Refrigeration And/or Air-Conditioning Contracting Industries
16 CFR Part 26 · 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 These rules and guides are historical: most were rescinded or replaced, so do not assume any is in force.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)
§ 26.0 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. 23.37 Misuse of Words “Ruby,” ‘“Sap- phire,” “Emerald,” “Topaz,” ‘Stone,” “Birthstone,” Etc. 23.38 Misuse of Words “Real,” “Genuine,” “Natural,” Ete. 23.39 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. PART 26—REFRIGERATION AND/OR AIR-CONDITIONING CONTRACT- ING INDUSTRIES Sec. . 26.0 Applicability of the rules in this part. Grovr I 26.1 Deception (generai). 26.2 26.3 Guarantees, warranties, etc. 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. 26.11 Enticing away employees of competi- tors. 26.12 Deception as to used or rebuilt prod- ucts. 26.13 Defamation of competitors or false disparagement of their products. 26.14 Exclusive deals. 26.15 Prohibited forms of trade restraints (uniawful price fixing, etc.). AutTHority: Secs. 6, 5, 38 Stat. 721, 719; 15 U.S.C. 46, 45, uniess otherwise noted. Source: 21 FR 3046, May 8, 1956, unless otherwise noted. §26.0 Applicability of the rules in this part. The rules in this part have applica- tion to persons, firms, corporations, and organizations engaged in the sale and installation of: (a) Mechanical refrigeration units or systems for commercial or industrial use; or Title 16—Commerciol Proctices (b) Mechanical air-conditioning units or systems for commercial, in- dustrial, or home use. Norte 1. As above used, the word “‘installa- tion” makes reference to services the perfor- mance of which requires engineering knowl- edge and skill. Thus, window air-condition- ing units and mechanical refrigeration units which are of such size and type as to require but a “plug in’ to an established electric power system are not to be considered as products to which these rules have applica- tion. Note 2. As above used, the words ‘‘air-con- ditioning units or systems” make reference to units or systems which are either capable of lowering, or of both lowering and raising, the temperature of the air within an enclo- sure and simultaneously effecting a substan- tial degree of control of the humidity and circulation of the air in such enclosure. Units or systems which are designed to raise, but not lower, the temperature of air within an enclosure are not products to which these rules have application. Norte 3. The above is to be construed as definement of the nature of activities to which the rules have application and is not intended as definement of the kind of prod- ucts which may be designatcd ‘air condi- tioners” or “refrigeration units or systems.” Group I § 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 pro- motional literature, ‘advertising matter, mark, brand, label, or device, or any other type of oral or written representation, which has the capacity and tendency or effect of deceiving purchasers, or prospective purchasers as to the construction, design, model, origin, manufacture, quality, absence of noise in operation, strength, dura- bility, life expectancy, utility, cost of operation, or safety of such products, or of their capacity to cool or refriger- ate, or in any other material respect; or to mislead purchasers or prospec- tive purchasers with respect to the need for repair, maintenance, or re- placement of parts of such products after their purchase and use, or with respect to any services offered con- cerning maintenance of the products. 318 Chapter I—Federal Trade Commission § 26.2 Guarantees, warranties, etc. In the sale, offering for sale, or in- stallation of industry products, it is an unfair trade practice to use, or cause to be used, any guarantee or warranty which is false, misleading, deceptive, or unfair to the purchasing or consum- ing public, whether in respect to qual- ity, construction, serviceability, or per- formance of any industry product. (a) The foregoing inhibitions of this section are to be considered as applica- ble with respect to any guarantee or warranty in which the terms and con- ditions relating to the obligation of the guarantor or warrantor are im- practical of fulfillment. (b) It is also an unfair trade practice to make or offer any guarantee or war- ranty respecting an industry product unless the nature and extent of the undertaking, and any and all material conditions and limitations applicable thereto, are clearly and conspicuously stated in immediate conjunction there- with, and unless the obligations of the guarantor or warrantor with respect to the guarantee or warranty are scrupu- lously fulfilled. § 26.3 Prohihited discrimination. 1 (a) Prohibited discriminatory prices, or rebates, refunds, discounts, credits, etc., which effect unlawful price dis- crimination. It is an unfair trade prac- tice for any industry member engaged in commerce, in the course of such commerce, 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, ef- fects a discrimmation in price between different purchasers of goods of like ‘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 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.” § 26.3 grade and quality, where elther or any of the purchases 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 the 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; (2) That nothing contained in this paragraph shall prevent differentials which make only due allowance for differences in the cost of manufacture, sale, or delivery resulting from the dif- fering methods or quantities in which such commodities are to such purchas- ers sold or delivered; Nore: This proviso shall not be construed as permitting an industry member to allow a price differential to a customer, whether in the form of a quantity price discount, rebate, or other form, through billing as a singie order an aggregate of the amount of two or more orders of such customer on which the industry member makes separate deliveries, when the price differential al- lowed is not based on a net savings in cost of manufacture, sale, or delivery of the prod- ucts to sald customer resulting from the dif- ferent method and quantity in which the products are sold and delivered to said cus- tomer, or is more than due allowance for such net savings; nor is this proviso to be construed as. permitting an industry member to allow a price differential to a customer, whether in the form of a quantity price discount, rebate, or other form, when, pursuant to agreement or understanding by the industry member and the customer, de- livery of the products purchased is to be de- layed or made in installments so as to in- volve storage cost to the industry member, and when as a result of such cost or other- wise, the price differential allowed is not based on a net savings in cost of manufac- ture, sale, or delivery of the products to said customer resulting from the different method and quantity in which the products are sold and delivered to said customer, or is more than due allowance for such net sav- ings. (3) That nothing contained in this section shall prevent persons engaged in selling goods, wares, or merchandise in commerce from selecting their own 319 § 26.4 customers 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 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 faith in discon- tinuance of business in the goods con- cerned. (b) Prohibited brokerage and com- missions. lt is-an unfalr trade practice for any mdustry member engaged in commerce, in the course of such com- merce, to pay or grant, or to receive or accept, anything of value as a commis- sion, brokerage, or other compensa- tion, or any allowance or discount in lieu thereof, except for services ren- dered in connection with the sale or purchase of goods, wares, or merchan- dise, either to the other party to such transaction or to an agent, representa- tive, or other intermediary therein where such intermedlary is acting in fact for or in behalf, or is subject to the direct or indirect control, of any party to such transaction other than the person by whom such compensa- tion Is so granted or paid. (c) Prohibited advertising or promo- tional allowances, etc. It is an unfair trade practice for any Mmdustry member 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 facilities furnished by or through such customer in connec- tion with the processing, handling, sale, or offering for sale of any prod- ucts or commodlties 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. (d) Prohibited discriminatory ser- vices or facilities. It is an unfair trade practice for any industry member en- gaged in commerce to discriminate in favor of one purchaser against an- Title 16—Cammercial Practices other 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. (e) Inducing or receiving an illegal discrimination in price. 1t is an unfair trade practice for any industry member engaged in commerce, in the course of such commerce, knowingly to induce or receive a discrimination in price which is prohibited by the fore- going provisions of this section. (f) Exemptions. The inhibitions of this section shall not apply to pur- chases of their supplies for their own use by schools, colleges, universities, public libraries, churches, hospitals, and charitable institutions not operat- ed for profit. Norte: In complaint proceedings charging discrimination in price or services or facill- ties furnished, and upon proof having been made of such discrimination, the burden of rebutting the prima facie case thus made by showing justification shall be upon the person charged; and unless justification shall be affirmatively shown, the Commis- sion is authorized to issue an order termi- nating the discrimination: Provided, howev- er, That nothing contained in this section 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 mect an equally low price of a competitor, or the services or facilities furnished by a competitor. See sec- tion 2-B, Clayton Act. §26.4 Substitution of products. It is an unfair trade practice to make an unauthorized substitution of prod- ucts, where such a substitution has the capacity and tendency or effect of misleading or deceiving the purchas- ing or consuming public, by: (a) Shipping, delivering, or installing industry products which do not con- form to samples submitted, to specifi- cations upon which the sale is consum- mated, or to representations made prior to securing the order, without advising the purchaser of the substitu- tion and obtaining his consent thereto 320 Chapter I—Federal Trade Cemmissian prior to making shipment or delivery; or (b) Falsely representing the reason for making a substitution. § 26.5 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. NorTE: Illustrative of the type of misrepre- sentation inhibited by this section is the practice of an industry member advertising or otherwise claiming that a product has been approved by a governmental authority or private agency, or meets certain specifica- tions or standards, when in fact the product has not been so approved or does not meet the certain specifications of standards. § 26.6 Deceptive prices. (a) The publishing or circulating of false or misleading price quotations, price lists, or terms or conditions of sale, with the capacity and tendency or effect of misleading or deceivmg purchasers or prospective purchasers, is an unfair trade practice. (b) It is also an unfair trade practice to make or publish, directly or indi- rectly, any false, misleading, or decep- tive statements or representations, through advertising or otherwise, con- cerning installment sales contracts used or their terms and conditions, m- cluding down payments, interest, car- rying charges, etc., or respecting any other matters relative to such con- tracts or their terms and conditions. § 26.7. Misrepresentation as to character of business. It is an unfair trade practice for any industry member, in the course of or in connection with the sale and instal- lation of industry products, to repre- sent, directly or indirectly, that he is an air-conditioning or refrigeration contractor when such is not the fact; or in any other manner to misrepre- sent the character, extent, or type of his business. § 26.9 § 26.8 Inducing breacb 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 contractual 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 to solic- it the business of a customer of a com- peting industry member; nor is the section to be construed as in anywise authorizing any agreement, under- standing, 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. § 26.9 Prohibited sales below 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 here is a reasonable probability that the effect will be, to substantially injure, suppress, or stifle competition or tend to create a mo- nopoly, is an unfair trade practice. (b) This section is not to be con- strued as prohibiting all sales below cost, but only such selling below the seller’s cost as is resorted to and pur- sued with the wrongful intent or pur- pose referred to and when 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 seasonal goods near the conclusion of the season; (2) of perishable goods in respect to which deterioration is imminent; (3) of obso- lescent goods; (4) made under judicial process; or (5) made in bona fide dis- continuance of business in the goods concerned. (c) As used in paragraphs (a) and (b) of this section, the term ‘‘cost’”? means 321 § 26.10 the respective seller’s cost and not an 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 incoine and such other taxes as are not properly appli- cable to cost), and general overhead expenses, incurred by the seller in the acquisition, manufacture, processing, preparation for marketing, sale, deliv- ery, and installation of the products. Not to be included are dividends or in- terest on borrowed or invested capital, or nonoperating losses, such as fire losses and losses from the sale or ex- change of capital assets. Operating cost should not be reduced by items of nonoperating income, such as income from investments, and gain on the sale of capital assets. (d) Nothing in this section shal] be construed as relieving an industry meinber from compliance with any of the requirements of the Robinson- Patman Act. § 26.10 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, 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 sold and _ in- stalled 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. § 26.11 Enticing away employees of com- - petitors. It is an unfair trade practice wilfully to entice away employees or sales rep- resentatives of competitors with the Title 16—Cammercial Practices 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 eimploy- ment to employees of competitors in good faith and not for the purpose of injuring, destroying, or preventing competition. § 26.12 Deception as to used or rebuilt products. (a) It is an unfair trade practice to represent, directly or indirectly, that any industry product or part thereof is new, unused, or rebuilt, 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 all advertising and promotional literature relating thereto, of the fact: (1) That such products are second- hand, rebuilt, or contain second-hand or rebuilt parts, as the case may be, when such products have the appear- ance of being new; or (2) That the rebuilding of rebuilt products was done by other than the original manufacturer, when such -is the case. § 26.13 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 disparagrement of competitors’ products in any respect, or of their business methods, selling prices, values, credit terms, policies, or ser- vices, is an unfair trade practice. § 26.14 Exclusive deals. It is an unfair trade practice to con- tract to sell or sell any industry prod- uct, or fix a price charged therefor, or discount from, or rebate upon, such price, on the condition, agreement, or 322 Chapter I—Federol Trode Commission understanding that the purchaser thereof shall not use or deal in the products of a competitor or competi- tors of such industry member, where the effect of such sale or contract for sale, or of such condition, agreement, or understanding, may be to substan- tially lessen competition or tend to create a monopoly in any line of com- merce. §26.15 Prohihited forms of trade re- straints (unlawful price fixing, etc.).? _It is an unfair trade practice, either directly or mdirectly, 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 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, agreement, com- bination, or conspiracy. PART 34—NURSERY INDUSTRY Sec. 34.0 Definitions. 34.1 Deception (general). 2The 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 label 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 class produced or distributed by others, a selier of such a commodity may enter into a contract or agreement with a buyer thereof which establlshes 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 jurlsdiction 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. § 34.0 Sec. 34.2 34.3 Deception through use of names. Substitution of products. 34.4 Size and grade designations. 34.5 Deception as to blooming, fruiting, or growing ability. 34.6 Misrepresenting products as conform- ing to standards, etc. 34.7 Faise claims of membership, deceptive use of seals, etc. 34.8 Plants coilected from the wild state. 34.9 Misrepresentation as to character of business. 34.10 Deceptive guarantees. 34.11 Deceptive “salesmen wanted” adver- tisements. 34.12 Misrepresentation with respect to collection of accounts. 34.13 Deception as to origin or source of in- dustry products. 34.14 Exclusive deals. 34.15 Tie-in sales; coercing purchase of one product as a prerequisite to the pur- chase of other products. 34.16 Deceptive pricing. 34.17 Enticing away employees of competi- tors. 34.18 Use of the word “free.” 34.19 Use of lottery schemes. 34.20 Defamation of competitors or false disparagement of their products. 34.21 Prohibited forms of trade restraints (unlawful price fixing, etc.). 34.22 Prohibited discrimination. 34.23 Aiding or abetting use of unfair trade practices. AvuruHority: Secs. 6, 5, 38 Stat. 721, 719; 15 U.S.C. 46, 45, unless otherwise noted. Source: 23 FR 4804, June 28, 1958, unless otherwise noted. §34.0 Definitions. (a) Industry products. As used in this part, the term “industry prod- ucts” includes all types of trees, small fruit plants, shrubs, vines, ornamen- tals, herbaceous annuals, biennials and perennials, bulbs, corms, rhizoines, and tubers which are offered for sale or sold to the general public. Included ‘are products propagated sexually or asexually and whether grown in a commercial nursery or collected from the wild state. Such products are cus- tomarily used for outdoor planting. Not included are florists’ or green- house plants solely for inside culture or use and annual vegetable plants. Likewise, gladiolus bulbs and corms are excluded inasmuch as they are covered by trade practice rules pro- mulgated January 17, 1952. (b) Industry members. Any person, firm, corporation, or organization en- 323