Guides For The Greeting Industry Relating To Discriminatory Practices
16 CFR Part 244 · Guides · in the Code of Federal Regulations 1975-1975 (1 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 These rules and guides are historical: most were rescinded or replaced, so do not assume any is in force.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, 1975 CFR · Earliest edition: 1975 CFR
Text (1975 edition, OCR)
Chapter l—Federal Trade Commission
8243.9 Representations concerning
washability, cleanability, cte.
Industry members should not directly
or indirectly misrepresent the manner in
which the exposed surfaces of prefinished
industry products may be washed,
cleaned, or otherwise maintained, or fail
to clearly and conspicuously disclose the
manner in which exposed surfaces may
be washed, cleaned, or otherwise main-
tained without adverse effects whenever
representations are made concerning
such matters.
[Guide 9]
§ 243.10 Size markings and designa-
tions.® .
Industry members should not:
(a) Mark or otherwise represent, di-
rectly. or by implication, an industry
product as being of a certain size unless
it has the dimensions represented; or
(b) Fail to disclose in advertising and
on industry products the true size there-
of when the failure to make such disclo-
sure has the capacity and tendency or
effect of deceiving purchasers or pro~
spective purchasers as to the size of such
products. For example, consumers gener-
ally assume that decorative wall panels
are 4’ x 8’ x %4’’ when advertised with-
out disclosure of dimensions. Therefore,
if the dimensions of advertised panels
are less than 4’ x 8’ x %4’’, an affirmative
disclosure of the correct size should be
made.®
[Guide 10]
§ 243.11 Removal, obliteration, or al-
teration of marks or labels.
Industry members should not:
(a) Remove, obliterate, deface, change,
alter, conceal, or make illegible any in-
formation this part provides be disclosed
on industry products, without replacing
adhe same before sale, resale or distribu-
tion for sale with a proper mark or label
meeting the provisions of this part; or
(b) Sell, resell, or distribute any in-
dustry product without its being marked
5 Officially established Commercial Stand-
ards and Product Standards concerning the |
various industry products are recognized as
giving proper guidance for determining di-
mensions of industry products (e.g., CS157~-
56; CS176-58; CS35-61; CS251-63; CS236-66;
and PS1-66; and amendments or revisions
thereof).
°See paragraphs (b) and (c) of § 243.1.
§ 243.14
or labeled and described in accordance
with the provisions of this part.
{Guide 11]
§ 243.12 Misrepresenting products as
conforming to standard or specifica-
tion.
Members of the industry should not
. misrepresent in advertismg, labeling, or
otherwise, that any product conforms to
any applicable standard or specification.
(Guide 12]
§ 243.13 Deception as to origin.
.(a) Industry members should not
make any direct or indirect representa-
tion which is false or likely to mislead
prospective purchasers concerning the
origin of either domestic or foreign in-
dustry products, or any substantial parts
thereof.
(b) Industry members should clearly
and conspicuously disclose that industry
products, or any substantial parts
thereof, were produced or manufactured
in an identified foreign country when the
failure to make such disclosure has the
capacity and tendency or effect of de-
ceiving prospective purchasers. Such
disclosures should be in the form of a
legible mark, stamp or label on the prod-
-uct, and any samples thereof, and should
be of such size, conspicuousness and per-
mmanency as to remain noticeable and
legible upon casual inspection until con-
sumer purchase,
[Guide 13]
§ 243.14 Other parts in this title 16 ap-
plicable to this industry.
The Commission has adopted Guides
Against Deceptive Pricmg, Part 233,
Guides Against Deceptive Advertising of
Guarantees, Part 239, and Guides
Against Bait Advertising, Part 238, all
of which have general application and
furnish additional guidance for members
of the Decorative Wall Paneling Indus-
try. Members of this industry should
comply with those parts.
_ PART 244—GUIDES FOR THE GREET-
ING CARD INDUSTRY RELATING
TO DISCRIMINATORY PRACTICES
Sec.
244.0 Definitions.
244.1 Price discriminations in general,
244.2 Promotional assistance.
AUTHORITY: The provisions of this Part
244 issued under secs. 5, 6, 38 Stat. 719, as
391
*§ 244.0
amended, 721; 15 U.S.C. 45, 46: 49 Stat. 1526;
15 U.S.C. 13, as amended, unless otherwise
noted. .
Source: The provisions of this Part 244
appear at 33 F.R. 16634, Nov. 15, 1968, unless
otherwise noted.
§ 244.0 Definitions.
For purposes of this part the following
definitions will apply:
(a) “Greeting card” means any com-"
mercial form of card, sheet, or folder
which conveys a greeting or similar type
of message by means of printed reading
matter or pictorial matter. The term in-
cludes “chromos” which contain pic-
tures but no words, and also, cards which
contain words but no pictures.
(b) “Publisher” means any person,
firm, partnership, corporation, or any
other organization which has greeting
cards printed or packaged, whether in
its own plant or other plant, for sale ex-
clusively by it. It does not include the
printer or packager unless he acts for
his own account.
(@) “Distributor” means any person,
firm, partnership, corporation, or any
other organization that purchases greet-
ing cards for resale to parties other than
the ultimate consumer. This includes
wholesalers, jobbers, and all other inter-
mediaries other than retallers.
(d) “Supplier” medns any greeting
card pubUsher or distributor.
(e) “Retailer’’ means any seller of
greeting cards to the ultimate consumer,
such as card shops, drug stores, discount
houses, department stores, etc.
(f) “Competing customers” means, for
purposes of § 244.2 entitled “Promotional
Assistance”, all businesses that compete
in the resale of the supplier’s greeting
cards at the same functional level of
distribution regardless of whether they
purchase direct from the supplier or
through some intermediary (e.g., direct
buying retailers and retailers that pur-
chase through wholesalers and compete
with the direct buying retailers).
(g) “Commerce”—this has not been
precisely defined in the statute. In gen-
eral, if there is any part of a business
which is not wholly within one State
(for example, sales or deliveries of prod- -
ucts, their subsequent distribution or
purchase, or delivery of supplies or raw
materials), the business may be subject
to section 2 of the amended Clayton Act
and/or section 5 of the Federal Trade
Commission Act. Sales in the District of
Columbia are also covered by the Acts.
Title 16—Commercial Practices
ch) “Promotional assistance”? means
any payment, allowance, service, or fa-
cility provided by a supplier whether
direct to a customer or to a third party
for the benefit of a customer in connec-
tion with the processing, handling, sale,
or offering for sale the supplier’s product,
including but not limited to:
(1) Any kind of advertising;
(2) Window and counter displays;
(3) Servicing of greetmg card cab-
inets or racks;
(4) Greeting card cabinets, or a dis-
count thereon;
(5) Rebates or allowances for soiled,
discontinued or leftover cards;
(6) Push money;
(7) Contribution to a customer’s an-
niversary or any other sale.
°@ “Proportionally - equal terms”
means that the promotional assistance is
proportionalized on some basis which is
fair to all competing customers. No sin-
gle way-to proportionalize is prescribed
by law and any method that treats com-
peting customers on proportionally equal
terms may be used.
(j) “Cost justification” is an affirma-
tive defense which may be undertaken
by a supplier charged with price dis-
crimination, by establishing that his
price differential was based solely on dif-
ferences in the cost of manufacture, sale
or delivery resulting from the differing
methods or quantities in which his prod-
ucts are sold or delivered. This defense
depends upon savings in cost based on all
the facts relevant to the transactions. It
is a technical defense and some items,
such as savings in brokerage, may not be
included in determining savings in cost.
(This defense is not available to a sup-
plier charged with discrimination in the
furnishing of promotions! assistance.)
(k) “Meeting competition in good
faith” is an affirmative defense which
may be undertaken by a supplier
charged with a violation of subsection 3
(a), (a), or (e) of the amended Clayton
Act who can defend his actions by estab-
lishing that his lower price or granting of
disproportionate promotional assistance
was made in good faith to meet an
equally low price or greater promotional
assistance paid for or furnished by a
competitor. This defense, however, is
1This phrase incorporates any and all serv-
ices and facilities covered by subsections (d)
and (e) of section 2 of the amended Clayton
Act, including those which technically may
not be promotional in nature.
392
Chapter |—Federal Trade Commission
subject to important limitations. For in-
stance, it is insufficient to defend a
charge of violating subsection (a), (d),
or (e) of section 2 of the amended Clay-
ton Act solely on the basis that compe-
tition in a particular industry is very
keen, requiring that special prices or al-
lowances be given to some customers if a
seller is “to be competitive’.
§ 244.1 Price discriminations in general.
(a) Publishers and distributors in the
Greeting Card Industry should not, in
the course of commerce, grant, secretly
or openly, directly or indirectly, any re-
bate, refund, discount, credit, or other
form of price differential which effects
a discrimination in price between differ-
ent purchasers of greeting cards of like
grade and quality, where the effect
thereof may be substantially to lessen
competition or tend to create a monop-
oly in any line of commerce, or to in-
jure, destroy, or prevent competition with
the publisher or distributor granting the
discrimination or with the purchaser re-
ceiving its benefit or with customers of
either of them.
Note: This section ts not applicable to
greeting cards purchased by the U.S. Gov-
ernment, State and local government entities
or by schools, colleges, universities, public 1-
braries, hospitals, churches, and charitable
institutions not operating for profit, as sup-
Plies for their own use. Also, this section Ils
not to be construed as preventing price
changes from time to time where made in re-
sponse to changing conditions affecting the
market for or the marketability of the goods
concerned, such as, obsolescence of seasonal
goods, distress sales under court process or
sales in good faith in discontinuance of busi-
ness in the goods concerned,
(b) The following are examples of
practices involving price differentials to
be avoided in commerce, when involving
goods of like grade and quality, where the
effect thereof may have the reasonable
probability of adversely affecting com-
petition and the seHer is unable to estab-
lish either the “cost justification” or
“meeting competition in good faith’
defense:
(1) A supplier sells to retailers at 50
percent off list but grants an extra 5 per-
‘cent discount to chain store customers.
It is immaterial that such 5 percent dis-
count is given under the guise of or
labeled as a promotional allowance.
(2) A supplier sells direct to retailers
at 50 percent off list and at the same time,
sells to a retail buying group allowing
39-064—75
§$ 244.2
the latter an additional 5 percent
discount.
(3) A supplier grants discounts of 2
percent on first $1,000 of purchases, 4
percent on the next $1,000 of purchases,
and 6 percent on all purchases thereafter
during a specified period of time.
(4) A supplier grants a 5 percent re-
bate on the mcreased amount of greeting
cards purchased over purchases in the
preceding year.
(5) A suppHer pays freight on ship-
ments to one or more customers but does
not pay such freight for all customers,
thereby effecting a difference in price be-
tween customers. .
(6) A supplier invoices goods to all
customers at the same price but supplies
additional quantities of such goods at no
extra charge to one or more, but not to
all, such customers.
Nors 1: As previously indicated, the fore-
going are examples of practices involving
price differentials to be avoided in commerce,
when involving goods of like grade and qual-
ity, where the effect thereof may have the
reasonable probability of adversely affecting
competition and when not subject to the
other exemptions, exclusions, or defenses set
forth in this section.
Nore 2: While this section concerns viola-
tions of the Clayton Act, as amended, per-
taining to price discriminations granted by
publishers and distributors it should not be
overlooked that section 2(f) of such Act
makes it unlawful for any person engaged itm
commerce, in the course of such commerce,
knowingly to Induce or recelve a discrimina-
tion in price prohibited by the Act.
[Guide 1]
§ 244.2 Promotional assistance.
(a) Publishers and distributors of
greetings cards, providing promotiona)}
assistance in the course of commerce to
competing customers, should do so under
a plan which takes into account the
following:
(1) The promotional] assistance must
be made available on proportionally
equal terms to all competing customers.
(2) The competing customers must be
made aware that the promotional assist-
ance is availabie. It is not absolutely nec-
essary that the offer be in writing for it
may be made in any manner the sup-
plier chooses including letter, telegram,
conspicuous notice on invoice, by sales-
men, etc. However, if the suppHer wants.
to be able to show later that the offer
was made to a certain customer, he is in
a better position to do so if the offer was
made in writing. :
36 393
§ 244.2
(3) The supplier must not adopt a
plan which is of use to only one customer
or to only one favorite class of customers.
The plan must be either realistically
available to all competing customers in a
practical business sense, or reasonable
alternatives must be made available on
proportionaily equal terms.
(4) The supplier must take reasonable
precautions to see that the customers
receiving promotional assistance are per-
forming what is required of them under
the plan, and that he is not paying any
amount in excess of that actually used
oy the customers..-
(b) The following are examples of
practices involving discriminations in
the.furnishing of promotional assistance
to be avoided in commerce when involv-
ing products of like grade and quality’
and when the seller is unable to estab-
lish a defense of “meeting competition
in good faith.”
(1) A supplier grants allowances only
for radio, television, and newspaper ad-
vertising when he has some competing
customers, such as small card shops,
which are unable to advertise in these
media, even with the promotional as-
sistance offered.
(In the above circumstances, and in
order to satisfy legal requirements,‘ the
supplier must make usable and suitable
alternatives available on proportionally
equal terms to all other customers com-
peting in the distribution of the sup-
Plier’s greeting cards, such as, but not
limited to, advertising in the neighbor-
hood paper or buying guide, in-store ad-
vertising, envelope stuffers, handbills,
etc.)
department stores or other customers 4
rebate of 50 percent on all Christmas
cards purchased from the supplier and
left over after Christmas, but does not
make the offer to all of its customers
competing with those to whom this serv-
ice is accorded.?
(3) A supplier furnishes greeting card
cabinets without cost or with a special
discount to one or more customers, but
‘does not make the same offer available
on proportionally equal terms to all
other competing customers, or in the
event he does make such offer, he does
not offer usable and suitable alternatives
of equivalent measurable cost to those
2A rebate on leftover greeting cards may,
under some circumstances, be cognizable
under § 244.1, as a price discrimination.
(2) A supplier grants as a service to:
Title 16—Commercial Practices
competing ‘customers to whom cabinets
are not usable and suitable.
(4) A supplier accords to one or more
customers the privilege of returning for
credit, refund, or exchange, any or all
of the greeting cards purchased from
the supplier but fails to offer the same
privilege to all other customers compet-
_ing in the distribution of the supplier’s
greeting cards.
(In the above circumstances, the
supplier need not offer alternatives to
returns for credit, refund, or. exchange
because they would appear to be usable
by all customers in a practical business
sense.)
(5) A suppller furnishes promotional
assistance based on increased amounts
of purchases, such as 2 percent coopera-
tive advertising allowance on yearly pur-
chases up to $1,000, and 4 percent
cooperative advertising allowance on
purchases over $1,000.
(Generally, using as a basis for promo-
tional assistance a percentage of dollar
volume or quantity of goods purchased
during a specified period of time will in-
sure that the promotional assistance is
furnished on proportionally equal terms;
Provided, however, That when promo-
tional assistance is furnished on -this
basis, the percentage remains constant
regardless of the amount of purchases.)
Nore 1: As previously indicated, the fore-
going are examples of practices involving
discriminations in the furnishing of promo-
tional assistance to be avoided in commerce
when involving products of like grade and
quality and when the seller is unable to
establish a defense of “meeting competition
in good faith.”
Nore 2: While this section concerns viola-
tions of the Clayton Act, as amended, per-
‘taining to discriminations in the furnish-
ing of promotional assistance by publishers
or distributors, it should not be overlooked
that a customer who induces, or receives
promotional assistance that he knows, or
should know, is not available on proportion-
ally equal terms to his competitors engaged
in the resale of the supplier’s greeting cards,
may be proceeded against by the Commission
‘for violation of section 5 of the Federal Trade
Commission Act, which prohibits unfair
methods of competition.
[Guide 2] .
Note: Nothing contained in this part re-
lieves any party subject to a Commission
cease and desist order or other requirement
from complying with the specific provisions
of such order or requirement. The Guides
in this part do not constitute a finding in
and will not affect the disposition of any
formal or informal matter now pending with
the Commission,
894