Commercial And Industrial Floor And Vacuum Machinery Industry
16 CFR Part 210 · Trade practice rules · in the Code of Federal Regulations 1959-1978 (13 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 These rules and guides are historical: most were rescinded or replaced, so do not assume any is in force.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: 1959 CFR
Text (1978 edition, OCR)
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. § 210.0 § 210.0 Definitions. (a) Industry members. Persons, firms, corporations and organizations engaged in the manufacture, sale, or distribution of industry products as in this section. (b) Industry products. Commercial and industrial power driven machines for wet or dry cleaning, polishing, re- surfacing, or maintenance of floors, floor coverings and other surfaces, and parts, accessories, and attachments for such machines. Among the products included are commercial and industri- al power driven floor polishers, sand- ers and scrubbers, rug shampoo ma- chines, mopping machines, and vacuum cleaners, including vacuum cleaners deslgned for removing liquids and/or dirt from containers of all kinds. § 210.1 Misrepresentation and deception in general. It is an unfair trade practice to use, or cause or promote the use of, any trade promotional literature, advertis- ing matter, guarantee, warranty, mark, brand, label, trade name, pic- ture, desigu or device, designation, or other type of oral or written represen- tation, however disseminated or pub- lished, which has the capacity and tendency or effect of misleading or de- ceiving purchasers or prospective pur- chasers: (a) With respect to the type, kind, grade, quality, size, weight, capacity, durability, serviceability, construction, manufacture, or distribution of any in- dustry products, or concerning any parts, accessories, or attachments for such products; or (b) With respect to the terms or con- ditions of sale, rental, or distribution of such products and parts, accesso- ries, and attachments therefor; or (c) With respect to the types and kinds of cleaning and maintenance work that such products, and attach- ments and accessories, will perform, or the rate of speed at which they will perform such work; or (d) With respect to the average or customary savings or reduction in time, labor, or money expenditures re- suiting from the use of such products, or the average or customary earnings or profits derived from the sale, distri- 92 Title 16—Commerclial Practices bution, or operation of such products; or (e) Which in any other material re- spect has the capacity and tendency or effect of misleading or deceiving the purchasing or consuming public. § 210.2 Misrepresentation as to character of business. It is an unfair trade practice for any member of the industry to represent, directly or indirectly, through the use of any word or term in his corporate or trade name, in his advertising or otherwise, that he is a manufacturer of industry products, or that he is the owner or operator of a factory manu- facturing them, when such is not the fact, or in any other manner to mis- represent the charactor, extent, volume, or type of his business. § 210.3 Deception through failure to dif- ferentiate between wholesale and retail transactions. Where industry products are sold at wholesale and at retall in the same es- tablishment, it is an unfair trade prac- tice to misrepresent, directly or indi- rectly, either type of business as being the other type of business. § 210.4 Misrepresentation as to instali- ment sales contracts, their terms, con- ditions, ete. It is an unfair trade practice to make or publish or cause to be made or pub- lished, directly or indirectly, through advertising or otherwise, any state- ment or representation concerning in- stallment sales contracts to be used in the sale of industry products which has the capacity and tendency or effect of deceiving purchasers or pro- spective purchasers with respect to the terms or conditions of such contracts, the downpayment required, the number, amount and dates of instali- ments to be paid, the rate of interest or the financing cost to be charged, or in any other material respect. §210.5 Deceptive “Salesmen Wanted” ad- vertisements. In connection with the promotion of the sale of industry products, it is an unfair trade practice for any member of the industry to use, or cause to be used, any advertisement, offer, state- Chapter I—Federal Trade Commissien ment or other form of representation which directly or by implication, is false, misleading, or deceptive concern- ing: (a) The salary, commission, income, earnings, or other remuneration which agents, canvassers, sollcitors, or sale representatives receive or may receive; or (b) Any conditions or contingencies affecting such remuneration or the op- portunities therefor. § 210.6 Misrepresenting products as con- forming to standard. In connection with the sale or offer- ing for sale of industry products, it is an unfair trade practice to represent, through advertising or otherwise, that such products conform to any stan- dards recognized in or applicable to the industry when such is not the fact. $210.7 Deception as to rebuilt or second- hand products. (a) It is an unfair trade practice for any member of the industry to sell, offer for sale, advertise, or otherwise represent, any industry product as being new when such is not the fact. (b) In the marketing of industry products which are second-hand or re- built, or which contain second-hand or rebuilt parts, it is an unfair trade prac- tice to fail to make full and nondecep- tive disclosure, by a conspicuous tag or label firmly attached to the products, and in ail advertising and promotional literature relating thereto, of the fact: (1) That such products are second- hand, rebullt, or contain rebuilt or second-hand parts, as the case may be; and (2) That the rebuilding was done by other than the original manufacturer, when such is the case; when the fail- ure to make such disclosure has the capacity and tendency or effect of mis- leading purchasers or prospective pur- chasers of such products. §210.8 Misuse of terms “Close-Outs,” “Discontinued Lines,” “Special Bar- gains,” etc. It is an unfair trade practice to offer for sale, sell, advertise, describe, or otherwise represent regular lines of in- dustry products as ‘“Close-Outs,” “Dis- continued Lines,” “Special Bargains,” 93 § 210.10 or by words or representations of simi- lar import, when such are not true in fact; or to so offer for sale, sell, adver- tise, describe, or otherwise represent industry products where the capacity and tendency or effect thereof is to lead the purchasing or consuming public to belleve such products are being offered for sale or sold at great- ly reduced prices, or at so-called “bar- gain” prices, when such is not the fact. § 210.9 Substitution of products. It is an unfair trade practice for any industry member, in the course of or in connection with the sale or distribu- tion of industry products, to make an unauthorized substitution of products, where such substitution has the capac- ity and tendency or effect of mislead- ing or deceiving purchasers or the con- suming public, by: (a) Shipping or dellvering industry products which do not conform to samples submitted, to specifications upon which the sale is consummated, or to representations made prior to se- curing the order, without advising the purchaser of the substitution and ob- taining his consent thereto prior to making shipment or delivery; or (bo) Falsely representing the reason for making a substitution. § 210.10 Deceptive use and imitation of trade or corporate names, trade-marks, ete. It is an unfair trade practice for any member of the industry: (a) To imitate, or cause to be imitat- ed, or directly or indirectiy promote the imitation of, the trade-marks, trade names, or other exclusively owned symbois or marks of identifica- tion of competitors in a manner having the capacity and tendency or effect of misleading or deceiving pur- chasers, prospective purchasers, or the buying public; or (bo) To use any trade name, corporate name, trade-mark, or other trade des- ignation which has the capacity and tondency or effect of misleading or de- ceiving purehasers or prospective pur- chasers as to the character, name, nature, or origin of any product of the industry, or of any material used therein, or which is false or misleading in any material respect. § 210.11 § 210.11 False invoicing. It is an unfair trade practice for members of the industry to issue in- ‘voices, billings, or sales slips which by reason of misstatements therein or omissions therefrom have the capacity and tendency or effect of deceiving purchasers or prospective purchasers in any material respect. § 210.12 Deceptive pricing. In the sale, offering for sale, or dis- tribution of industry products, it is an unfair trade practice for an industry member: (a) To represent or imply that the price at which he is offering to sell any such products is a special or bar- gain price therefor, or is a saving to the buyer when compared with the usual price of the product, when such is not the fact; or (b) To put into the hands of a cus- tomer of such industry member any instrumentality for representing or implying that the price at which the customer is reselling such products is a special or bargain price therefor, or is a saving to the buyer when compared with the usual price of the products, when such is not the fact. $210.13 Use of the word “free.” In connection with the sale, offering for sale, or distribution of industry products, it is an unfair trade practice to use the word “free,’”’ or any other word or words of similar import, in ad- vertisements or in other offers to the public, as descriptive of an article of merchandise or service, which is not an unconditional gift, under the fol- lowing circumstances: (a) When all the conditions, obliga- tions, or other prerequisites to the re- ceipt and retention of the “free” arti- cle of merchandise or service offered are not clearly and conspicuously set forth at the outset so as to leave no reasonable probability that the terms of the offer will be misunderstood: and, regardiess of such disclosure: (b) When, with respect to any article of merchandise required to be pur- chased in order to obtain the “free” article or service, the offerer (1) in- creases the ordinary and usual price of such article of merchandise, or (2) re- 94 Title 16—Commerciai Practices duces its quality, or (3) reduces the quantity or size thereof. Nore: The disclosure required by para- graph (a) of this section shall appear in close conjunction with the word “free” (or other word or words of similar import) wherever such word first appears in each advertisement or offer. A disclosure in the form of a footnote, to which reference is made by use of an asterisk or other symboi piaced next to the word “free” will not be regarded as compliance. § 210.14 Guarantees, warranties, etc. (a) It is an unfair trade practice to represent, in advertising or otherwise, that any industry product is “guaran- teed” unless the nature and extent of such guarantee is conjunctively dis- closed and without deceptively mini- mizing the terms and conditions relat- ing to the obligation of the guarantor. (b) It is also an unfair trade practice to use, or cause to be used, any guar- antee in which the obligations of the guarantor are impracticabie of fulfill- ment, or in respect to which the guar- antor fails or refuses to observe his li- abilities thereunder. (c) This section shall be applicable not only to guarantees but also to war- ranties, to purported guarantees and warranties, and to any promise or rep- resentation in the nature of a guaran- tee or warranty. § 210.15 Use of lottery schemes, ctc. It is an unfair trade practice to sell, distribute, or promote the sale or dis- tribution of any industry product by means of a game of chance, gift enter- prise, or lottery scheme. §210.16 Consignment distrihution. (a) It is an unfair trade practice for any member of the industry to employ the practice of shipping industry prod- ucts on consignment without the ex- press request or prior consent of the purchasers: (b) It is an unfair trade practice for any member of the industry to employ the practice of shipping industry prod- ucts on consignment or pretended con- signment for the purpose and with the effect of artificially clogging or closing trade outlets and restricting competi- tors’ use of said trade outlets in get- ting their products to purchasers Chapter i—Federal Trade Commission through regular channeis of distribu- tion, thereby injuring, destroying, or preventing competition or tending to create a monopoly or unreasonably to restrain trade. (c) Nothing in this section shall be construed to authorize any under- standing or agreement, combination or conspiracy, or planned common course of action, by and between industry members, mutually to conform or re- strict their practice of shipping goods on consignment with the intent or effect of lesseding competition. $210.17 Coercing purchase of one product as a prerequisite to the purchase of other products. It is an unfair trade practice to re- quire, by coercion or by any other means, the purchase of one or more products as a prerequisite to the pur- chase of one or more other products, where the effect may be substantially to lessen competition or tend to create @ monopoly or unreasonably to re- strain trade. § 210.18 Prohibited sales beiow cost. (a) 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 is, or where there is a reason- able probability that the effect will be, to substantially injure, suppress, or stifle competition or tend to create a monopoly, is an unfair trade practice. (b) This section is not to be con- strued as prohibiting all sales below cost, but only such selling beiow the seller's cost as is resorted to and pur- sued with the wrongful intent or pur- pose referred to and where the effect is, or where there is reasonable prob- ability that the effect will be, to sub- stantially injure, suppress, or stifle competition or to create a monopoly. Among the situations in which the requisite purpose or intent would ordi- narily be lacking are cases in which such sales were: (1) Of obsolescent goods; (2) made under judicial process; or (3) made in bona fide discontinu- ance of business in the goods con- cerned. (c) As used in paragraphs (a) and (b) of this section, the term “cost” means the respective seller’s cost and not an 95 § 210.20 average cost in the industry whether such average cost be determined by an industry cost survey or some other method. It consists of the total outlay or expenditure by the seller in the ac- quisition, production, and distribution of the products involved, and com- prises all elements of cost such as labor, material, depreciation, taxes (except taxes on net income and such other taxes as are not properly appll- cable to cost), and general overhead expenses, incurred by the seller in the acquisition, manufacture, processing, preparation for marketing, sale, and delivery of the products. Not to be in- cluded are dividends or interest on borrowed or invested capital, or nono- perating losses, such as fire losses and losses from the sale or exchange of capital assets. Operating cost should not be reduced by items of nonoperat- ing income, such as income from in- vestments, and gain on the sale of cap- ital assets. (d) Nothing in this section shall be construed as relleving an industry member from compliance with any of the requirements of the Robinson- Patman Act. $210.19 Defamation of competitors or false disparagement of their products. The defamation of competitors by falsely imputing to them dishonorable conduct, inability to perform con- tracts, questionable credit standing, or by other false representations, or the false disparagement of the grade or quality of the goods of competitors, their credit torms, values, policies, ser- vices, the nature or form of the busi- ness conducted, or in any other mate- rial respect, is an unfair trade practice. § 210.20 Procurement of competitors’ con- fidential information by unfair meth- ods and wrongful use thereof. It is an unfair trade practice for any member of the industry to obtain in- formation concerning the business of a competitor by bribery of an employee or agent of such competitor, by false or misleading statements or represen- tations, by the impersonation of one in authority, or by any other unfair means, and to use the information so obtained in such manner as to injure sald competitor in his business or to § 210.21 suppress competition or unreasonably restrain trade. $210.21 Enticing away employees of com- petitors. It is an unfair trade practice for any member of the industry wilfully to entice away employees or sale repre- sentatives of competitors with the intent and effect of thereby unduly hampering or injuring competitors in their business and destroying or sub- stantially lessening competition: Pro- vided, That nothing in this section shall be construed as prohibiting em- ployees from seeking more favorable employment, or as prohibiting employ- ers from hiring or offering employ- ment to employees of competitors in good faith and not for the purpose condemned in this section. § 210.22 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 vaiue to agents, employ- ees, or representatives of customers or prospective customers, or to agents, employees, or representatives of com- petitors’ custemers or prospeetive cus- tomers, without the knowledge of their employers or principals, as an in- ducement to influence their employers or principals to purchase or contract to purchase products manufactured or sold by such industry member or the maker of such gift or offer, or to influ- ence such employers or principals to refrain from dealing in the products of competitors or from dealing or con- tracting to deai with competitors. § 210.23 Inducing breach of contract. (a) Knowingly inducing or attempt- ing to induce the breach of existing lawful contracts between competitors and their customers or their suppliers, or interfering with or obstructing the performance of any such contractuai duties or services, under any circum- stance having the capacity and ten- dency or effect of substantially injur- ing or lessening present or potential competition, is an unfair trade prac- tice. (b) Nothing in this section is intend- ed to imply that it is improper for any Title 16—Commerclal Practices industry member to solicit the busi- ness of a customer of a competing in- dustry member; nor is the section to be construed as in any wise authoriz- ing any agreement, understanding, or planned common course of action by two or more industry members not to solicit business from the customers of either of them, or from customers of any other industry member. $210.24 Unfair threats of infringement suits. The circulation of threats of sult for infringement of patents or trade- marks among customers or prospective customers of competitors, not made in good faith but for the purpose or with the effect of thereby harassing or in- timidating such customers or prospec- tive customers, or of unduly hamper- ing, injuring, or prejudicing competi- tors in their business, is an unfair trade practice. $210.25 Unlawful interference with com- petitors’ purchases or sales. It is an unfair trade practice for any member of the industry, by means of any monopolistic practices or through combination, conspiracy, coercion, boycott, threats, or any other unlaw- ful means, directly or indirectly, to in- terfere with a competitor’s right to purchase his raw materials and sup- plies from whomsoever he chooses, or to sell his product to whomsoever he chooses. $210.26 Prohibited forms of trade re- straints. ' It is an unfair trade practice, either directly or indirectly, to engage in any ‘The inhibitions of this section are sub- ject to Pub. L. 542, approved July 14, 1952— 66 Stat. 632 (the McGuire Act) which pro- vides that with respect to a commodity which bears, or the labei or container of which bears, the trade-mark, brand, or name of the producer or distributor of such commodity and which is in free and open competition with commodities of the same general ciass produced or distributed by others, a seller of such a commodity may enter into a contract or agreement with a buyer thereof which establishes a minimum or stipulated price at which such commodity may be resold by such buyer when such con- tract or agreement is lawful as applied to in- trastate transactions under the laws of the 96 Choptor I—-Fodoral Trado Commission Planned common course of action, or to enter into or take part in any un- derstanding, agreement, combination, or conspiracy, with one or more indus- try members, or with any other person or persons, to fix or maintain the price of any goods or otherwise unlawfully to restrain trade; or to use any form of threat, intimidation, or coercion to induce any member of the industry or other person or persons to engage in any such planned common course of action, or to become a party to any such understanding, agrecment, com- bination, or conspiracy.- $210.27 Exclusive deals. It is an unfair trade practice for any member of the industry to contract to sell or sell any industry product, or fix a price charged therefor, or discount from, or rebate upon, such price, upon the condition, agreement, or under- standing that the purchaser thereof shall not use or deal in the products of a competitor or competitors of such in- dustry member, where the effect of such sale or contract for sale, or of such condition, agreement, or under- standing, may be substantially to lessen competition or tend to create a monopoly in any line of commerce. § 210.28 Prohibited discrimination. ? (a) Prohibited discriminatory prices, rebates, refunds, discounts, etc., which effect unlawful price discrimination. State, Territory, or territorial jurisdiction in which the resale is to be made or to which the commodity is to be transported for such resale, and when such contract or agree- ment is not between manufacturers, or be- tween whoiesalers, or between brokers, or between factors, or between retailers, or be- tween persons, firms, or corporations in competition with each other. 2As used in this section, the word ‘“‘com- merce” means “trade or commerce among the several States and with foreign nations, or between the District of Columbia or any Territory of the United States and any State, Territory, or foreign nation, or be- tween any insular possessions or other places under the jurisdiction of the United States, or between any such possession or place and any State or Territory of the United States or the District of Columbia, or any foreign nation, or within the District of Columbia or any Territory or any insular possession or other place under the jurisdic- tion of the United States.” § 210.28 It is an unfair trade practice for any member of the industry engaged in commerce in the course of such com- merce, to grant or allow, secretly or openly, 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 discrimination in price between dif- ferent purchasers of goods of like grade and quallty, where either or any of the purchasers involved therein are in commerce, and where the effect thereof 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, 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, and are not purchased by schoois, colleges, unlversities, publlc li- braries, churches, hospitals, and chari- table institutious not operated for profit, as supplies for their own use; (2) That nothing contained in this paragraph shall prevent differentials which make only due allowance for differences in the cost of manufacture, sale, or dellvery resulting from the dif- fering methods or quantities in which such commodities are to such purchas- ers sold or delivered; Nore: Cost justification under the above proviso depends upon net savings in cost based on all facts reievant to the transac- tions under the terms of paragraph (a)(2) of this section. For exampie, if a seller regular- ly grants a discount based upon the pur- chase of a specified quantity by a singie order for a single delivery, and this discount is Justified by cost differences, it does not foliow that the same discount can be cost justified if granted to a purchaser of the same quantity by multiple orders or for multiple deliveries. (3) That nothing contained in this section shall prevent persons engaged in selling goods, wares, or merchandise in commerce from selecting their own customers in bona fide transactions and not in restraint of trade; (4) That nothing contained in this paragraph shall prevent price changes 97 § 210.28 from time to time where made in re- sponse to changing conditions affect- ing the market for or the marketabil- ity of the goods concerned, such as but not limited to obsolescence of seasonal goods, distress sales under court pro- cess or sales in good falth in discon- tinuance of business in the goods con- cerned; (5) That nothing contained in this section shall prevent the meeting in good faith of an equally low price of a competitor. NOTE: See subsection (b) of section 2 of the Clayton Act as amended, which is set forth in the note following paragraph (f) of this section. (b) The following are examples of price differentiai practices to be con- sidered as subject to the prohibitions of paragraph (a) of this section when involving goods of like grade and qual- ity which are sold for use, consump- tion, or resale within any place under the jurisdiction of the United States, and which are not purchased by schoois, colleges, universities, public il- braries, churches, hospitals, and chari- table institutions not operated for profit, as supplies for their own use, and when: (1) The commerce requirements specified in paragraph (a) of this sec- tion are present; and (2) The price differential has a rea- sonable probability of substantially lessening competition or tending to create a monopoly in any line of com- merce, or of injuring, destroying or preventing competition with the in- dustry member or with the customer receiving the benefit of the price dif- ferential, or with customers of either of them; and (3) The price differential is not justi- fied by cost savings (see paragraph (a) (2) of this section); and (4) The price differential is not made in response to changing conditions af- fecting the market for or the market- ability of the goods concerned (sce paragraph (a) (4) of this section); and (5) The lower price was not made to meet in good faith an equally iow price of a competitor (see paragraph (a) (5) of this section). Example 1. At the end of a given period an industry member grants a discount to a cus- 98 Title 16—Commercial Practices tomer equivalent to a fixed percentage of the total of the customer’s purchases during such period and fails to grant such discount to other customers under like conditions. Example 2. An industry member sells goods to one or more of his customers at a higher price than he charges other custom- ers for like merchandise. It is immaterial whether or not such discrimination is ac- complished by misrepresentation as to the grade and quality of the products sold. Example 3. Terms of 2 percent 10 days are granted by an industry member to some cus- tomers on goods purchased by them from the industry member. Another customer or customers are, nevertheless, allowed to take a 5 percent instead of a 2 percent discount when making payment to the industry member within the time prescribed. Example 4. An industry member invoices goods to all his customers at the same price but supplles additlonal quantities of such goods at no extra charge to one or more, but not to all such customers; or supplies other goods or premiums to one or more, but not to all, such customers for which he makes no extra charge and which effects an actual Price difference in favor of certain of his customers. Note: As previously indicated, the forego- ing are examples of practices to be consid- ered violative of the prohibitions of para- graph (a) of this section when involving goods of like grade and quality and when not subject to the order exemptions, exclu- sions or defenses set forth in this para- graph. (c) Prohibited brokerage and com- missions. It is an unfair trade practice for any member of the industry en- gaged in commerce, in the course of such commerce, to pay or grant, or to receive or accept, anything of vaiue as a commission, brokerage, or other compensation, or any allowance or dis- count in lieu thereof, except for ser- vices rendered in connection with the sale or purchase of goods, wares, or merchandise, either to the other party to such transaction or to an agent, representative, or other intermediary therein where such intermediary is acting in fact for or in behalf, or is subject to the direct or indirect con- trol, of any party to such transaction other than the person by whom such compensation is so granted or pald. (d) Prohibited advertising or promo- tional allowances, etc. It is an unfair trade practice for any member of the industry engaged in commerce to pay or contract for the payment of adver- tising or promotional allowances or Chapter |—Federal Trade Commissien 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 facilities furnished by or through such customer in connec- tion with the processing, handling, sale, or offering for sale of any prod- ucts or commodities manufactured, sold, or offered for sale by such member, unless such payment or con- sideration is available on proportional- ly equal terms to all other customers competing in the distribution of such products or commodities. Nore 1: Industry members giving advertis- ing allowances to competing customers must exercise precaution and diligence in seeing that all of such allowances are used in ac- cordance with the terms of their offers. Note 2: When an industry member gives allowances to competing customers for ad- vertising in a newspaper or periodical, the fact that a lower advertising rate for equlv- alent space is avallable to one or more, but not all, such customers, is not to be regard- ed by the industry member as warranting the retention by such customer or custom- ers of any portion of the allowance for his or their personal use or benefit. (e) Prohibited discriminatory ser- vices or facilities. It is an unfair trade practice for any member of the indus- try engaged in commerce to discrimi- nate in favor of one purchaser against another purchaser or purchasers of a commodity bought for resale, with or without processinz, by contracting to furnish or furnishing, or by contribut- ing to the furnishing of, any services or facilities inciuding, but not limited to, displays, exhibits, and promotional material connected with the process- ing, handling, sale, or offering for sale of such commodity so purchased upon terms not accorded to all competing purchasers on- proportionally equal | terms. Nore: See subsection (b) of section 2 of the Clayton Act as amended, which is set forth in the note following paragraph (f) of this section. _ (f) Inducing or receiving an illegal discrimination in price. It is an unfair trade practice for any member of the industry engaged in commerce, in the course of such commerce, knowingly to induce or receive a discrimination in § 210.28 price which is prohibited by the fore- going provisions of this section. Nore: Paragraph (f) of this section is a re- statement of section 2 (f) of the Clayton Act as amended. In a complaint proceeding under this section, in order to make out a prima facie violation, the Commission must show that the favored buyer induced or re- ceived the lower price knowing, or knowing facts from which he should have known, that such price was violative of section 2 (a) of said act and not justified under para- graphs (a) (2), (4), or (5) of this section. When, in any such proceeding, the issue is limited to the question of whether the price differential involved made only due allowance for differences in cost of manu- facture, saie, or delivery resulting from the differing methods or quantities in which the goods were sold and delivered, the Commis- sion may establish a prima facie case in a number of ways, including: (1) By showing that the buyer paying the lower price knew that the methods by, and quantities in, which the goods were sold and delivered to him by the seller were the same as in the case of the competing buyer or buyers paying the higher price or prices; or (2) By showing, when there is a difference in the methods or quantities in which the goods were sold and delivered by the seller to the buyer than in the case of the compet- ing buyer or buyers paying the higher price or prices, that the buyer paying the lower price or prices knew the nature and extent of such differences and knew or should have known that they could not have resulted in sufficient cost savings of the kind and char- acter specified as to justify the price differ- ential. Nore: Section 210.28 is based on the provi- sions of section 2 of the Clayton Act as amended by the Robinson-Patman Act. Subsection (b) of section 2 of the Clayton Act as amended, which reads as follows, is in amplification of the note to paragraph (aX5) of this section and of the note to paragraph (e) of this section. “Upon proof being made, at any hearing on a complaint under this section, that there has been dis- crimination in price or services or facilities furnished, the burden of rebutting the prima facie case thus made by showing jus- tification shall be upon the person charged with a violation of this section, and unless justification shall be affirmatively shown, the Commission is authorized to issue an order terminating the discrimination: Pro- vided, however, That nothing herein con- tained 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 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.” 99 § 210.29 § 210.29 Aiding or abetting use of unfair trade practices. It is an unfair trade practice for any person, firm, or corporation to aid, abet, coerce, or induce another, direct- ly or indirectly, to use or promote the use of any unfair trade practice speci- fied in the foregoing sections of this part. COMMITTEE ON TRADE PRACTICES § 210.201 Industry committee. The provisions of § 16.1: of this sub- chapter shall be applicable to an in- dustry committee established under this part. PART 214—HEARING AID INDUSTRY Sec. 214.0 214.1 214.2 Definitions. Misrepresentation in general. Guarantees, warranties, etc. 214.3 Bait advertising. 214.4 Misrepresentation of earnings of salesmen or agents. 214.5 Misrepresentation as to character of business, etc. 214.6 Deception as to benefit of services or advice of a physician, etc. 214.7 Deception as to visibility, construc- tion, etc. 214.8 Deception as to availability of sult- able batteries. 214.9 Deception respecting novelty of prod- ucts. 214.10 Misrepresenting a commercial hear- ing aid establish:nent. 214.11 Deceptive advertising of hearing aid parts, accessories or components. 214.12 Misrepresenting installment sales contracts. 214.13 Deceptive endorsements, testimon- ials, etc. 214.14 Deception as to used or rebuilt prod- ucts. 214.15 Deception respecting tests, accep- tance, or approvai. 214.16 Defamation of competitors or false disparagement of their products. 214.17 Deceptive use or imitation or simu- lation of trade or corporate names, trademarks, etc. 214.18 Procurement of competitor’s confi- dentiai information. 214.19 Unfair threats of infringement sults. 214.20 Inducing breach of contract. 214.21 . Commerciai bribery. 116 CFR 16.1 was deleted at 36 FR 3116, Feb. 18, 1976. Titie 16—Commercial Practices Sec. 214.22 Prohibited forms of trade restraints (unlawful price fixing, etc.). 214.23 Arrangements to exclude sale of competitors’ products. 214.24 Aiding or abetting use of unfair trade practices. AurHoriry: Secs. 6, 5, 38 Stat. 721, 719; 15 U.S.C. 46, 45, unless otherwise noted. Source: 30 FR 9058, July 20, 1965, unless otherwise noted. § 214.0 Definitions. (a) “Industry products” consist of all instruments and devices designed for or represented as aiding, improving, or correcting defective hearing, and parts and accessories therefor. (b) “Industry members’ are persons, firms, corporations, and organizations engaged in the manufacture, distribu- tion, or saie of any industry products as defined above. § 214.1 Misrepresentation in general. It is an unfair trade practice for any industry member to use, or cause or promote the use of, any trade promo- tionai literature, advertising matter, testimonial, guarantee, warranty, mark, insignia, depiction, brand, desig- nation, or representation, however dis- seminated or published, which has the capacity and tendency or effect of mis- leading or deceiving purchasers or pro- spective purchasers, or of aiding, abet- ting, or causing saies agents, deaiers, distributors, or other marketers to mislead or deceive the purchasing or consuming public. (a) With respect to the grade, quai- ity, quantity, origin, novelty, price, cost, terms of saie, use, construction, size, composition, dimensions, type, design, development, visibility, dura- bility, performance, fit, appearance, efficacy, benefits, cost of operation, re- sistance to climatic conditions, or physiological benefits of any industry product, or the psychological well- being induced by an industry product; or (b) With respect to any service or ad- justment offered, promised, or to be supplied to purchasers of any industry product; or (c) With respect to the manufacture, distribution, or marketing of any in- dustry product; or 100