Grocery Industry
16 CFR Part 73 / 209 · Trade practice rules · in the Code of Federal Regulations 1938-1978 (17 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 These rules and guides are historical: most were rescinded or replaced, so do not assume any is in force.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, 1978 CFR · Earliest edition: 1938 CFR
Text (1978 edition, OCR)
§ 205.103 agree upon or to fix, specify, or deter- mine the prices, discounts, terms, or conditions of sale to be covered in any sales contract or transaction, but these shall be open to individual negotiation between the seller and buyer, subject to the requirements of §8§205.1 to 205.16 of this part and applicable pro- visions of iaw. § 205.103 Use of samples. (a) The industry disapproves the giving of samples without charge in greater quantity than is actually nec- essary to acquaint purchasers or pro- spective purchasers with the grade or quality of the product offered for sale. However, the furnishing of any sam- ples shall not be carried out in a manner involving discrimination pro- hibited by the provisions of § 205.15 of this part. (b) The industry interpretation of “actually necessary” quantities as above is: “A reference sample of each item not exceeding one 27” x 27” square or one full repeat of pattern, with one color line not to exceed 6” x 9”.”" § 205.104 Arbitration of disputes. The industry approves and recom- mends the use of commercial arbitra- tion for the speedy and efficient dispo- sition of disputes arising out of the sale, processing, and distribution of the industry’s fabrics. PART 209—GROCERY INDUSTRY Sec. 209.0 Definitions. Grovpr I SUBGROUP A Statutory basis of §§ 209.3 to 209.8. Definition of ‘““cemmerce.” 209.3 Prohibited discrimination in price. 209.4 Prohibited brokerage and commis- sions, etc. 209.5 Prohibited discrimination in advertis- ing or promotional allowances. 209.6 Prohibited discrimination in services or facilities. 209.7 Prohibited inducing or receiving dis- crimination in price. 209.8 Exemptions from §§ 209.3 to 209.7. SUBGROUP R 209.9 Statutory basis of §§ 209.11 to 209.25. 209.10 Definition of “purchasing public.” 209.1 209.2 Title 16—Commercial Practices Sec. 209.11 Prohibited wrongful selling below cost. 209.12 False use of the term “bargain” pro- hibited. 209.13 Prohibited use of fictitious price. 209.14 Prohibited use of any false or mis- ieading term of sale. 209.15 Prohibited use of any false or mis- leading invoice, etc. 209.16 Prohibited misrepresentation of available product supply. 209.17 Prohibited use of any misleading or deceptive selling method. 209.18 Prohibited misrepresentation in general. 209.19 Prohibited defamation of competi- to: r. 209.20 Prohibited enticing of competitor's employee. 209.21 Prohibited substitution of competi- tor’s product. 209.22 Prohibited interference with com- petitor’s contract. 209.23 Prohibited coercion of purchase. 209.24 Prohibited use of lottery scheme. 209.25 Prohibited forms of trade restraints (unlawful price fixing, etc.) SUBGROUP C 209.26 Prohibited use of unfair exclusive deals. SUBGROUP D 209.27 Prohibited aiding or abetting use of unfair trade practices. COMMITTEE ON TRADE PRACTICES 209.201 Industry committee. Avrnorrry: Secs. 6, 5, 38 Stat. 721, 719; 15 U.S.C. 46, 45, unless otherwise noted. Source: 17 FR 2357, Mar. 19, 1952, unless otherwise noted. Note: FTC Order, File No. 21-452, 21 FR 265, Jan. 13, 1956, provides in part that Part 22, Frozen Food Industry, of this sub- chapter, supersedes Part 209 with respect to persons, firms, corporations, and organiza- tions engaged in the production and/or marketing of vegetables, fruits, julces, fish and shellfish, baked goods, and other mis- cellaneous prepared foods, which are packed, marketed, and delivered to the ulti- mate consumer in a frozen state. (Not in- cluded as products of the frozen food indus- try are meats and poultry, and frozen dairy products including ice cream and sherbets.) $209.0 Definitions. The term “member of the industry,” as used in this part, means any person engaged in the business of marketing one or more products to or in the gro- 86 Chopter I—Federal Trade Commission cery trade. The term “person,” as thus used, means any individual, partner- ship, corporation, association, or other organization. Grovr I SUBGROUP A § 209.1 Statutory basis of §§ 209.3 to 209.8. Sections 209.3 to 209.8 of this part contain rules which repeat the statu- tory language in section 2 (a) and (c) to (f) of the Clayton Act, as amended by the Robinson-Patman Act and oth- erwise. This law is qualified by the fol- lowing mect-competion provisions in section 2(b) of the Clayton Act: Upon proof being made, at any hearing on a complaint under this section, that there has been discrimination in price or services or facilities furnished, the burden of rebut- ting the prima-facie case thus made by showing justification shall be upon the person charged with a violation of this sec- tion, and unless justification shall be affir- matively shown, the Commission is autho- rized to issue an order terminating the dis- crimination: Provided, however, That noth- ing herein centained shall prevent a seller rebutting the prima-facie case thus made by showing that his lower price or the furnish- ing of services or facilities to any purchaser 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. § 209.2 Definition cf “commerce.” The term “commerce,” as used in 8§ 209.3 to 209.8 of this part, is te be construed as it is defined in section 1 of the Clayton Act. This definition is as follows: “Commerce” * * * means trade or com- merce among the several States and with foreign nations, or between the District of Columbla 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 posses- sion or place and any State or Territery of the United States or the District of Colum- bia or any foreign nation, or within the Dis- trict of Columbla or any Territory or any in- sular possession or other place under the ju- risdiction of the United States: Provided, That nothing in this Act contained shall apply to the Phillippine Islands. 87 30-035 O- 78-7 § 209.3 § 209.3 Prohihited discrimination in price. It is an unfair trade practice for any member of the industry engaged in commerce, in the course of such com- merce, either directly or indirectly, to discriminate in price betwcen different purchasers of commodities of like grade and quality, whether either or any of the purchases involved in such discrimination are in commerce, where such commodities are sold for use, con- sumption, or resale within the United States or any Territory thereof or the District of Columbia or any insular possession or other place under the ju- risdiction of the United States, and where the effect of such discrimina- tion may be substantially to lessen competition or tend to create a mo- nopoly in any line of commerce; or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them: Provided, That noth- ing contained in this section shall pre- vent: (a) Differentials which make oniy due aliowance for differences in the cost of manufacture, sale, or delivery resulting from the differing methods or quantities‘ in which such commod- ities are to such purchasers soid or de- livered; or (b) Price changes from time to time where in response to changing condi- tions affecting the market for or the marketability of the goods concerned, such as but not limited to actual or im- minent deterioration of perishable goods, obsolescence of seasonal goods, distress sales under court process, or ‘This exemption of quantity price differ- entials is further qualifled by the following additional provisions in amended section 2 (a) of the Clayton Act: «“e ¢ © the Federal Trade Commission may, after due investigation and hearing to all in- terested partles, fix and establish quantity limits, and revise the same as it finds neces- sary, as to particular commoditles or classes of commodities, where It finds that avail- able purchasers in greater quantities are so few as to render differentials on account thereof unjustly discriminatory or promo- tive of monopoly in any line of commerce; and the foregoing shall then not be con- strued to permit differentials based on dif- ferences in quantities greater than those so fixed and established * * *”’. § 209.4 sales in good faith in discontinuance of business in the goods concerned; or (c) Persons engaged in selling goods, wares, or merchandise in commerce from seiecting their own customers in bona fide transactions and not in re- straint of trade. § 209.4 Prohibited brokerage and commis- sions, etc. 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 compensa- . tion, or any allowance or discount in lieu thereof, except for services ren- dered in connection with the sale or purchase of goods, wares, or merchan- dise, either to the other party to such transaction or to an agent, representa- tive, or other intermediary therein where such intermediary 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 compensa- tion is so granted or paid. § 209.5 Prohibited discrimination in ad- vertising or promotional allowances. 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 contract for the pay- ment of anything of value to or for the benefit of & customer of -such person as compensation or in consider- ation for any services or facilities fur- nished by or through such customer in connection with the processing, han- dling, sale, or offering for sale of any products or commodities manufac- tured, sold, or offered for sale by such person, uniess such payment or consid- eration is avallable on proportionally equai terms to all other customers competing in the distribution of such products or commodities. § 209.6 Prohibited discrimination in ser- vices or facilities. It is an unfair trade practice for any member of the industry engaged in commerce, in the course of such com- merce, to discriminate in favor of one purchaser against another purchaser or purchasers of a commodity bought Titie 16—Commerciai Practices for resale, with or without processing, by contracting to furnish or furnish- ing, or by contributing to the furnish- ing of, any services or facilities con- nected with the processing, handling, sale, or offering for sale of such com- modity so purchased upon terms not accorded to all competing purchasers on proportionally equai terms. § 209.7 Prohibited inducing or receiving discrimination in price. It is an unfair trade practice for any member of the industry engaged in commerce, in the course of such com- merce, knowingly to induce or receive a discrimination in price which is pro- hibited by §§ 209.3 to 209.8 of this part. § 209.8 Exemptions from §§ 209.3 to 209.7. Nothing in §§ 209.3 to 209.7 of this part: (a) Shall prevent a cooperative asso- ciation from returning to its members, producers, or consumers the whole, or any part of, the net earnings or sur- plus resulting from its trading oper- ations, in proportion to their pur- chases or sales from, to, or through the association, ? or (b) Shall apply to purchases of their supplies for their own use by schoois, colieges, universities, public libraries, churches, hospitals, and charitable in- stitutions not operated for profit.* SUBGROUP B § 209.9 Statutory basis of §§ 209.11 to 209.25. Sections 209.11 to 209.25 of this part contain rules based on sections 5 and 12 of the Federal Trade Commission Act. Said section 5 prohibits the use of all unfair methods of competition and of all unfair or deceptive acts or prac- tices in commerce, and sald section 12- a (1) prohibits the dissemination of “any false advertisement by United States mails, or in commerce by any means, for the purpose of inducing, or which is likely to induce, directly or indirectly the purchase of food, drugs, *Paragraph (a) repeats the statutory lan- guage in section 4 of the Robinson-Patman ct. *Paragraph (b) repeats the statutory lan- guage in an amendment to the Robinson- Patman Act. ' 88 Chapter I—Federal Trade Commission devices, or cosmetics.” As used in said sections 5 and 12, the term “com- merce” is to be construed as it is de- fined in section 4 of the Federal Trade Commission Act. This definition reads as follows: “Commerce” means commerce among the several States or with foreign nations, or in any Territory of the United States or in the District of Coiumbia, or between any such Territory and another, or between any such Territory and any State or foreign nation, or between the District of Columbia and any State or Territory or foreign nation. § 209.10 Definition of “purchasing public.” The term “purchasing public,” as used in 8§ 209.11 to 209.25 of this part, means actual and prospective trade or consumer purchasers, as the case may be. § 209.11 Prohihited wrongful selling below cost. (a) It is an unfair trade practice for any member of the industry to adver- tise, offer, or sell a product 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. As used in this sec- tion, the term “cost’’ means the total cost to the seller, including the costs of acquisition, processing, preparation for marketing, sale, and delivery. (b) This section is not to be con- strued as prohibiting all sales below cost, but only such selling below the selier’s cost as is resorted to and pur- sued as a monopolistic practice with the wrongful intent referred to and where the effect may be unreasonably to restrain trade, tend to create a mo- nopoly, or substantially lessen compe- tition. § 209.12 False use of the term “bargain” prohihited. It is an unfair trade practice for any member of the industry to falsely rep- resent in the advertisement, offer, or saie of a product, either expressly or impliedly, that the price at which such product is sold is a bargain price or an otherwise reduced price. 89 § 209.18 § 209.13 Prohihited use of fietitious price. It is an unfair trade practice for any member of the industry to advertise, offer, or sell a product (a) at a price purported to be reduced from what is in fact a fictitious price, or (b) at a purported reduction in price which is in fact a fictitious one. § 209.14 Prohibited use of any false or misieading term of sale. It is an unfair trade practice for any member of the industry to quote or disseminate any price or any other term (including condition) of sale which is false, or which otherwise has the capacity and tendency or effect of misleading or deceiving the purchas- ing public. § 209.15 Prohibited use of any false or misleading invoice, ete. It is an unfair trade practice for any member of the industry, in connection with the sale or purchase of a product, (a) to make an invoice a false record of a sale by adding or omitting any state- ment with respect to it, or (b) to falsi- fy a purchase record by any manipula- tion of it, or (c) to use an invoice or purchase record which otherwise has the capacity and tendency or effect of misleading or decciving the purchas- ing public. § 209.16 Prohibited misrepresentation of available product supply. In connection with the advertise- ment, sale, offering for sale, or distri- bution of products, it is an unfair trade practice for any member of the industry, either expressiy or implledly, to misrepresent the available supply of a product. § 209.17 Prohibited use of any misleading or deceptive selling method. It is an unfair trade practice for any member of the industry to use any method of selling a product which has the capacity and tendency or effect of misleading or deceiving the purchas- ing public in any material respect. § 209.18 Prohibited misrepresentation in general. It is an unfair trade practice for any member of the industry, either direct- § 209.19 ly or indirectiy, to make any misrepre- sentation in the advertisement, offer, or sale of a product (a) about its pro- duction or distribution, or (b) about its identity, nature, character, composi- tion, grade, quality, quantity, size, use, or value, or (c) in any other material respect. § 209.19 Prohibited defamation of com- petitor. It is an unfair trade practice for any member of the industry to defame a competitor, or to disparage his prod- uct, his business or its conduct, by any false or otherwise unfair representa- tion. § 209.20 Probibited enticing of competi- tor’s employee. It is an unfair trade practice for any member of the industry to entice away any employee of a competitor with the purpose and tendency or effect of un- fairly injuring him: Provided, That nothing in this section shall be con- strued as prohibiting employees or agents from seeking or obtaining more favorable employment. § 209.21 Prohibited substitution of com- petitor’s product. It is an unfair trade practice to ship or dellver products which do not con- form to samples submitted, to specifi- cations upon which the sale is consum- mated, or to representations made prior to securing the order, without advising the purchasers as to such sub- stitution and obtaining consent there- to at or before the time of shipment or dellvery, and with the capacity and tendency or effect of misleading or de- celving the purchasing or consuming public. § 209.22 Prohibited interference with com- petitor’s contract. (a) It is an unfair trade practice for any member of the industry (1) to induce the breach of a competitor's lawful purchase, sale, or other busi- ness contract, or (2) to interfere with or obstruct the performance of such a contract by a competitor, where either of such practices has the capacity and tendency or effect of substantially in- juring or lessening present or poten- tial competition. 90 Title 16—Commercial Practices (b) Nothing in this section is intend- ed to imply that it is improper for any member of the industry to solicit the business of a customer of a competing member of the industry; nor is the sec- tion to be construed as in anywise au- thorizing any agreement, understand- ing or planned common course of action by two or more members of the industry not to solicit business from the customers of either or any of them, or from customers of any other member of the industry. § 209.23 Prohibited coercion of purchase. It is an unfair trade practice for any member of the industry to require by coercion, or by any other means, the purchase of one or more products as a condition to the purchase of one or more other products, where the effect may be substantially to lessen compe- tition, unreasonably restrain trade, or tend to create a monopoly. § 209.24 Prohibited use of lottery scheme. It is an unfair trade practice for any member of the industry to sell or pro- mote the sale of products by means of a game of chance, gift enterprise, or other lottery scheme, or to sell or dis- tribute any punchboards, push cards, or other lottery devices which are to be used, or may be used, in the sale or distribution of merchandise to the public by means of a game of chance, gift enterprise, or other lottery scheme. § 209.25 Prohibited forms of trade_re- straints (unlawful price fixing, etc.). It is an unfair trade practice for any member of the industry, either direct- ly or indirectly— (a) To engage in any planned common course of action, or to enter into or take part in any understand- ing, agreement, combination, or con- spiracy with one or more members of the industry or with any other person or persons, unlawfully to fix, main- tain, or enhance the price of any goods, or otherwise unlawfully to re- strain trade; or (b) 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 Chapter |—Federal Trade Commissian action, or to become a party to any such understanding, agreement, com- bination, or conspiracy. SUBGROUP C § 209.26 Prohibited use of unfair exclusive deals. ‘ It is an unfair trade practice for any member of the industry engaged in commerce, * in the course of such com- merce, to make a sale or contract for sale of goods, for use, consumption or resale within any place under the ju- risdiction of the United States, or fix a price charged therefor, or discount from, or rebate upon, such price, on the condition, agreement, or under- standing that the purchaser thereof shall not deal in the goods of a com- petitor or competitors of the seller, where the effect of such sale or con- tract for sale, or such condition, agree- ment or understanding, may be to sub- stantially lessen competition or tend to create a monopoly in any line of commerce. SUBGROUP D § 209.27 Prohibited aiding or abetting use of unfair trade practices. It is an unfair trade practice for any member of the industry, either direct- ly or indirectly, knowingly to ald, abet, coerce, or induce another to use or promote the use of any unfair trade practice forbidden by the rules in this part. COMMITTEE ON TRADE PRACTICES § 209.201 Industry committee. The provisions of §16.1* of this chapter shall be applicable to an in- dustry committee established under this part. °16 CFR 16.1 was deleted at 36 FR 3116, Feb. 18, 1971. (21 FR 1174, Feb. 21, 1956] ‘This section is based on section 3 of the Clayton Act. ®’The term “commerce,” as used in this section, is to be construed as it is defined in section 1 of the Clayton Act. This definition is quoted in § 209.2. 91 § 209.201 PART 210—COMMERCIAL AND IN- DUSTRIAL FLOOR AND VACUUM MACHINERY INDUSTRY Sec. 210.0 Definitions. 210.1 Misrepresentation and deception in general. 210.2 Misrepresentation as to character of business. 210.3 Deception through failure to differ- entiate between wholesale and retail transactions. 210.4 Misrepresentation as to installment sales contracts, their terms, conditions, etc. 210.5 Deceptive “Salesmen Wanted” adver- tisements. 210.6 Misrepresenting products as con- forming to standard. 210.7 Deception as to rebuilt or second- hand products. 210.8 Misuse of terms “Close-Outs,” “Dis- continued Lines,” “Special Bargains,” etc. 210.9 Substitution of products. 210.10 Deceptive use and imitation of trade or corporate names, trade-marks, etc. 210.11 False invoicing. 210.12 Deceptive pricing. 210.13 Use of the word “free.” 210.14 Guarantees, warranties, etc. 210.15 Use of lottery schemes, etc. 210.16 Consignment distribution. 210.17 Coercing purchase of one product as @ prerequisite to the purchase of other products. 210.18 Prohibited sales below cost. 210.19 Defamation of competitors or false disparagement of their products. 210.20 Procurement of competitors’ confi- dential information by unfair methods and wrongful use thereof. 210.21 Enticing away empioyees of com- petitors. 210.22 Commercial bribery. 210.23 Inducing breach of contract. 210.24 Unfair threats of infringement sults. 210.25 Unlawful interference with competi- tors’ purchases or sales. 210.26 Prohibitcd forms of trade restraints. 210.27 Exclusive deals. 210.28 Prohibited discrimination. 210.29 Aiding or abetting use of unfair trade practices. COMMITTEE ON TRADE PRACTICES 210.201 Industry committee. Auvurxoniry: Secs. 6, 5, 38 Stat. 721, 719; 15 U.S.C. 46, 45, unless otherwise noted. Source: 23 FR 4512, June 21, 1958, unless otherwise noted.