, or into the belief that treated
covers have a greater degree of resist-
ance to such deterioration, or will re-
tain their resistance to such deteriora-
tion for a longer period of time, than is
in fact true.

(b) Misuse of the term “proof.” In
accordance with the provisions of para-
graph (a) of this section, the following
requirements respecting use of the term
“proof,” or similar representations, shall
apply:

(1) The term “fireproof,” “flame-
proof,” or any other word, term, or rep-
resentation of similar import, shall not
be used as descriptive of any canvas
cover unless such cover is incombustible
and will remain so throughout its ex-
pected life under normal use.

Nors: It is the consensus of the industry
that there is no commercial treatment for
canvas material which, when applied in
quantity and manner as to assure of an
optimum of efficiency, will render such fabric
incombustible for any substantial length of
time when exposed to direct flame.

(2) The term “waterproof,” or any
other word, term, or representation of
similar import, shall not be used as de-
scriptive of any canvas cover unless such
cover is impermeable to water and mols-
ture and will remain so throughout its
expected life under normal use. °

(3) The terms “weatherproof,” “sun-
proof,” “mildewproof,” or any words,
terms, or representations of similar im-
port, shall not be used as descriptive of
any canvas cover unless such cover is
immune to deterloration due to the
action of the weather, sun, or mildew,
respectively.

§ 199.2 Disclosure as to size of prodnct
and kind and weight of fabric.

(a) In connection with the offering for
sale, sale, or distribution of canvas
covers, it is an unfair trade practice to

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Chapter |—Federal

deceptively conceal the true size or di-
mension of such covers or the kind and
grey-goods weight of the fabric; or to
advertise, mark, brand, stamp, tag, label,
or otherwise represent or describe, any
canvas cover in a manner having the
capacity and tendency or effect of con-
fusing, misleading, or deceiving the pur-
chasing or consuming public as to the
size or any dimension of such canvas
covers, or as to the kind, grey-goods
weight, or other grade or quallty of the
fabric.

(b) To the end that confusion, mis-
understanding, deception, and unfair
competitive practices may be avoided
and prevented, canvas covers (other
than tents or awnings which are “cus-
tom-made” or “tailor-made” as defined
in § 199.4)* shall be properly marked so
that the size and dimensions, and the
kind and grey-goods weight of the fabric,
may be effectively disclosed to purchasers
and consumers in a manner which is
truthful, definite, unambiguous, and in
no way misleading or deceptive. The
following provisions for proper marking
shall be applicable for the purposes
stated in this section:

(ce) Disclosure of size of tarpaulins
and flat covers:

(1) Finished size. Each tarpaulin or
flat cover shall be so marked as to dis-
close plainly the actual size or dimen-
sions thereof at the time of completion
of manufacture. Such size shall be des-
ignated “finished size” and shall be ac-
companied by a statement clearly
indicating that such “finished size” is
the size at the time of completion of
manufacture and revealing the fact,
when such is the case, that the product
is subject to shrinkage due to varying
climatic conditions and possible retrac-
tion from tension applied in the course
of manufacture, as for example:

- Pinished size (size at time of completion
of manufacture) : 8 feet by 10 feet.

This product is subject to shrinkage due
to varying climatic conditions and possihle
retraction from tension applied in the course
of manufacture.

(2) Cut size. The term “cut size” as
used in this part shall mean the size or
dimensions of a canvas cover before the
making of its seams, hems, or reinforce-

2Tents or awnings whieh are “custom-
made” or “tailor-made” as defined in § 190.4
need not under these rules be marked as to
size, or as to the kind and weight of the
fabric, where no deception is practiced in
connection therewith.

Trade Cemmission $199.2
ment turn-overs. Nothing in this part
shall be construed as prohibiting truth-
ful disclosure of the cut size of a canvas
when such cut size is shown in conjunc-
tion with, and with no greater conspicu-
ousness than, any marking of the “fin-
ished size,” and when explanation ts
made of the meaning of “cut size.” Such
conjunctive marking of finished and cut
size shall be accompanied by a statement
clearly indicating that the product is
subject to shrinkage due to climatic con-
ditions and possible retraction from ten-
sion applled in the course of manufac-
ture. The following is an example of
proper size marking when cut size is
shown:

Finished size (size at time of completion
of manufacture): 8 feet by 10 feet.

Cut size (size before making seams, hems,
and reinforcement turn-overs: 8 feet 6 inches
by 10 feet 6 inches.

This product is subject to dus
to varying climatic conditions and possible
retraction from tension applied in the course
of manufacture.

(d) Disclosure of size of tents:

(1) (i) Each tent’* shall be so marked
as to disclose plainly the finished size at
the time of the completion of manufac-
ture. The ground or base dimensions
and the center height shall be given and,
where pertinent, the wall or eave di-
mensions. Other dimensions of the
tent may also be given, provided they
are given as finished dimensions at the
completion of manufacture thereof.

(ii) Where it is desired to show the
“cut size” in addition to the “finished
size,” the same shall be shown in con-
formity with paragraph (c) (2) of this
section.

(iii A qualifying statement shall also
accompany the size marking revealing
the fact, when such is the case, that the
product is subject to shrinkage due to
varying climatic conditions and possible
retraction from tension in accordance
with the applicable example following
paragraph (c) (1) or (2) of this section.

(e) Disclosure of size of awnings:

(1) In disclosing size or dimensions
of awnings, the width, drop and exten-
sion (exclusive of valance) shall be
stated in the finished size at the time of
completion of manufacture. The val-
ance, where given, shall be stated as an
additional item to the drop, as for
example:

Drop 86 inches, Valance 8 inches.

149


§ 199.3

Where it is desired to show the “cut size”
in addition to the “finished size,” the
same shall be shown in conformity with
paragraph (c) (2) of this section.

Norz: Nothing in this section shall be con-
strued as prohibiting nondeceptive repre-
sentation of an awning as having been made
to fit a certain size window or opening, pro-
vided such awning will satisfactorily and
fully fit such designated opening without the
necessity of any stretching, distortion, or
other material adaptation.

(f) Disclosure of kind and weight of
fabric:

(1) Each canvas cover® shall be so
marked as to disclose clearly and unam-
biguously the commercial type of fabric
(such as “Army duck,” “double filling
duck,” “drill,” “jean,” “osnaburg,” etc.)
and the original grey-goods weight of
the fabric. Such weight shall be shown
in ounces per square yard to the nearest
1/100 of an ounce subject to recognized
mill tolerance and tables of conversion
as shown in Commercial Standard
CS28-46 of the National Bureau of
Standards. (See also § 199.104.)

(2) No marking or sales description
referring to the loaded weight of the
fabric after treatment shall be used
which creates or tends to create confu-
sion or deception in the merchandising
of the products. Nothing in this section,
however, shall be construed as prohibit.
ing the marking or stamping of other
additional information on the canvas
cover, or on the tag or label affixed
thereto: Provided, That such additional
marking or stamping shall be in accord
with true facts and with all provisions of
this part: And provided further, That
the same shall in no way tend to con-
fuse or mislead with respect to the
above-mentioned required markings, or
otherwise.

(g) Type of marking to be used:

(1) The marking in the several re-
spects provided for in this section shall
be clearly and conspicuously set forth
either upon the canvas cover itself, or
upon a durable tag or labeling securely
sewed or attached to the canvas cover
in such manner as to carry through to
the ultimate consumer; and the infor-
mation to be disclosed shell be written
or printed with such permanency as to
remain legtble throughout the market-
ing of the product in the channels of
trade and delivery to the ultimate con-
sumer,

3See footnote 2 to § 199.2.

Title 16—Commercial Practices

§ 199.3 Resort to harmful and excessive
stretching prohibited.

The practice of unduly or excessively
stretching cloth in finishing, treating, or
processing operations reduces the quality
of the cloth and of the product made
therefrom and induces harmful and un-
desirable contraction, shrinkage, and
undersize after completion of manufac-
ture of the product; and it is an unfair
trade practice for any member of the in-
dustry to cause or promote any such
harmful and undue or excessive stretch-
ing or tension with respect to the canvas
material or canvas cover, either in his
own processing, manufacturing, or treat-
ing operations, or by any other process-
ing, manufacturing, or treating concern,
The limited ordinary and necessary ten-
sion which is required under good manu-
facturing, processing, and treating oper-
ations carefully applied shall not, under
this section, be construed as coming
within the term “undue or excessive
stretching” as herein used.

8199.4 Misuse of term “custom-made”
or “custom-tailored.”

In the sale, offering for sale, or dis-
tribution of canvas covers, it is an unfair
trade practice to use the term “custom-
made” or “custom-tailored,” or terms or
representations of similar import, as de-
scriptive of any canvas cover when the
same has not been cut and made pur-
suant to individual specifications for a
specific opening or specified place of use
by the ultimate consumer or purchaser
(as distinguished from a ready-made or
stock canvas cover).

8199.5 Use of terms “shrunk,” “pre-
2” etc,

In offering for sale, advertising, selling,
or distributing any canvas cover or can~
vas covers, it is an unfair trade practice
to use the terms “preshrunk,” “‘shrunk,”
“full shrunk,” “shrinkproof,” ‘“doubl
shrunk,” or any word, term, or phrase
of similar meaning, import, or scope,
as descriptive of any canvas cover, un-
less the same has in fact been pre-
shrunk to the extent that there re-
mains no residual shrinkage therein:
Provided, That nothing in this sec-
tion shall prohibit the use of the term
“shrunk” or “preshrunk” as descriptive
of canvas covers (though some residual
shrinkage remains therein) if the same
nave in fact been substantially pre-
shrunk and there is stated in conjunc-
tion with such terms. and with equal

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Chapter l—Federal Trade Commission

emphasis, conspicuousness, and display,
the percentage or maximum percentage
of residual shrinkage remaining therein.
The designations and provisions for the
proper disclosure of residual shrinkage
as specified in the trade practice rules
relating to “Shrinkage of Woven Cotton
Yard Goods,” promulgated by the Fed-
eral Trade Commission June 30, 1938,
shall be available to the members of
the industry for their use and guidance
in the application of this section.

§ 199.6 Loading or adulterating indus
try products.

The practice of adulterating or loading
industry products being deceptive and
harmful to purchasers and productive of
unfair methods of competition, it fs an
unfair trade practice to adulterate or
load any canvas cover or product of the
industry by adding or applying to the
fabric any substance or product which
does not contribute or perform a useful
service to the full extent applied, or by
any other means to adulterate or load
such canvas cover or product of the
industry.

§ 199.7 Misrepresentation as to origin.

In the sale, offering for sale, or dis-
tribution of canvas covers, it is an unfair
trade practice to use any marking, label-
ing, advertising, or other representation
which has the capacity and tendency or
effect of misleading or deceiving pur-
chasers or prospective purchasers:

(a) Into the belief that such canvas
covers, or any part thereof, were made
or manufactured in the United States
when such is not the fact; or

(b) Into the belief that such canvas
covers, or any part thereof, were made
or manufactured in a foreign country
when such is not the fact; or

(ec) Into any other erroneous belief as
to origin of the product or any part
thereof.

Nors: Products of foreign manufacture
when imported into the United States are
required to be marked as showing the coun-
try of origin under provisions of U. 8. C. A.
Title 19, Beco. 1804, and nothing in §§ 199.1
to 199.24 shall be construed as relieving any-
one from such requirements.

§ 199.8 Deceptien as to being new.

(a) It isan unfair trade practice to sell,
offer for sale, or distribute canvas covers
under circumstances or conditions which
have the capacity and tendency or effect
of misleading or deceiving the purchas-
ing or consuming public into the erro-
neous belief that such canvas covers are

90-059—-77———-11

$199.9

new and unused when in truth and in
fact they are used, rebuilt, or second-
hand, in whole or in part.

(b) It is also an unfair trade practice
to fail or refuse to make full and non-
deceptive disclosure of, and thereby to
deceptively conceal, the fact that any
canvas cover, or any part thereof, so
offered for sale or sold or distributed,
has been used, or has been rebuilt, or fs
second-hand, or is composed of used or
reprocessed material, in whole or in part.

§ 199.9 Misrepresentation not specifi-
eally prohibited above.

(a) It is an unfair trade practice to
sell, offer for sale, or distribute any can-
vas cover, part thereof, or other prod-
ucts of the industry, under any represen-
tation, circumstance, or condition having
the capacity and tendency or effect of
misleading or deceiving purchasers or
prospective purchasers thereof in respect
to the grade, quality, type, composition,
treatment, durability, performance, size,
weight, strength, construction, or origin
of any such canvas cover part, or other
product of the industry, or in respect to
the manufacture, processing, or distribu-
tion thereof, or in a manner which ts
false, misleading, or deceptive in any
other material respect.

(b) Under this section it ts an unfair
trade practice to misrepresent:

(1) The immunity or degree of resist-
ance, durability, or efficiency of a canvas
cover with respect to mildew, water, sun,
heat, combustion, cold, ice, or other
weather conditions; or

(2) The breaking strength of the warp
or filling of the canvas material of a
canvas cover; or

(3) The composition or type of treat-
ing material applied to or on the canvas
material of a treated canvas cover; or

(4) The method or manner of the
application of treating materials to or
on the canvas material of a treated
canvas cover; or

(5) The method or process used in
effecting the coloring of the canvas ma-
terial of a canvas cover; or

(6) The colorfastness properties or
qualities of any colored canvas material
of a canvas cover; or

(7) The fire or flame-resistant prop-
erties or treatment of the cover or
fabrics; or

(8) The amount or type of stitching
or sewing in effecting seams, hems, or
reinforcements of any canvas cover; or

151


§ 199.10

(9) The kind, size, strength, or rot-
resistance of thread or twine used in the
sewing or stitching of any canvas cover;

or
(10) The thread count or welght of
the canvas fabric or any canvas cover;

or

(11) The size, kind, or type of rein-
forcements for placement of grommets
or eyelets in or upon any canvas cover;

or

(12) The number and the size, type,
composition, or strength, of grommets,
eyelets, rods, pipes, pulleys, frames, roll-
ers, stakes, poles, or other hardware used
on or in connection with a canvas cover;
or

(13) The immunity or degree of re-
sistance of grommets, eyelets, rods,
pipes, pulleys, frames, stakes, poles,
arms, rollers, gears, gear housings, or
other hardware of any canvas cover
respecting rust, corrosion, rot, or other
deterioration; or

(14) The immunity or degree of re-
sistance of the ropes of a canvas cover
to rot or mildew deterioration; or

(15) The number, and the size, kind,
composition, or strength, of any rope or
ropes of & canvas cover; or

(16) In any manner to misrepresent,
dlrectly or indirectly, any canvas cover,

canvas material, or treatment thereof. —

§ 199.10 Deceptive guarantees, warran-
ties, etc.

(a) It is an unfair trade practice to
use, or cause to be used, a guarantee
which is false, misleading, deceptive, or
unfair to the purchasing or consuming
public.

(b) Under this section guarantees of
the following type or character shall not
be used:

(1) Guarantees containing  state-
ments, representations, or assertions
which have the capacity and tendency
or effect of misleading or deceiving in
any respect; or

(2) Guarantees which are so used, or
are of such form, text, or character, as
to import, imply, or represent that the
guarantee is broader than is in fact true;
or

(3) Guarantees in which any condi-
tion, qualificatlon, or contingency ap-
plied by the guarantor thereto is not
fully and nondeceptively stated therein,
or is stated in such manner or form as
to be deceptively minimized, obscured,
or concealed, wholly or in part; or

(4) Guarantees which are stated,
phrased, or set forth in such manner

Title 16—Commercial Practices

that although the statements contained
therein are literally and technically true,
the whole is misleading in that pur-
chasers or users are not made sufficiently
aware of certain contingencles or condi-
tions applicable to such guarantee which
materially lessen the value or protection
thereof as a guarantee to purchasers or
users; or

(5) Guarantees which purportedly
extend for such an indefinite or unlim-
ited period of time or for such long pe-
riod of years as to have the capacity
and tendency or effect of thereby mis-
leading or deceiving purchasers or users
into the belief that the product has or
is definitely known to have a greater
degree of serviceability or durability in
actual use than is in fact true; or

(6) Guarantees which have the ca-
pacity and tendency or effect of other-
wise misrepresenting the serviceability,
durability, or lastlng quallties of the
product, such as, for example, a guar-
antee extending for a certain number
of years or other long period of time
when the ability of the product to last,
endure, or remain serviceable for such
period of time has not been established
by actual experience or by competent
and adequate tests definitely showlng in
either case that the product has such
lasting quallties under the conditions
encountered or to be encountered in the
respective locallty where the product is
sold and used under the guarantee: or

(7) Purported guarantees in the form
of documents, promises, representations,
or other form which are represented or
held out to be guarantees when such
is not the fact, or when they involve any
deceptive or misleading use of the word
“Guarantee” or terms of similar im-
port; or

(8) Guarantees issued, or directly or
indirectly caused to be used, by any
member of the industry when or under
which the guarantor fails or refuses to
scrupulously observe his obligation
thereunder or fails or refuses to make
good on claims coming reasonably within
the terms of the guarantee: or

(9) Guarantees which in themselves
or in the manner of their use are other-
wise false, misleading, or deceptive.

(c) This section shall be applicable
not only to guarantees but also to war-
ranties, to purported warranties and
guarantees, and to any promise or rep-
resentation in the nature of or purport-
ing to be a guarantee or warranty.

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Chapter |—Federal

§ 199.11 Misrepresentation as to charac-
ter of business.

It is an unfair trade practice for any
person, firm, or corporation to repre-
sent, directly or indirectly, that he or it
is a canvas cover manufacturer, or that
he or it owns or controls a factory en-
gaged in the manufacture of canvas
covers, when such is not the fact; or in
any other manner to misrepresent the
character, extent, or type of his or its
business.

§ 199.12 Imitation or simulation of
trade-marks, trade names, etc.

The imitation or simulation of the
trade-marks, trade names, brands, or
labels of competitors, with the capacity
and tendency or effect of misleading or
deceiving the purchasing or consuming
public, is an unfair trade practice.

$199.13 False mvoicing.

Withholding from or inserting in an
invoice or billing any statement or infor-
mation by reason of which omission or
insertion a false record is made, wholly
or in part, of the transaction which such
invoice or billing purports to represent,
with the effect of thereby misleading or
deceiving the purehasing or consuming
public, is an unfair trade practice.

§ 199.14 Use of lottery schemes.

The offering or giving of prizes, pre-
miums, or gifts in connection with the
sale of industry products, or as an in-
ducement thereto, by any method which
involves lottery or scheme of chance, is
an unfair trade practice.

§ 199.15 Defamation of competitors or
false disparagement of their prod-

ucts.

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 quality, grade, origin,
use, construction, design, performance,
properties, manufacture, or distribution
of the products of competitors, or of their
business methods, selling prices, values,
credit terms, policies, or services, is an
unfair trade practice.

§ 199.16 Procurement of competitors’
confidential information by unfair
means and wrongful use thereof.

It is an unfair trade practice for any
member of the industry to obtain infor-
mation concerning the business of a
competitor by bribery of an employee or

Trade Commission $199.20

agent of such competitor, by false or mis-
leading statements or representations, by
the impersonation of one in authority, or
by any other unfair means, and to use
the information so obtained in such man-~
ner as to injure said competitor in his
business or to suppress competition or
unreasonably restrain trade.

$199.17 Unfair threats of infringement
suits,

The circulation of threats of suits for
infringement of patents or trade-marks
among customers or prospective custom-
ers 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, injuring,
or prejudicing competitors in their busi-
ness, is an unfair trade practice.

§ 199.18 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
witb 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.

§ 199.19 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
of value to agents, employees, or repre-
sentatives of customers or prospective
customers, or to agents, employees, or
representatives of competitors’ customers
or prospective customers, without the
knowledge of their employers or prin-
cipals, as an inducement to influence
their employers or principals to pur-
chase or contract to purchase products
manufactured or sold by such industry
member or the maker of such gift or
offer, or to influence such employers or
principals to refrain from dealing in the
products of competitors or from dealing
or contracting to deal with competitors.

§ 199.20 Coercing purchase of one prod-
uct as 4 prerequisite to 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, tend to

153


§ 199.21

create a monopoly, or to unreasonably
restrain trade, is an unfair trade practice.

§ 199.21 Selling below cost.

The practice of selling products of the
industry 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 pro-
duction 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.

§ 199.22 Prohibited discrimination.*

(a) Prohibited discriminatory prices,
or rebates, refunds, discounts, credits,
etc., which effect unlawful price discrimi-
nation. In the marketing in commerce
of products of the industry of like grade
and quality for use, consumption, or
resale within the jurisdiction of the
United States, and subject to subpara-
graphs (1), (2), (3), and (4) of this
paragraph, it is an unfair trade practice
for any member of the industry engaged
therein to discriminate in price between
different purchasers where the effect
thereof may be substantially to lessen
competition or tend to create a monopoly
in any line of commerce, or to injure,
destroy, or prevent competition with such
industry member or with any person who
knowingly receives the benefit of such
discrimination or with their customers.

(1) The inhibitions against such dis- .

crimination in price shall be applicable
irrespective of whether the discrimina-
tion in the price itself is effected in the
form, or through the means, of rebates,
refunds, discounts, credits, allowances, or
other form of price differential.

(2) Nothing, however, contained in
this paragraph shall prevent differen-
tlals which make only due allowance for
differences in the cost of manufacture,

* As used throughout this section, the word
“commerce” means “trade or commerce
among the several States and with foretgn
nations, or between the District of Columbia
or any Territory of the United States and
any State, Territory, or foreign nation, or
between any tnsular 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 foretgn nation, or within the District
of Columbta or any Territory or any insular
possession or other place under the Jjuris-
diction of the United States.”

Title 16—Commercial Practices

sale, or delivery resulting from the dif-
fering methods or quantities in which
the products are sold or delivered to said
purchasers.

(3) 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

e.

(4) Nor shall anything contained in
this paragraph prevent price changes
from time to time where made in re-
sponse to changing conditions affecting
the market for or the marketability of
the products 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 products
concerned,

(b) Prohibited brokerage or commis-
sions. In the selling of industry prod-
ucts in commerce, it is an unfair trade
practice for any member of the industry
engaged therein to pay or grant, or to
receive or accept, any commission, bro-
kerage, or other compensation, or any
allowance or discount in leu thereof, ex-
cept for services rendered in connection
with the sale or purchase of such prod-
ucts, either to the other party to such
transaction or to an agent, representa-
tive, or other intermediary therein,
where such agent, representative, or
other 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 coinpensation is so granted
or pald.

(ce) Prohibited advertising or promo-
tional allowances, etc. In the selling of
industry products in commerce by any
member of the industry, and in the
course thereof, it is an unfair trade prac-
tice for such member to pay or contract
for the payment of anything of value to
or for the benefit of his customer as
compensation or in consideration for
certain services or facilities furnished
by or through such customer, unless
such payment or consideration is avail-
able on proportionally equal terms to
all other customers of such member
competing in the distribution of such
products.

(1) As used in this paragraph, the cer-
tain services or facilities referred to are
such as are furnished by or through the

154


Chapter |!—Federa!l Trade Commission

customer in connection with the process-
ing, handling, sale, or offering for sale,
of such industry member’s products.

(a) Prohibited discrimination in serv-
ices or facilities. In the sale of indus-
try products bought for resale, with or
without processing, it is an unfair trade
practice for any member of the industry
engaged in commerce to discriminate
in favor of one purchaser against an-
other purchaser by furnishing certain
services or facilities upon terms not ac-
corded to all competing purchasers on
proportionally equal terms.

(1) Said services or facilities referred
to in this paragraph are such as are
connected with the processing, handling,
sale, or offering for sale, of the products
purchased, and the term “furnishing”
as used in this paragraph shall be con-
strued as including contracting to fur-
nish, 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
industry, in the course of commerce
in which he is engaged, 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 thelr own use by
schools, colleges, universities, public
libraries, churches, hospitais, and chari-
table institutions not operated for
profit.

Nore: In complaint proceedings charging
discrimination in price or services or facili-
ties furnished, and upon proof having been
made of such discrimination, the burden of
rebutting the prima facie case thus made
by showing justification shall be upon the
person charged; and unless justification shall
be affirmatively shown, the Commission is
authorized to issue an order terminating the
discrimination: Provided, however, That
nothing herein contained shall prevent a
seller rebutting the prima facie case thus
made by showing that his lower price or the
furnishing of services or facilities to any pur-
chaser or purchasers was made in good faith
to meet an equally low price of a competitor
or the services or facilities furnished by a
competitor. (See seo. 2 (b), Clayton Act.)
3199.23 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
customer-purchaser of industry prod-

See footnote to § 199.22.

§ 199.102

ucts, bought from such member of the
industry for resale, by contracting to
furnish, or furnishing in connection
therewith, upon terms not accorded to
all competing customer-purchasers on
proportionally equal terms, the service
or facility whereby such favored pur-
chaser is accorded the privilege of re-
turning industry products so purchased
and receiving therefor credit or refund
of purchase price: Provided however,
That nothing in any of the sections in
Group I shall prohibit or be used to
prevent the return of merchandise by
purchaser, for credit or refund of pur-
chase price, when and because such mer-
chandise has not been properly labeled
by the seller in accordance with these
rules, or has been otherwise falsely or
deceptively labeled or represented, or
when and because such merchandise is
defective in material, workmanship, or
in any other respect is contrary to war-
ranty or purchase contract.

8199.24 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 in-
directly, to use or promote the use of any
unfair trade practice specified in these
rules or any other unfair method of com-
petition or unfair or deceptive act or
practice.

Group IT

§ 199.101 Disclosure of manufacturer’s
identity.

In order to avoid and prevent decep-
tion as to the identity of manufacturers
of canvas covers and to aid in fixing re-
sponsibility for misrepresentation and
deceptive concealment of the true facts
concerning such canvas covers, it is the
judgment of the industry that every
manufacturer should indelibly and legi-
bly stamp or mark on the canvas covers
made by it, or on a durable tag or label
securely attached to such canvas covers,
the name or mark of identification of
such manufacturer.

8 199.102 Return of merchandise.

The practice, by members of the indus-
try, of selling merchandise and later per-
mitting the purchaser to return it for
credit or refund of purchase price, with-
out just cause, creates waste and loss,
increases the cost of doing business,
operates both to the detriment of the
industry and the public, and is con-
demned by the industry.

155


§ 199.103

§ 199.103 Repndiation of contracts.

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

§ 199.104 Manner of disclosure of type
of canvas material.

It is the recommendation of the indus-
try that denomination of the type of
canvas material of which a canvas cover
is made be in accord with the nomencla-
ture and definitions contained in Com-
mercial Standard CS28-46 (Cotton
Fabric Tents, Tarpaulins, and Covers) of
the National Bureau of Standards.

PART 201—SEAM BINDING

INDUSTRY
Sec.
201.0 Definition of “seam binding.”
Group I
201.1  Misrepresentation and misbranding.
201.2 Identification and disclosure of fiber
or material content.
201.8 Disclosure of yardage.
201.4 Deception respecting type of edge.
201.5 Deception as to origin.
201.6 Selling below cost.
201.7 False invoicing.
201.8 Consignment distribution.
201.9 Combination or coercion to fix prices,

suppress competition, or restrain
trade.

201.10 Prohibited discrimination.

201.11 Aiding or abetting use of unfair
trade practices.

AurHogrtry: The provisions of this Part 201
issued under secs. 6, 5, 88 Stat. 721, 719; 16
U.S.C. 46, 45, unless otherwise noted.

Source: The provisions of this Part 201 ap-
pear at 16 F.R. 6367, June 30, 1951, unless
otherwise noted.

§ 201.0 Definition of “seam binding.”

As used in this part, the term “seam
binding’ shall be understood as embrac-
ing any narrow fabric (other than bias
binding) having a woven, cut, or other
kind of edge, and which is of the type
used in the manufacture of wearing ap-
parel to prevent ravelling or fraying at
seams and hems.

Group I
§ 201.1 Misrepresentation and mis-
branding.

It is an unfair trade practice for any
member of the industry to use, or cause
or promote the use of, any trade promo-

Title 16—Commercial Practices

tional literature, advertisement matter,
guarantee, mark, brand, label, desig-
nation, or other form of representation,
however disseminated or published,
which has the capacity and tendency or
effect of misleading or deceiving pur-
chasers or prospective purchasers with
respect to the grade, quality, freedom
from imperfections, color fastness, wasb-
ability, fiber or material content, yard-
age, size, origin, fabrication, type of
edge, manufacture, finishing, or distribu-
tion of any seam binding, or which is
false, misleading, or deceptive in any
other material respect.

§ 201.2 Identification and disclosure of
fiber or material content.

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

(b) Seam binding containing rayon,
silk, or linen shall be identified as to its
fiber and material content in labels, in-
voices, and advertisements, in accord-
ance with the requirements of trade
practice rules heretofore promulgated by
the Commission for the rayon industry,
silk industry, and linen industry: Pro-
vided, That seam binding containing,
purporting to contam, or in any way
represented as containing wool, re-
processed 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.

Note: A copy of the above-mentioned trade
practice rules, and of the Wool Products
Labeling Act of 1939 and the rules and reg-
ulations Issued thereunder, may be obtained
from the Commission by any industry mem-
ber making request therefor.

§ 201.3 Disclosure of yardage.

In order that purchasers may not be
deceived as to the yardage of seam bind-
ing and that misrepresentation and de-
ceptive concealment in respect thereto
may be avoided and prevented, the mini-
mum yardage of the article should be
clearly and nondeceptively marked on
the product or on the disks, spools, bolts,
cards, or other form of immediate pack-
aging of the product; and the sale, offer
for sale, or distribution of any seam bind-
ing not so marked, with the tendency and
capacity or effect of misleading or de-
ceiving purchasers or the consuming
public, is an unfair trade practice.

156