Cosmetic And Toilet Preparations Industry

16 CFR Part 221 · Trade practice rules · in the Code of Federal Regulations 1960-1978 (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 These rules and guides are historical: most were rescinded or replaced, so do not assume any is in force.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, 1978 CFR · Earliest edition: 1960 CFR

Decisions that mention this industry's rules (11)

Text (1978 edition, OCR)

Chapter I—Federal Trade Commissien

PART 221—COSMETIC AND TOILET
PREPARATIONS INDUSTRY

Sec.

221.1 Prohibited discrimination.

221.2 Misrepresentation in general.

221.3 Deception as to origin.

221.4 Deceptive imitation of trademarks,
trade names, etc.

221.5 Misrepresentation as to character of
business.

221.6 Use of the word “free.”

221.7 Deceptive pricing.

221.8 Passing off an industry product as
and for the product of a competitor.

221.9 Defamation of competitors or false
disparagement of their products.

221.10 Commercial] bribery.

221.11 Procurement of competitor’s confi-
dential] information by unfair means and
wrongful use thereof.

221.12 Inducing breach of contract.

221.13 Use of lottery schemes, ete.

221.14 Prohibited forms of trade restraints
(unlawful price fixing, etc.).

221.15 Unfair threats of infringement
sults.

221.16 Exclusive deals.

221.17 Push money.

Autuonrity: Sec. 2, 49 Stat. 1526, secs. 3, 6,
5, 38 Stat. 731, 721, 719; 15 U.S.C. 13, 14, 46,
45, unless otherwise noted.

Source: 31 FR 9059, July 1, 1966, unless
otherwise noted.

$221.1 Prohibited discrimination.

(a) Prohibited discriminatory prices,
rebates, discounts, etc. It is an unfair
trade practice for any member of the
industry engaged in commerce, in the
course of such commerce, to grant or
allow, secretly or openly, directly or
indirectly, any rebate, refund, dis-
count, credit, or other form of price
differential, where such rebate,
refund, discount, credit, or other form
of price differential, effects a discrimi-
nation in price between different pur-
chasers of goods of like grade and
quality, where either or any of the
purchascrs involved therein are in
commerce, and where the effect there-
of may be substantialiy to lessen com-
petition or tend to create a monopoly
in any line of commerce, or to injure,
destroy, or prevent competition with
any person who either grants or know-
ingly receives the benefit of such dis-
crimination, or with customers of
either of them: Provided, however,

§ 221.1

(1) That the goods involved in any
such transaction are sold for use, con-
sumption, or resale within any place
under the jurisdiction of the United
States, and are not purchased by
schools, colleges, universities, public li-
braries, churches, hospitals, and chari-
table institutions not operated for
profit, as supplies for their own use;

(2) That nothing contained in this
paragraph (a) shall prevent differen-
tlals which make only due allowance
for differences in the cost of produc-
tion, sale, or delivery resulting from
the differing methods or quantities in
which industry products are sold or
delivered to different purchasers;

Nore: Cost justification under the above
proviso depends upon net savings in cost
based on all facts relevant to the transac-
tions under the terms of proviso (a)(2). For
example, if a seller regularly grants a dis-
count based upon the purchase of a speci-
fied quantity by a single order for a single
dellvery, and this discount is justified by
cost differences, it does not follow that the
same discount can be cost justified if grant-
ed to a purchaser of the same quantity by
multiple orders or for multiple dellveries.

(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
section shall prevent price changes
from time to time where made in re-
sponse to changing conditions affect-
ing the market for or the marketabli-
ity of the goods concerned, such as but
not limited to actual or imminent de-
terioration of perishable goods, obso-
lescence of seasonal goods, distress
sales under court process, or sales in
good falth in discontinuance of busi-
ness in the goods concerned;

(5) That nothing contained in this
section shall prevent the meeting in
good falth of an equally iow price of a
competitor.

Norte 1: Section 2(b) of the Clayton Act, as
amended, reads as follows: “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

115


§ 221.1

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.”

Note 2: In complaint proceedings, justifi-
cation of price differentials under para-
graphs (a) (2), (4), and (5) of this section is a
matter of affirmative defense to be estab-
lished by the person or concern charged
with price discrimination.

Nore 3: Nothing in this section should be
construed as prohibiting the granting of dif-
ferent prices which are not otherwise viola-
tive of the foregoing provisions of this sec-
tion, to customers in different functional
categories. For example, a seller may grant
a@ lower price to wholesalers than to retail-
ers to the extent that such wholesalers
reseli to retailers. If such wholesalers also
seli at retail they may not properly be
granted a price lower than the prices grant-
ed to competing retailers on that portion of
the goods they seli at retail.

(b) Prohibited brokerage and com-
missions. It is an unfair trade practlce
for any meinber of the industry en-
gaged in commerce, in the course of
such commerce, to pay or grant, or to
receive or accept, anything of value as
a commisslon, 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 transactlon 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.

(c) Prohibited advertising or promo-
tional allowances, ete. 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
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 facilitles furnished by
or through such customer in connec-

Title 16—Commerclial Practices

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 made known to and is
avallable on proportionally equal
terms to all other customers compet-
ing in the distributlon of such prod-
ucts or commodities.

Nore: Section 2(b) of the Clayton Act, as
amended, which is set forth in Note 1 fol-
iowing paragraph (a)(5) of this section, is
applicable to paragraph (c).

(a) 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 processing, by contracting to
furnish or furnishing, or by contribut-
ing to the furnishing of, any services
or facilities connected with the pro-
cessing, handling, sale, or offering for
sale of such commodity so purchased
upon terms not accorded to all com-
peting purchasers on proportionally
equal terms.

Nore: Section 2(b) of the Clayton Act, as
amended, which is set forth in Note 1 fol-
lowing paragraph (a)(5) of this section, is
applicable to paragraph (d).

(e) Inducing or receiving an illegal
discrimination in price, advertising or
promotional allowances, or services or
facilities. It is an unfair trade practice
for any member of the industry en-
gaged in commerce, in the course of
such commerce, knowingly to induce
or recelve a discrimination in price, ad-
vertising or promotional allowances, or
services or facilities, prohibited by the
foregoing provisions of this section.

(f) Proportional equality of treat-
ment of competing customers. (1) The
following is presented for the purpose
of clarifying the requirements of para-
graphs (c) and (d) of this section with
respect to the supplying of marketing
services, facilities or allowances by in-
dustry members to their customers,
but it is not intended to imply by such
presentation that other methods
which assure of proportlonal equality
of treatment of competing customers
may not also be used.

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Chapter I—Foderal Trade Commission

(2) An industry member may simul-
taneously offer to each of his custom-
ers competing in the resale of his
products the same kind of promotlonal
service, facility or allowance of a cost
value equal to a uniform percentage of
the sales (or purchases) of the indus-
try member's products by each cus-
tomer during a specified and identical
period of time: Provided, however,
That when the service, facility, or
allowance offered is of a type which
under reasonable terms and conditions
is not usable or suitable to the facili-
ties and business of all customers, and
is offered to any one customer, the
member offer each of those customers
to whom the service, facility, or
allowance is not usable or suitable an
alternate type of promotional service,
facility or allowance which is of equiv-
alent measurable cost, is usable by the
customer, and is suitable to his facili-
ties and business, and promptly
inform all competing customers of the
kind and amount of services, facilities
or allowances which he has offered to
each and the respective terms and con-
ditions under which such services, fa-
cilities or allowances are to be fur-
nished by the industry member: And
provided, further, That when the offer
of any service, facility, or allowance to
any customer is conditioned on such
customer supplying some reciprocal
service, facility, or payment, a recipro-
cal service, facility, or payment be re-
quired in the offers to all other cus-
tomers and there be an equality of
ratio among all customers as to the
measurable cost of that which is sup-
plied by the industry member and the
recriprocal service, facility, or pay-
ment required of any customer. The
industry member must take every rea-
sonable precaution to see that services,
facilities, or allowances which he fur-
nishes to customers are used in accord
with the terms of his offer; and upon
fallure of the customer to perform any
obligation on his part the industry
member must cease supplying the cus-
tomer any further service, facility, or
allowance.

Explanatory analysis. In other words, one,
but not the only, method of complying with
paragraphs (c) and (d) of this § 221.1, is as
foliows:

§ 221.2

The industry member may offer, simulta-
neously, to each competing resale customer,
the same kind of—

1. Promotional service, or

2. Facility, or

3. Allowance,

The value of which must be equal to a uni-
form percentage of dollar volume.

1. Of the sales or purchases by each cus-
tomer of the industry member’s products.

2. Computed for an Identical, specified
period of time. However, if the same kind is
not usable and suitable under reasonable
terms and conditions to all such customers,
and is offered to one,

The others must be offered an alternate
type of—

1. Promotional service, or

2. Facility, or

3. Allowance, and

The alternate type must be—

1, Of equivalent measurable cost, and

2. Usable by the customer and sultable
with respect to his facilities and character
of business; and

All such customers must be promptiy in-
formed of—

1. The kind,

2. The amount, and

3. Terms and conditions of the offer.

Also. When the offer is conditioned upon
something reciprocal to be furnished hy the
customer, the member—

1. Must require of all customers the same
proportionate reciprocity (equality of ratio
as to the measurable cost of that supplied
hy the customer to that supplied by the
member);

2. Must take every reasonable precaution
to see that what he pays or furnishes is used
in accordance with the terms of his offer;
and

3. Must cease furnishing or paying It to
the customer when the industry member
knows, or has reason to believe, lt is not so
used. (Rule 1.)

§ 221.2 Misrepresentation in general.

It is an unfair trade practice to use,
or cause or promote the use of, any
false, untrue, or deceptive statement,
representation, guarantee, warranty,
testimonial, or endorsement, by way of
advertising (through newspapers, mag-
azines, circuiars, booklets, or by radio,
or any other medium), oral represen-
tation, or otherwise, which has the ca-
pacity and tendency or effect of mis-
leading or deceiving purchasers, pro-
spective purchasers, or the consuming
public with respect to the efficacy,
permanency of the effects, medicinal

117


§ 221.3

or curative properties, grade, quality,
quantity, substance, character, origin,
size, preparation, manufacture, or dis-
tribution of any product of the indus-
try, or concerning the purported ap-
proval or endorsement of such product
by State, Federal, medical, or other
authority, or in any other material re-
spect.

Note: Among the prohibitions of this sec-
tion is ‘false advertisement,” as defined in
section 15 of the Federal Trade Commission
Act, of any “cosmetic” as such term is de-
fined in the same section. Furthermore,
nothing in this Part 221 is to be construed
as relieving anyone of the necessity of com-
plying with the cosmetic labeling require-
ments of the ‘Federal Food, Drug and Cos-
metic Act” and the general regulations
thereunder. (Rule 2.)

$221.3 Deception as to origin.

(a) In connection with the sale or of-
fering for cale of cosmetic and toilet
preparations, it is an unfair trade
practice to misrepresent, through any
means or device, the country of origin
thereof.

(b) In connection with the sale or of-
fering for sale of any cosmetic or toilet
preparation product not whoily made
(ie., in form for distribution to the
public except for bottling and/or pack-
aging) in a foreign country or coun-
tries, it is an unfair trade practice to:

(1) Represent directly that such
product was made in a foreign coun-
try, or ;

(2) Use any foreign word, term or
phrase in the brand or product name
or otherwise, or any depiction or other
device, which may tend to convey the
erroneous impression that the product
is of foreign origin, unless clear and
conspicuous disclosure is made in close
connection and conjunction therewith
of the fact that such product was
made, compounded, mixed, blended, or
diluted in the United States. (“Brand
or product name” as used in this sec-
tion shall refer to any name including
company or trade name, when used to
designate products.)

Notes on application of the section. 1. Pro-
vision (b)(1) of the section is intended to
prevent the use of such statements as
“Made in France,” ‘Imported from Italy,”
etc., in counectlon with products not wholly
made in the foreign country referred to.

Title 146—Commercial Practices

2. When a bottle or other immediate con-
tainer used in connection with any such
product bears terminoiogy or depictions re-
ferred to in provision (b)(2) of the section,
the disclosure required by. the section must
be placed clearly and conspicuously on at
least one face (or the top) of the bottle or
other immediate container.

3. When a package, box, or other wrap-
ping encasing the bettle or other inner con-
tainer, used in connection with any such
product, has a distinct front face, on which
terminoiogy or depictlons referred to in pro-
vision (b)(2) of the sectlon appear, the dis-
closure required by the section must be
placed clearly and conspicuously on such
front face of each such package, box and
other wrapping. When such disclosure has
been made, it will not be necessary to repeat
the disclosure although terminology or de-
pictions referred to in provision (b)(2) of the
sectlon may alse appear on other parts of
said package, box, or other wrapping.

4. When a package, box or other wrapping
does not have a distinct front face, or has
such a face upon which no terminology or
depictions referred to in provision (b)(2) of
the sectlon appear, the disclosure required
by the section must be placed clearly and
conspicuously on the package, the box and
other wrapping, in close connection and
conjunction with any such terminology or
depiction wherever used.

5. When any terminology or depiction re-
ferred to in provision (b)(2) of the section is
used in promotional material, including, but
not limited to, display or sampler bottles,
display cards or display packages, or in
other advertising, to refer to such products,
disclosure required by the section shall
appear clearly and conspicuously in close
connection and conjunction with such ter-
minology or depiction.

Nothing in above notes 2, 3, 4, or 5 shall
be decmed to permit any representation
prohibited by provision (b)(1) of the sectlon.

The sectlon does not require disclosure of
domestic bottling and/or packaging of prod-
ucts wholly made in a foreign country, im-
ported in bulk, and bottled or otherwise
packaged in the United States.

Provisions of outstanding Cease and
Desist Orders pertaining to subject matter
covered by this §221.3 shall not be con-
strued by the Commission as prohibiting or
requiring more than the section. (Rule 3.)

(31 FR 9059, July 1, 1966, as amended at 31
FR 9267, July 7, 1966)

§ 221.4 Deceptive imitation of trademarks,
trade names, ete.

The imitation of trademarks, trade
names, or other exclusively owned
marks of identification of competitors,
with the capacity and tendency or

118


Chapter |—Federal Trade Cammission

effect of misleading or deceiving pur-
chasers, prospective purchasers, or the
consuming public, is an unfair trade
protection. (Rule 4.)

§ 221.6 Misrepresentation as to character
of business.

It is an unfair trade practice for any
concern, in the course of or in connec-
tion with the distribution of industry
products, to represent, directly or indi-
rectly, that it is a manufacturer of in-
dustry products, or that it owns or
controis a factory making such prod-
ucts, when such is not the fact, or in
any other manner to misrepresent the
character, extont, or type of its busi-
ness. (Rule 5.)

§221.6 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, regardless of such disclosure;

(b) When, with respect to any article
of merchandise required to be pur-
chased in order to obtain the ‘‘frec”
article or service, the offerer (1) in-
creases the ordinary and usual price of
such article of merchandise, or (2) re-
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 appeare in each
advertisement or offer. A disclosure in the
form of a footnote, to which reference is
made by use of an asterisk or otner symboi
piaced next to the word “free,” will not be
regarded as compliance. (Ruie 6.)

§ 221.10

§ 221.7 Deceptive pricing.

Members of the industry shall not
represent directly or indirectly in ad-
vertising or otherwise that an industry
product may be purchased for a speci-
fied price, or at a saving, or at a re-
duced price, when such is not the fact;
or otherwise deceive purchasers or
prospective purchasers with respect to
the price of any product offered for
sale; or furnish any means or instru-
mentality by which others engaged in
the sale of industry products may
make any such representation.

Nore: The Commission promulgated
Guides Against Deceptive Pricing effective
January 8, 1964, superseding the Guides
adopted October 2, 1958. The 1964 Guides
are appended to these rules for additional
guidance with respect to price savings repre-
sentations. (Ruie 7.)

§ 221.8 Passing off an industry product as
and for tbe product of a competitor.

The passing off, or causing to be
passed off, of any industry product as
and for the product of a competitor
through appropriation or simulation
of such competitor’s trademarks,
lables, or by any other means or
device, with the capacity and tendency
or effect of thereby misleading or de-
ceiving purchasers, prospective pur-
chasers, or the consuming public, is an
unfair trade practice. (Rule 8.)

§ 221.9 Defamation of competitors or false
disparagement of tbeir 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 cred]t terms, values, policies, ser-
vices, the nature or form of the busi-
ness conducted, or m any other mate-
rial respect, is an unfair trade practice.
(Rule 9.)

§ 221.10 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, employ-
ees, or representatives of customers or
prospective customers, or to agents,

119

30-035 O- 78-9


§ 221.11

employees, or representatives of com-
petitors’ customers or prospective 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 deal with competitors.
(Rule 10.)

§ 221.11 Procurement of competitor’s con-
fidcntial information by unfair means
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 representa-
tions, by the impersonation of one in
authority, or by any other unfair
means, and to use the information so
obtained so as substantially to injure
competition or unreasonably restrain
trade. (Rule 11.)

§ 221.12 Inducing breach of contract.

(a) Knowingly inducing or attempt-
ing to induce the breach of existing
lawful contracts between competitors
and their customers or between com-
petitors and their suppllers, or intor-
fering with or obstructing the perfor-
mance of any such contractual duties
or services, under any circumstance
having the capacity and tendency or
effect of substantially injuring or less-
ening competition, is an unfair trade
practice.

(b) Nothing in this section is intend-
ed to imply that it is improper for any
industry member to solicit the busi-
ness of a customer of a competing in-
dustry member; nor is the seetion to
be construed as in anywise authorizing
any agreement, understanding, or
planned common course of action by
two or more industry members not to
solicit business from, or to sell to, the
customers of either of them, or cus-
tomers of any other industry member.
(Rule 12.)

Title 16—-Commerclal Practices

§ 221.13 Use of lottery sehemes, etc.

It is an unfair trade practice to sell,
distribute or promote the sale or dis-
tribution of any industry product or
other merchandise by means of a gift
enterprise or lottery scheme. (Rule
13.)

§ 221.14 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, to engage in any
planned common course of action, or
to enter into or take part in any un-
derstanding, agreement, combination,
or conspiracy, with one or more mem-
bers of the industry, 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, agreement,
combination, or conspiracy. (Rule 14.)

§ 221.15 Unfair threats of infringement
suits.

The circulation of threats of sult for
infringement of patents or trademarks
among customers or prospective cus-

‘The prohibitions of this section are sub-
ject to Public Law 542, approved July 14,
1952, 66 Stat. 632 (the McGuire Act, com-
monly referred to as the Fair Trade Amend-
ment), which provides that with respect to a
commodity which bears, or the label or con-
tainer of which bears, the trademark, 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 class produced or distributed
by others, a selier 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
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 wholesalers, or between brokers, or
between factors, or between retailers, or be-
tween persons, firms, or corporations in
competition with each other.

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Chapter l—Federal Trade Commissien

tomers of competitors, not made in
good faith but for the purpose or with
the effect of harassing or intimidating
such customers or prospective custom-
ers, or of unduly hampering, injuring,
or prejudicing competitors in their
business, is an unfair trade practice.
(Rule 15.)

§ 221.16 Exclusive deals.

It is an unfair trade practice for any
member of the industry to contract to
seli or sell any industry product, 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 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.
(Rule 16.)

§ 221.17 Push money.

It is an unfair trade practice for an
industry member to pay or contract to
pay anything of vaiue to a salesperson
employed by a customer of the indus-
try member as compensation for, or as
an inducement to obtain, speciai or
greater effort or service on the part of
the salesperson in promoting the
resale of products supplied by the in-
dustry member to the customer—

(a) When the agreement or under-
standing under which the payment or
payments are made or are to be made
is without the knowledge and consent
of the salesperson’s employer; or

(b) When the terms and conditions
of the agreement or understanding are
such that any benefit to the salesper-
son or customer is dependent on lot-
tory; or

(c) When any provision of the agree-
ment or understanding requires or
contempiates practices or a course of
conduct unduly and _ intentionally
hampering sales of products of com-
petitors of an industry member; or

(d) When, because of the terms and
conditions of the understanding or
agreement, inciuding its duration, or
the attendant circumstances, the
effect may be to substantially lessen

§ 221.17

competition or tend to create a mo-
nopoly; or

(e) When similar payments are not
accorded to salespersons of competing
customers on proportionally equai
terms in compliance with section 2 (d)
and (e) of the Clayton Act.

Note: Payments made by an industry
member to a salesperson of a customer
under any agreement or understanding that
all or any part of such payments is to be
transferred by the salesperson to the cus-
tomer, or is to result in a corresponding de-
crease in the salesperson’s salary, are not to
be considered within the purview of this
§ 221.17, but are to be considered as subject
to the requirements and provisions of sec-
tion 2(a) of the Clayton Act. (Rule 17.)

PART 223—ORTHOPEDIC APPLIANCE
INDUSTRY

Sec.
223.0 Definitions.

Group I

223.1 Deception (general).

223.2 Representation or promise that prod-
uct will “fit.”

223.3 Protection of public with respect to
apparent agency.

223.4 Deceptive testimonials or depictions.

223.5 Deceptive demonstrations.

223.6 Misuse of terms “custom-made,”
“custom-built,” ete.

223.7 Guaranties, warranties, etc.

223.8 Misrepresenting products as _ con-
forming to standard.

223.9 Deception as to being “new.”

223.10 Substitution of products.

223.11 False invoicing.

223.12 Misrepresentation as to installment
sales contracts, their terms, conditions,
etc.

223.13 Misrepresentation as to character of
business.

223.14 Defamation of compotitors or faise
disparagement of their products.

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

223.16 Unfair threats of infringement
sults.

223.17 Deceptive use of trade or corporate
names, trade-marks, etc.

223.18 Use of the word “free.”

223.19 Coercing purchase of one product as
& prerequisite to the purchase of other
products.

223.20 Fictitious prices.

223.21 Prohibited allowances or commis-
sions to doctors.

223.22 Inducing breach of contract.

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