Combination Storm Window And Door Industry

16 CFR Part 25 · Trade practice rules · in the Code of Federal Regulations 1959-1977 (12 annual editions)

Scanned CFR pages, OCR text may contain errors; the linked Library of Congress PDF is the authority. Not legal advice; not affiliated with the FTC. These rules and guides are historical: most were rescinded or replaced, so do not assume any is in force.

Latest edition: Library of Congress, 1977 CFR · Earliest edition: 1959 CFR

Text (1977 edition, OCR)

§ 25.0

Category II. Rules in this part having ap-
plication to industry products composed in
whole or in part of a precious metal or
metals:

23.22 Misrepresentation as to Gold Content.
23.23 Misrepresentation as to Sliver Con-
tent.

23.24 Misuse of Words “Platinum,” “Trid-
ium,” “Palladium,” “Ruthenium,”
“Rhodium,” and “Osmium.”

Additional Requirements Relating to
Quality Marks.

Category III, Rules in this part having ap~-
plication to industry products containing
diamonds or imitations thereof:

23.26 Misuse of the Word “Diamond.”

23.27 Misuse of Word “Perfect,” Etc.

23.28 Misuse of Term “Blue White.”

23.29 Misuse of the Term “Properly Cut,”
Etc.

Misuse of the Word “Brilliant” and
“Puil Cut.”

Misuse of Term “Clean,” Etc.

Misrepresentation of Weight, “Total
Weight.”
Nors: These rules aiso have application to

diamonds which are soid in the loose and

unset state.

Category IV. Rules in this part having
application to industry products contain-
ing pearls, cultured pearls, or imitations
thereof:

23.33 Misuse of Word “Pearl.”

23.34 Misuse of Terms “Cultured Pearl,”
“Cultivated Pearl,’ “Seed Pearl,”
“Oriental Pearl,” “Oriental,” “Na-
tura,” and “Kultred.”

23.86 Misrepresentation as to Cultured
Pearls.

Norte: These ruies aiso have application to
pearls, cultured pearls, and imitation pearls
sold in the loose (unstrung and unset) state.

Category V. Rules in this part having ap-
plication to industry products containing
rubies, sapphires, and emeralds and other
precious or semi-precious stones, and syn-
thetic and imitation stones:

23.36 Deception as to Precious and Semi-
Precious Stones.

Misuse of Words “Ruby,” “‘Sapphire,”
“Emerald,” “Topaz,” ‘‘Stone,’’
“Birthstone,” Etc.

Misuse of Words “Real,” Genuine,”
“Natural,” Etc.

Misuse of Words “Gem,” ‘“Reproduc-
tion,” “Replica,” “Synthetic,” Etc.

Note: Industry products covered by the

rules in Categories II through V are also
subject to the rules in Category I.

23.25

23.30

23.31
23.32

23.37

23.38

23.39

Title 16—Commercial Practices

PART 25—COMBINATION STORM
WINDOW AND DOOR INDUSTRY

Bec.

25.0 Definitions.

25.1 Deception (general).

25.2 Bait advertising.

25.3 Deceptive pricing.

25.4 Guarantees, warranties, etc.

25.5 Use of the word “free.”

25.6 Deceptive testimonials or depictions.

25.7 Misrepresenting products as con-
forming to standard.

25.8 Deceptive use of seals.

25.9 Misrepresentation as to character of
business.

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

26.11 Substitution of products.

25.12 Misuse of terms “custom built,”
“made-to-order,” etc.

25.13 Defamation of competitors or false
disparagement of their products.

265.14 Imitation of trade-marks, trade
names, etc.

25.15 Coercing purchase of one product as
& pre-requisite to the purchase of
other products.

25.16 Procurement of competitors’ confi-
dential information.

265.17 Unfair threats of infringement suits.

25.18 Inducing breach of contract.

25.19 Commercial bribery.

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

25.21 Exclusive deals.

26.22 Prohibited discrimination.

COMMITTEE ON TRADE PRACTICES
26.201 Industry committee.

AvTHORITY: The provisions of this Part 25
issued under secs. 6, 5, 38 Stat. 721, 719; 15
U.S.C. 46, 45, unless otherwise noted.

Sourcs: The provisions of this Part 25 ap-
pear at 22 F.R. 1165, Feb. 28, 1957, unless
otherwise noted.

§ 25.0 Definitions.

As used in this part, the terms “in-
dustry member” and “industry products”
shall have the following meanings, re-
spectively:

(a) Industry member. Any person,
firm, corporation, or organization en-
gaged in the manufacture, sale, or dis-
tribution of industry products as defined
in paragraph (b) of this section.

(b) Industry products. Industry prod-
ucts consist of combination storm
windows and doors. The storm windows
are designed for permanent attachment
and are either the self-storing type or
the interchangeable type. The windows
basically consist of a frame with chan-

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Chapter I—-Federal Trade Commission

nels, and glass (or other transparent
material) inserts and screen inserts.
The storm doors basically consist of a
frame and glass (or other transparent
material) inserts and screen inserts.

§ 25.1 Deception (general).

(a) In the sale, offering for sale, or
distribution of industry products, it is an
unfair trade practice for any industry
member to make any representation
which, directly or by implication, or
through failure adequately to disclose
additional relevant information, has the
capacity and tendency to deceive pur-
chasers or prospective purchasers in any
material respect, including, but not lim-
ited to, representations relating to
construction, design, model, origin, man-
ufacture, quality, strength, utility, dura-
bility, or life expectance, of such prod-
ucts, or the benefits to be derived from
the use thereof, or with respect to the
need for repair or maintenance of such
products or any service or services to be
supplied to purchasers or prospective
purchasers of the products.

(b) Among the practices inhibited by
this section are the following:

(1) Representing that savings in fuel,
or reduction in heat loss, will result from
the use of storm windows or doors, when
such representation is false or mislead-
ing in any material respect.

(2) Representing or implying contrary
to fact that a building equipped with
combination storm windows and/or
doors affords positive protection against
prowlers, burglars, or other individuals
unlawfully attempting entry into such
building.

(3) Representing or implying that
combination storm windows or doors will
not shrink, rot, rust, warp, twist, sag, or
otherwise become unserviceable, when
such is not the fact.

(4) Representing or implying that the
metal portions of storm windows and/or
doors are made of “aircraft aluminum,”
or are of extruded metal, when such is
not the fact.

(c) The inhibitions of this section are
applicable with respect to every species
of advertisement or form of representa-
tion, whether in a newspaper or other
periodical, telephone directory, sales
catalog, sales promotional literature, ra~
dio or television broadcast, or other
media, or whether in the form of a mark,

§ 25.3

tag, or label on, affixed to, or accompany-
ing, the product.

§ 25.2 Bait advertising.

It is an unfair trade practice for an
industry member to offer for sale any in-
dustry product when the offer is not a
bona fide effort to sell the product so
offered.

Nore: In determining whether there has
been a violation of this section, considera-
tion will be given to acts or practices indicat-
ing that the offer was not made in good
faith for the purpose of selling the adver-
tised product, but was made for the purpose
of contacting prospective purchasers and
selling them a product or products other
than the products offered. Among acts or
practices whlch will be considered in making
that determination are the following:

(a) The creation, through the initial offer
or advertisement, of a faise impression of
the grade, quality, make, value, currency of
model, size, usability, or origin of the product
offered.

(b) The refusal to show, demonstrate, or
sell the product offered in accordance with
the terms of the offer.

(c) The disparagement, by acts or words,
of the product offered.

(ad) The showing, demonstrating, and in
the event of sale, the delivery, of a product
which is unusable or impractical for the pur-
pose represented or implied in the offer.

(e) The refusal, in the event of sale of
the product offered, to deliver such product
to the buyer within a reasonable time
thereafter.

(f) The failure to have available a quan-
tity of the advertised product sufficient to
meet reasonably anticipated demands.

It is not necessary that each act or prac-
tice set forth be present in order to estab-
ish that a particular offer is violative of
this section.

§ 25.3 Deceptive pricing.

(a) It is an unfair trade practice for
any member of the industry to represent
or imply, in advertising or otherwise,
than an industry product may be pur~
chased for a specified price when such is
not the fact; or that an industry product
is bemg offered for sale at a reduced
price when such is not the fact; or other-
wise to deceive purchasers or prospective
purchasers with respect to the price of
products offered for sale.

(b) Among the practices inhibited by
this section are:

(1) Representing or implying that a
stated price if for a complete func-
tional combination storm window or

299


§ 25.4

door when in fact the product so priced
is deficient as to parts necessary and
usual to the proper functioning and ap-
pearance of such coinbination storm
window or door (such as hinges, glass,
screening, frames, etc.).

(2) Representing or implying that the
price of combination storm windows or
doors includes certain services, such
as installation, adjustments, weather
stripping, etc., or includes parts or ac-
cessories such as door closers, grilles,
etc., when such is not the fact.

(3) Representmg or implying that the
selling price of any combination storm
window or door has been reduced from
what is m fact a fictitious price, or
that such price is a reduced or special
price when it is in fact the regular sell-
ing price of such combination storm
window or door, or when over a substan-
tial period of time the alleged “reduced”
or “special” price has been the price at
which such products customarily have
been sold.

(4) Representing or implying that
prices applicable only to certain sizes of
combination storm windows or doors ap-
ply to other or all sizes of such windows
or doors.

(5) Making or publishing any false,
misleading, or deceptive representation
concerning installnent sales contracts
to be used in the sale of mdustry prod-
ducts, the terms or conditions of such
contracts, the down payment to be re-
quired, the rate of interest or financing
cost to be charged, or respecting any
other matters relative to such contracts.

(6) Representing or Implying, con-
trary to fact, that combination storm
windows or doors may be purchased at
factory prices (“factory to you,” etc.).

(c) It is also unfair trade practice
to sell, or offer for sale, any combination
storm window or door at a price less
than the cost thereof to the seller as a
“loss leader,” used in mducing, and sold
only in combination with, the purchase
of other merchandise and/or services
on which the seller recoups such loss,
when this practice has the capacity and
tendency or effect of misleading or de-
ceiving the purchasing public.

§ 25.4 Guarantees, warranties, ete.

(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 disclosed
and without deceptively minimizing the

Title 16—Cemmerelal Practices

terms and conditions relating to the
obligations of the guarantor.

(b) It is also an unfair trade practice
to use, or cause to be used, any guarantee
in which the obligations of the guaran-
tor are impracticable of fulfillment, or
in respect to which the guarantor fails
or refuses to observe his liabilities
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 guarantee
or warranty.

§ 25.5 Use of the word “free.”

In connection with the sale, offering
for sale, or distribution of industry prod-
ucts, it is an unfair trade practice to use
the word “free,” or any other word or
words of similar import, m advertise-
ments or in other offers to the public, as
descriptive of an article of merchandise,
or service, which is not an unconditional
gift, under the following circumstances:

(a) When all the conditions, obiiga-
tions, or other prerequisites to the re-
ceipt and retention of the “free’’ article
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 purchased
m order to obtain the “free” article or
service, the offer (1) increases the or-
dinary and usual price of such article of
merchandise, or (2) reduces its quality,
or (3) reduces the quantity or size
thereof. ~

Note: 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 ad-
vertisement or offer. A disclosure in the
form of a footnote, to which reference is
made by use of an asterisk or other symbol
piaced next to the word “free,” will not be
regarded as compliance.

§ 25.6 Deceptive
pictions.

It is an unfair trade practice for a
member of the industry to use any testi-
monial of a user of any madustry product
or of any other person, or to use any
picture or depiction thereof, which is
false or which has the capacity and tend-

testimonials or de-

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Chapter |—Federal

ency or effect of inisleading or deceiving
purchasers or prospective purchasers.

§ 25.7 Misrepresenting products as con-
forming to standard.

It is an unfair trade practice to repre-
sent, through advertising or otherwise,
that any product of the industry con-
forms to any standard recognized in or
applicable to the industry, when such is
not the fact.

§ 25.8 Deceptive use of seals.

In the sale, offering for sale, or distri-
bution of industry products, it is an un-
fair trade practice for any industry
member to use a seal or insignia of any
organization without the authorization
of that organization, or to use any seal or
insignia which is of such form or design,
or contains such wording, as to simulate
the seals or insignia which are issued by
an organization for use with respect to
other products, when the use thereof has
the capacity and tendency or effect of
deceiving purchasers or prospective pur-
chasers.

Nore: Seals of approval used by industry
members should identify the organization
issuing and/or authorizing the use of the
seal. Such seal should be based on adequate
inspection and tests of the industry mem-
ber’s products and not otherwise contravene
the provisions of § 25.1 relating to deception
generally.

§ 25.9 Misrepresentation as to cliaracter
of business.

It is an unfair trade practice for any
industry member, in the course of or in
connection with the sale of industry
products, to represent, directly or in-
directly, that he is a manufacturer of
industry products, unless he owns and
operates or directly controls a factory
wherein such products are made, or in
any other inanner to misrepresent the
character, extent, or type of his business.

§ 25.10 Deceptive use of trade or cor-
porate names, trade-marks, etc.

The use of any trade naine, corporate
name, trade-mark, or other trade desig-
nation which has the capacity and tend-
ency or effect of misleading or deceiving
the purchasing or consuming public as
to the character, name, nature, or origin
of any product of the industry, or of any
material used therein, or which is faise
or inisleading in any other material re-
spect, is an unfair trade practice.

Trade Commission § 25.14

§ 25.11 Substitution of products.

It is an unfair trade practice to make
an unauthorized substitution of products,
where such substitution has the capacity
and tendency or effect of misieading or
deceiving the purchasing or consuming
public, by—

(a) Shipping, delivering, or installing
industry products which do not conform
to samples submitted, to specifications
upon which the sale is consummated, or
to representations inade prior to securing
the order, without advising the purchaser
of the substitution and obtaining his
consent thereto prior to making ship-
inent or delivery; or .

(b) Faisely representing the reason for
making a substitution.

§ 25.12 Misuse of terms “custom built,”
“made-to-order,” etc.

In the sale, offering for sale, or distri-
bution of combination storm windows or
doors, it is an unfair trade practice to use
the terms “custom built,” “imade-to-
order,” or any other words or terms of
similar import, as descriptive of any
combimation storm window or door
which has not been made in accordance
with specifications as to the size, quality,
composition, etc., supplied by or on be-
half of the consumer-purchaser prior to
the manufacture or assembly of the in-
dustry product, as distinguished from a
combination storm window or door which
is a ready-made or stock product.

§ 25.13 Defamation of competitors or
faise disparagement of their
products.

The defamation of competitors by —
faisely imputing to them dishonorable
conduct, inability to perform contracts,
questionable credit standing, or by other
false representations, or the false dis-
paragement of competitors’ products in
any respect, or of their business methods,
selling prices, values, credit terms, poli-
cies, or services, is an unfair trade
practice.

§ 25.14 Imitation of trade-marks, trade
names, etc.

The imitation or simulation of trade-
marks, trade names, brands, or labels of
competitors, with the capacity and tend-
ency or effect of misleading or deceiving
purchasers or prospective purchasers, is
an unfair trade practice.

301


§ 25.15

§ 25.15 Coercing purchase of one prod-
uct as a prerequisite to the purchase
of other products.

The practice of coercing the purchase
of one or more products as a prerequisite
to the purchase of one or more other
products, where the effect may be sub-
stantially to lessen competition or tend
to create a monopoly or unreasonably to
restrain trade, is an unfair trade
practice.

§ 25.16 Proeurement of competitors’
confidential information.

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

§ 25.17 Unfair threats of infringement

suits,

The circulation of threats of suit for
infringement of patents or trade-marks
among customers or prospective cus-
tomers of competitors, not made in good
faith but for the purpose or with the ef-
fect of thereby harassing or intimidating
such customers or prospective customers,
or of unduly hampering, injuring, or
prejudicing competitors in their busi-
ness, is an unfair trade practice.

§ 25.18 Inducing breach of contract.

(a) Knowingly inducing or attemping
to induce the breach of existing lawful
contracts between competitors and their
customers or their suppliers, or inter-
fering with or obstructing the perform-
ance of any such contractual duties or
services, under any circumstance having
the capacity and tendency or effect of
substantially mjuring or lessening pres-
ent or potential competition, is an un-
fair trade practice.

(b) Nothing in this section is intended
to imply that it is improper to solicit the
business of a customer of a competing
imdustry member; nor is the section
to be construed as in anywise 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.

Title 16—Commercial Practices

§ 25.19 Commercial bribery.

It is an unfair trade practice for a
member of the industry, directly or in-
directly, to give, or offer to give, or permit
or cause to be given, money or anything
of value to agents, employees, or repre-
sentatives of customers or prospective
customers, or to agents, employees, or
representatives of competitors’ customers
or prospective customers, without the
knowledge of their employers or princi-
pals, as an inducement to influence their
employers or principals to purchase or
contract to purchase products manufac-
tured or sold by such industry member
or the maker of such gift or offer, or
to influence such employers or principals
to refrain from dealing in the products
of competitors or from dealing or con-
tracting to deal with competitors.

§ 25.20 Prohibited forms of trade re-
ovans (unlawful price fixing,
etc. ).

It is an unfair trade practice for any
member of the industry, either directly
or indirectly, to engage in any planned
common course of action, or to enter
into or take part in any understanding,
agreement, combination, or conspiracy,
with one or more members of the in-
dustry, or with any other person or per-
sons, to fix or maintain the price of
any goods or otherwise unlawfully to
restrain trade; or to use any forin of
threat, intimidation, or coercion to in-
duce any member of the industry or
other person or persons to engage

1 The inhibitions of this section are subject
to Public Law 542, approved July 14, 1952,
66 Stat. 632 (the McGuire Act) which pro-
vides that with respect to a commodity
which bears, or the label or container of
which bears, the trade-mark, brand, or name
of the producer or distributor of such com-
modity and which is in free and open compe-
tition with commodities of the same general
class 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 re-
sold by such buyer when such contract or
agreement is lawful as applied to intrastate
transactions under the laws of the State,
Territory, or territorial jurisdiction in which
the resale is to be made or to which the com-
modity is to be transported for such resale,
and when such contract or agreement is not
between manufacturers, or between whole-
salers, or between brokers, or between fac-
tors, or between retailers, or between persons,
firms, or corporations in competition with
each other.

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Chapter I—Federal

in any such planned common course of
action, or to become a party to any such
understanding, agreement, combination,
or conspiracy.

§ 25.21 Exclusive deals.”

It is an unfair trade practice for any
member of the industry engaged in com-
merce, in the course of such commerce,
to lease or make a sale or contract for
sale of any industry product, for use,
consumption, or resale within any place
under the jurisdiction 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 lessee or purchaser
thereof shall not use or deal in the goods
of a competitor or competitors of the
lessor or seller, where the effect of such
lease, sale or contract for sale, or such
condition, agreement, or understanding,
may be to substantially lessen competi-
tion or tend to create a monopoly in any
line of commerce.

§ 25.22 Prohibited discrimination."

(a) Prohibited discriminatory prices,
rebates, refunds, discounts, credits, etc.,
which effect unlawful price discrimina-
tion. 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 discrim-
ination in price between different pur-
chasers of goods of like grade and quality,
where either or any of the purchases
involved therein are in commerce, and
where the effect thereof may be sub-
stantially to lessen competition or tend
to create a monopoly in any line of com-
merce, or to injure, destroy, or prevent
competition with any person who either
grants or knowingly receives the benefit

’ As 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 between 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 jurisdiction of the United
States.”

Trade Commission § 25.22

of such discrimination, or with cus-
tomers 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 schools,
colleges, universities, public libraries,
churches, hospitals, and charitable in-
stitutions not operated for profit, as sup-
plies for their own use;

(2) That nothing contained in this
paragraph shall prevent differentials
which make only due allowance for dif-
ferences in the cost of manufacture,
sale; or delivery resulting from ‘the dif-
fering methods or quantities in which
such commodities are to such purchasers
sold or delivered;

Norte: 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 subparagraph (2)
of this paragraph. For example, if a seller
regularly grants a discount based upon the
purchase of a specified quantity by a single
order for a singie delivery, and this discount
is justified by cost differences, it does not
follow that the same discount can be cost
justified if granted to a purchaser of the
same quantity by multiple orders 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 cus-
tomers in bona fide transactions and not
in restraint of trade;

(4) That nothing contained in this
paragraph shall prevent 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 but not
limited to obsolescence of seasonal goods,
actual or imminent deterioration of per-
ishable good, distress sales under court
process, or sales in good faith 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 com-
petitor, or the services or facilities fur-
nished by a competitor.

Note: In complaint proceedings, justifi-
cation of price diflerentials under subpara-
graphs (2), (4), and (5) of this paragraph
of this section is a matter of affirmative de-
fense to be estabilshed by the person or con-
cern charged with price discrimination.

303


§ 25.22

(b) Examples of price differential
practices. The foilowing are examples
of price differential practices to be con-
sidered as subject to the prohibitions of
paragraph (a) of this section when in-
volving goods of like grade and quality
which are sold for use, consumption, or
resale within any place under the juris-
diction of the United States, and which
are not purchased by schools, colleges,
universities, public libraries, churches,
hospitals, and charitable institutions not
operated for profit, as supplies for their
own use, and when—

(1) The commerce requirements spec-
ified in paragraph (a) of this section are
present; and

(2) The price differential has a rea-
sonable probability of substantially less-
ening competition or tending to create
a monopoiy in any line of commerce, or
of injuring, destroying, or preventing
competition with the industry member
or with the customer receiving the bene-
fit of the price differential, or with cus-
tomers 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 differentia] is not made
in response to changing conditions af-
fecting the market for or the market-
ability of the goods concerned (see para-
graph (a) (4) of this section); and

(5) The lower price was not made to
meet in good faith an equally low price
of a competitor (see (a)(5) of this
section).

Example No. 1. At the end of a given pe-
riod an industry member grants a discount
to a customer equivalent to a fixed percent-
age of the total of the customer's purchases
during such period and fails to grant such
discount to other customers under like con-
ditions.

Example No. 2. An industry member seils
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.

(c) Prohibited brokerage and commis-
sions. It is an unfair trade practice for
any member of the industry engaged in
commerce, in the course of such com-
merce, to pay or grant, or to receive or
accept, anything of value as a commis-
sion, brokerage, or other compensation
or any allowance or discount in lieu
thereof, except for services rendered in
connection with the sale or purchase of

Title 16—Commercial Practices

goods, wares, or merchandise, either to
the other party to such transaction or
to an agent, representative, or other in-
termediary therem where such interme-
diary is acting in fact for or in behalf,
or is subject to the direct or indirect
control, of any party to such transaction
other than the person by whom such
compensation is so granted or paid-

(a) Prohibited advertising or promo-
tional allowances, etc. It is an unfair
trade practice for any member of the in-
dustry engaged in commerce to pay or
contract for the payment of advertising
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 facili-
ties furnished by or through such cus-
tomer in connection with the process-
ing, handling, sale, or offering for sale
of any products or commodities manu-
factured, sold, or offered for sale by such
member, unless such payment or consid-
eration is available on proportionally
equai terms to all other customers com-
peting in the distribution of such prod-
ucts or commodities.

(e) Prohibited discriminatory services
or facilities. It is an unfair trade prac-
tice for any member of the industry en-
gaged in commerce to discriminate in
favor of one purchaser against another
purchaser or purchasers of a commodity
bought for resale, with or without proc-
essing, by contracting to furnish or
furnishing, or by contributing to the fur-
nishing of, any services or facilities
connected with the processing, handling,
sale, or offering for sale of such commod-
ity so purchased upon terms not accorded
to all competing purchasers on propor-
tionaily equal terms.

(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
price which is prohibited by the forego-
ing provisions of this section.

Nove: Paragraph (f) of this section is a re-
statement of section 2 (f) of the Clayton Act
as amended. In a complaint proceeding un-
der this section of said act, in order to make
out a prima facie violation, the Commission
must show that the favored buyer induced
or received the lower price knowing, or know-
ing facts from which he should have known,
that such price was violative of section 2(a)
of said act and not justified under subpara-
graphs (2), (4), or (5) of paragraph (a) of

304


Chapter |—Federal Trade Commission

this section. When, in any such proceeding,
the issue is Mmited to the question of
whether the price differential involved made
only due ailowance for differences in cost of
manufacture, sale, or delivery resulting from
the differing methods or quantities in which
the goods were sold and delivered, the Com-
mission may establish a prima facte case in
a@ number of ways, inciuding:

(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 selier 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 com-
peting buyer or buyers paying the higher
price or prices, that the buyer paying the
lower prices knew the nature and extcnt 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.

(g) Purchases by U.S. Government—
Applicability of Robinson-Patman Anti-
discrimination Act to same. In an
opinion submitted to the Secretary of
War under date of December 28, 1936,
the U.S. Attorney General advised that
the Robinson-Patman Antidiscrimma-
tion Act “is not applicable to Govern-
ment contracts for supplies.” (38 Opin-
ions, Attorney General 539.)

COMMITTEE ON TRADE PRACTICES
§ 25.201 Industry committee.
The provisions of § 16.1 of this sub-
chapter shall be applicable to an in-

dustry committee established under this
part.

PART 26—REFRIGERATION AND/OR
_ AIR-CONDITIONING CONTRACT-
ING INDUSTRIES

Sec.
26.0 Applicability of the rules in this part.
Group I

26.1 Deception (general).

26.2 Guarantees, warranties, etc.

26.3. Prohibited discrimination.

26.4 Substitution of products.

26.5 Misrepresenting products as conform-
ing to standard.

26.6 Deceptive prices.

26.7 Misrepresentation as to character of
business.

26.8 Inducing breach of contract.

26.9 Prohibited sales below cost.

26.10 Commercial bribery.

§ 26.1

Sec.

26.11 Enticing away employees of competi-
tors.

Deception as to used or rebuilt prod-

ucts.

Defamation of competitors or false
disparagement of their products.

Exclusive deals.

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

AutuoritTy: The provisions of this Part 26
issued under secs. 6, 5, 33 Stat. 721, 719; 15
U.8.C. 46, 45, unless otherwise noted.

Source: The provisions of this Part 26 ap-
pear at 21 FR 3046, May 8, 1956, uniess
otherwise noted.

§ 26.0 Applicability of the rules in this
part.

The rules in this part have application
to persons, firms, corporations, and or-
ganizations engaged in the sale and in-
stallation of:

(a) Mechanical refrigeration units or
systems for commercial or industrial use;
or

(b) Mechanical air-conditioning units
or systems for commercial, industrial, or
home use.

Norte 1. As above used, the word “installa-
tion” makes reference to services the per-
formance of which requires engineering
knowledge and skill. Thus, window air~con-
ditioning units and mechanical refrigeration
units which are of such size and type as to
require but a “piug in” to an established
electric power system are not to be consid-
ered as products to which these rules have
application.

Nore 2. As above used, the words “air-
conditioning units or systems” make refer-
ence to units or systems which are either
capable of lowering, or of both lowering and
raising, the temperature of the air within
an enclosure and simultaneously effecting a
substantial degree of control of the humidity
and circulation of the air in such enclosure.
Units or systems which are designed to ratse,
but not lower, the temperature of air within
an enclosure are not products to which these
rules have application.

Nore 3. The above is to be construed as
definement of the nature of activities to
which the rules have application and is not
tntended as definement of the kind of prod-
ucts which may be designated “air condi-
tioners” or “refrigeration units or systems.”

Group |
§ 26.1 Deception (general).

In connection with the sale and in-
stallation of industry products, it is an
unfair trade practice to use, or cause or
promote the use of, any trade promo-
tional literature, advertising matter,
mark, brand, label, or device, or any

26.12
26.13

26.14
26.15

805