Nursery Industry

16 CFR Part 34 · Trade practice rules · in the Code of Federal Regulations 1959-1979 (14 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 These rules and guides are historical: most were rescinded or replaced, so do not assume any is in force.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, 1979 CFR · Earliest edition: 1959 CFR

Text (1979 edition, OCR)

Chapter I—Federal Trade Commission

Sec.

23.22 Misrepresentation as to Gold Con-
tent.

23.23 Misrepresentation as to Silver Con-
tent.

23.24 Misuse of Words “Platinum,” “TIri-
dium,” “Palladium,” “Ruthenium,”

“Rhodium,” and “Osmium.”
23.25 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

23.30 Misuse of the Word “Brilliant”? and
“Full Cut.”

23.31 Misuse of Term “Clean,” Etc.

23.32 Misrepresentation of Weight, “Total
Weight.”

Note: These rules also have application to
diamonds which are sold in the loose and
unset state.

Category IV. Rules in this part having ap-
plication to industry products containing
pearls, cultured pearls, or imitations there-
of:

23.33 Misuse of Word “Pearl.”

23.34 Misuse of Terms ‘‘Cultured Pearl,”
“Cultivated Pearl,” “Seed Pearl,” “Ori-
ental Pearl,’ “Oriental,” “Natura,” and
“Kultred.”

23.35 Misrepresentation as to Cultured
Pearls.

Note: These rules also 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 syri-
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,” Etc.

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

Norte: Industry products covered by the
rules in Categories II through V are also
subject to the rules in Category I.

§ 34.0
PART 34—NURSERY INDUSTRY

Sec.
34.0
34.1
34.2
34.3

Definitions.

Deception (general).

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 False claims of membership, deceptive
use of seals, etc.

34.8 Plants collected from the wild state.

34.9 Misrepresentation as to character of
business.

34.10 Deceptive guarantees.

34.11 Deceptive ‘“selesmen 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.

AvutTHoRITY: 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, rhizomes,
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.

331


§ 34.1

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-
gaged in the sale, offering for sale, or
distribution in commerce of industry
products, as defined above.

(c) Lining-out stock. Includes all
plant material coming from propagat-
ing houses, beds, or frames, and young
materials such as seedlings rooted or
unrooted cuttings, grafts or layers, of
suitable size to transplant either in
the nursery row or in containers for
“growing on.”

(d) Nursery-grown stock. Plants
propagated and grown under cultiva-
tion, or plants transplanted from the
wild and grown under cultivation for
at least one full growing season.

§ 34.1 Deception (general).

(a) It is an unfair trade practice to
sell, offer for sale, or distribute indus-
try products by any method, or under
any circumstance or condition, which
has the capacity and tendency or
effect of deceiving purchasers or pros-
pective purchasers as to quantity, size,
grade, kind, species, age, maturity,
condition, vigor, hardiness, number of
times transplanted, growth ability,
growth characteristics, rate of growth
or time required before flowering or
fruiting, price, origin or place where
grown, or in any other material re-
spect.

(b) The inhibitions of this section
shall apply to every type of advertise-
ment or method of representation,
whether in newspaper, periodical,
sales catalog, circular, by tag, label or
insignia, by radio or television, by sales
representatives, or otherwise.

(c) Among practices inhibited by the
foregoing are direct or indirect repre-
sentations:

(1) That plants have been propagat-
ed by grafting or bud selection meth-
ods, when such is not the fact.

(2) That industry products are
healthy, will grow anywhere without
the use of fertilizer, or will survive and
produce without special care, when
such is not the fact.

Title 146—Commercial Practices

(3) That plants will bloom the year
round, or will bear an extraordinary
number of blooms of unusual size or
quality, when such is not the fact.

(4) That an industry product is a
new variety, when in fact it is a stand-
ard variety to which the industry
member has given a new name.

(5) That an industry product cannot
be purchased through usual retail out-
lets, or that there are limited stocks
available, when such is not the fact.

(6) That industry products offered
for sale will be delivered in time for
the next (or any specified) seasonal
planting when the industry member is
aware of factors which make such de-
livery improbable.

(7) That the appearance of an indus-
try product as to size, color, contour,
foliage, bloom, fruit or other physical
characteristic is normal or usual when
the appearance so represented is in
fact abnormal or unusual.

(8) That the root system of any
plant is larger in depth or diameter
than that which actually exists,
whether accomplished by excessive
packaging material, or excessive ball-
ing, or other deceptive or misleading
practice.

(9) That bulblets are bulbs.

(10) That an industry product is a
rare or unusual item when such is not
the fact.

§ 34.2 Deception through use of names.

(a) In the sale, offering for sale, or
distribution of an industry product, it
is an unfair trade practice for any in-
dustry member to use a name for such
product which has the capacity and
tendency or effect of deceiving pur-
chasers or prospective purchasers as to
its true identity.

(b) Subject to the foregoing:

(1) When an industry product has a
generally recognized and well-estab-
lished common name, it is proper to
use such name as a designation there-
for, either alone or in conjunction
with the correct botanical name of the
product.

(2) When an industry product has a
generally recognized and well-estab-
lished common name, it is an unfair
trade practice for an industry member
to adopt and use a new name for the

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Chapter I—Federal Trade Commission

product unless such new name is im-
mediately accompanied by the gener-
ally recognized and well-established
common name, or by the correct bo-
tanical name, or by a description of
the nature and properties of the prod-
uct which is of sufficient detail to pre-
vent confusion and deception of pur-
chasers or prospective purchasers as to
the true identity of the product.

(3) When an industry product does
not have a generally recognized and
well-established common name, and a
name other than the correct botanical
name of the product is applied there-
to, such other name shall be immedi-
ately accompanied by either the cor-
rect botanical name of the product, or
a description of the nature and prop-
erties of the product which is of suffi-
cient detail as to prevent confusion
and deception of purchasers and pros-
pective purchasers as to the true iden-
tity of the product.

Nore: Industry recommendation. The in-
dustry recommends that in administering
this rule the Commission give consideration
to the use of plant names listed in horticul-
tural works such as Hortus Second, 1941, L.
H. Bailey; Manual of Cultivated Plants, Rev.
Ed. 1949, L. H. Bailey; Standard Cyclopedia
of Horticulture, 2d Ed. 1925 (with reissues),
L. H. Bailey; Check List of Native and Natu-
ralized Trees of the United States, U.S.D.A.
Agricultural Handbook 41, 1953, E. L. Little;
Manual of Cultivated Trees and Shrubs
Hardy in North America, 2d Ed. 1940, A.
Rehder; Native Woody Plants of the United
States, U.S.D.A. Misc. Publication 303, 1938,
W. R. Van Dersal; Standardized Plant
Names, 2d Ed. American Joint Committee
on Horticultural Nomenclature, 1942; and to
plant-name listings of well-recognized, non-
profit horticultural societies and organiza-
tions, such as the American Rose Society.

§ 34.3 Substitution of products.

With respect to industry products
offered for sale by an_ industry
member, it is an unfair trade practice
for any member of the industry:

(a) To ship or deliver industry prod-
ucts which do not conform to repre-
sentations made prior to securing the
order or to specifications upon which
the sale is consummated, without ad-
vising the purchaser of the substitu-
tion and obtaining his consent thereto
prior to making shipment or delivery,
where such practice has the capacity

§ 34.4

and tendency or effect of misleading
or deceiving purchasers or prospective
purchasers; or

(b) To falsely represent the reason
for making a substitution: Provided,
however, That nothing in this section
is intended to inhibit the shipment of
products different from those ordered,
prior to obtaining the purchaser’s con-
sent to such substitution, when the
order is received by the industry
member near the close of the planting
season for the products ordered and
the substitution involved relates but to
a product or products the total price
of which is comparatively small, and
when:

(1) At the cormmencement of the
planting season for the products or-
dered the industry member had a
supply of such products sufficient to
meet normal and reasonably expected
orders therefor, and such supply has
been exhausted; and

(2) The products substituted are of
similar variety and of equal or greater
value to those ordered by the purchas-
er and no additional charge is made
therefor; and

(3) Notice of the substitution, with
adequate identification of the substi-
tuted item or items, and with commit-
ment of the industry member to
refund any purchase rrice received for
the substituted products if such prod-
ucts are not acceptable to the purchas-
er and to compensate the purchaser
for any expense involved in the return
of the substituted products if refund is
conditioned on the return thereof, is
given the purchaser at the time of his
receipt of such products;

And provided further, That nothing in
this section is to be construed as sanc-
tioning the dissemination of an adver-
tisement of an industry product or
products or the personal solicitation of
orders therefor unless at the time of
such dissemination or solicitation the
industry member has a supply of such
product or products sufficient to meet
normal and reasonably’ expected
orders therefor.

§ 34.4 Size and grade designations.

(a) In the sale, offering for sale, or
distribution of industry products, it is
an unfair trade practice for an indus-

333


§ 34.5

try member to use any term, designa-
tion, number, letter, mark or symbol,
as a size or grade designation for any
industry product in a manner or under
any circumstance having the capacity
and tendency or effect of deceiving
purchasers or prospective purchasers
with respect to the actual size or grade
of such products.

(b) Under this section industry mem-
bers offering lining-out stock for sale
shall specify conspicuously and accu-
rately the size and age of such stock
when failure to do so has the capacity
and tendency or effect of deceiving
purchasers or prospective purchasers.

(c) Nothing in this section is to be
construed as inhibiting the designa-
tion of the size or grade of an industry
product by use of a size or grade desig-
nation for which a standard has been
established which is generally recog-
nized in the industry when the identi-
ty of such standard is conjunctively
disclosed, the product qualifies for the
designation under such standard, and
no deception of purchasers or prospec-
tive purchasers results in the use of
such designation.

Nore: It is the consensus of the industry
that the grade and size standard set forth in
American Standard For Nursery Stock, as
revised April 15, 1956, and approved by
American Standards Association, Inc., is
generally recognized in the industry, and
that use of the size and grade designations
therein set forth, in accordance with the re-
quirements of the standard for the designa-
tions, in the marketing of industry products
to which such standard relates, will prevent
deception and confusion of purchasers and
prospective purchasers of such products.

§ 34.5 Deception as to blooming, fruiting,
or growing ability.

In the sale, offering for sale, or dis-
tribution of industry products, it is an
unfair trade practice for any industry
member to deceive purchasers or pros-
pective purchasers as to the ability of
such products:

(a) To bloom, flower, or fruit within
a specified period of time; or

(b) To produce crops within a speci-
fied period of time, or to give multiple
crops each year, or to produce crops in
unfavorable climatic regions; or

(c) To bear fruit through self-pollini-
zation; or

Title 16—Commercial Practices

(d) To grow, flourish, and survive ir-
respective of the climatic conditions,
the care exercised in or after planting,
or the soil characteristics of the local-
ity in which they are to be planted.

Norte: 1: Under this section, when flower
bulbs are of such immaturity as not reason-
ably to be expected to bloom and flower the
first season of their planting, such fact shall
be clearly and conspicuously disclosed in all
advertisements and sales promotional litera-
ture relating to such products: Provided,
however, That such disclosure need not be
made when sales are confined to nurseries
and commercial growers for their use as
planting stock.

Notre 2: Under this section, in order to
avoid deception of purchasers and prospec-
tive purchasers thereof, when rose bushes
have been used in a greenhouse for the com-
mercial production of cut flowers, they shall
be tagged or labeled so as to clearly, ade-
quately and conspicuously disclose such
fact, and such tags and labels shall be so at-
tached thereto as to remain thereon until
consummation of consumer sale. A similar
disclosure shall be made in all advertising
and sales promotional literature relating to
such products. And when, by reason of such
previous greenhouse use or their condition
at the time of removal trerefrom or their
handling during or subsequent thereto,
there is probability that such rose bushes
will not satisfactorily thrive and produce
flowers when replanted outdoors, or will sat-
isfactorily thrive and produce flowers out-
doors only if given speciai treatment and at-
tention during and after their replanting,
such fact shall also be clearly, conspicuous-
ly, and nondeceptively disclosed in close
conjunction with, and in the same manner
as, the aforesaid required disclosure that
such products have been used in a green-
house for the commercial production of cut
flowers.

§ 34.6 Misrepresenting products as con-
forming to standards, etc.

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:

(a) That any product of the industry
conforms to the requirements of any
standard recognized in or applicable to
the industry, when such is not the
fact; or

(b) That an industry product con-
forms to the requirements of any
standard when (1) no such standard
exists, or (2) no disclosure of the iden-
tity of the standard is made, or (3)

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Chapter I—Federal Trade Commission

when the product does not in fact con-
form to the requirements of the iden-
tified standard.

Note: Among the types of misrepresenta-
tion inhibited by this section is the practice
of claiming that an industry product has
been approved by a governmental authority
or private agency, when in fact the product
has not been so approved.

§ 34.7 False claims of membership, decep-
tive use of seals, etc.

In the sale, offering for sale, or dis-
tribution of industry products, it is an
unfair trade practice for any industry
member:

(a) To represent or claim falsely that
he is a member of any association or
other organization; or

(b) To use the seal or other insignia
of any association or organization
without the authorization of such as-
sociation or organization; or

(c) 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 as-
sociation or organization for use by its
members—

when such representation, claim, or
use has the capacity and tendency or
effect of misleading or deceiving pur-
chasers or prospective purchasers in
any material respect.

§ 34.8 Plants collected from the wild state.

It is an unfair trade practice to sell,
offer for sale, or distribute industry
products collected from the wild state
without disclosing that they were col-
lected from the wild state: Provided,
however, That if collected plants are
grown in the nursery row for at least
one growing season before being mar-
keted, such disclosure is not required.

§ 34.9 Misrepresentation as to character of
business.

(a) In the sale, offering for sale, or
distribution of industry products, it is
an unfair trade practice for any indus-
try member to represent or imply that
he is a grower or propagator of such
products or any portion thereof, or
that he has any other experience or
qualification either relating to the
growing or propagation of such prod-
ucts or which enables him to be of as-

§ 34.11

sistance to purchasers or prospective
purchasers in the selection by them of
the kinds of types of products or the
placement thereof when such is not
the fact, or in any other manner to
misrepresent the character, nature, or
extent of his business.

Nore: Among practices subject to the inhi-
bitions of this section are representations by
an industry member to the effect that he is
a landscape architect when his training, ex-
perience, and knowledge do not qualify him
for such representation.

(bd) It is also an unfair trade practice
for an industry member to use the
word “guild”, ‘club’, ‘‘association”,
“council”, ‘society’, “foundation”, or
any other word of similar import or
meaning, as part of a trade name, or
otherwise, in such a manner or under
such circumstances as to indicate or
imply that his business is other than a
commercial enterprise operated for
profit, unless such be true in fact, or
so as to deceive purchasers or prospec-
tive purchasers in any other material
respect.

§34.10 Deceptive guarantees.

(a) It is an unfair trade practice to
represent, in advertising or otherwise,
that a nursery product is ‘guaran-
teed” unless the nature and extent of
such guarantee is conjunctively dis-
closed and without deceptively mini-
mizing the terms and conditions relat-
ing to the obligations of the guaran-
tor.

(b) It is also an unfair trade practice
to use or cause to be used any guaran-
tee in which the obligations of the
guarantor are impracticable of fulfill-
ment, or in respect to which the guar-
antor fails or refuses to observe his li-
abilities thereunder.

§ 34.11 Deceptive “salesmen wanted” ad-
vertisements.

In connection with the promotion or
the sale of industry products, it is an
unfair trade practice for an industry
member to use or cause to be used any
advertisement which, directly or by
implication, is false, misleading, or de-
ceptive concerning:

(a) The salary, commission, income,
earnings, or other form or remunera-
tion which agents, canvassers, solici-

335


§ 34.12

tors, sales representatives, or sales-
contact personnel may expect to re-
ceive; or

(b) The opportunities to become a
local manager, district supervisor, field
representative, or to start in an estab-
lished nursery or landscape business;
or

(c) Any form of inducement which
leads the prospective salesman to be-
lieve he will be employed as anything
other than a commission agent.

§ 34.12 Misrepresentation with respect to
collection of accounts.

It is an unfair trade practice for an
industry member to use collection let-
ters, notices, forms, or other communi-
cations purporting to emanate from
his ‘legal department,” when in fact
he does not maintain a legal depart-
ment for the collection of accounts; or
to use the names of fictitious or non-
existing collection agencies, or to rep-
resent that collection offices set up by
him are independent, bona fide collec-
tion agencies, or to use simulated legal
forms or other intimidating, threaten-
ing or deceptive methods to induce
payment.

§ 34.13 Deception as to origin or source of
industry products.

(a) It is an unfair trade practice to
sell, offer for sale, or advertise an in-
dustry product under any representa-
tion which has the capacity and ten-
dency or effect of deceiving purchas-
ers or prospective purchasers as to the
origin or source of such product (e.g.,
by use of the term “Holland” to de-
scribe bulbs which were grown in the
U.S.A.): Provided, however, That when
a plant has an accepted common name
which incorporates a geographical
term and such term has lost its geo-
graphical significance as so used, the
mere use of such common names does
not constitute a misrepresentation as
to source or origin (e.g., ‘Colorado
Blue Spruce,” ‘Arizona Cypress,”
“Black Hills Spruce,” “California
Privet,” “Japanese Barberry,” etc.).

(b) It is also an unfair trade practice
to advertise, sell, or offer for sale an
industry product of foreign origin
without adequate and nondeceptive
disclosure of the name of the foreign

Title 16—Commercial Practices

country from which it came, where
the failure to make such disclosure
has the capacity and tendency or
effect of deceiving purchasers or pros-
pective purchasers.

834.14 Exclusive deals,

It is an unfair trade practice for any
member of the industry engaged in
commerce,' in the course of such com-
merce, to make a sale or contract for
sale of 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 understanding that the
purchaser thereof shall not use or deal
in the goods of a competitor or com-
petitors of the seller, where the effect
of such sale or contract for sale, or
such condition, agreement, or under-
standing, may be substantially to
lessen competition or tend to create a
monopoly in any line of commerce.

$34.15 Tie-in sales; coercing purchase of
one product as a prerequisite to the
purchase of other products.

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

§ 34.16 Deceptive pricing.

(a) It is an unfair trade practice to
represent, in advertising or otherwise,
that the price of an industry product
has been reduced from a price which,

1As 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.”

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Chapter |—Federal Trade Commission

in fact, is a fictitious price; or that the
price is a wholesale, introductory, or
special price, when it is in fact the reg-
ular selling price of the product; or
that the regular price of a product is
higher than is actually the fact; or
otherwise to represent falsely or de-
ceptively the past or current price of
an industry product.

(b) It is also an unfair trade practice
to make a comparison, in advertising
or otherwise, between the price of an
industry product offered for sale and
the price of a comparable industry
product obtainable from competitive
sources, unless the comparison is made
in the same grade and size of product
and in the same general market area,
or unless the differences in grade, size,
and market area are clearly stated.

§ 34.17 Enticing away employees of com-
petitors.

It is an unfair trade practice for any
member of the industry wilfully to
entice away employees of sales-contact
personnel of competitors with the
intent and effect of thereby unduly
hampering or injuring competitors in
their business and destroying or sub-
stantially lessening competition; pro-
vided, that nothing in this section
shall be construed as prohibiting such
persons from seeking more favorable
employment, or as prohibiting employ-
ers from hiring or offering employ-
ment to employees of a competitor in
good faith and not for the purpose of
inflicting injury on such competitor.

§ 34.18 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

§ 34.21

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 “free”
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 paragraph
(a) of this section shall appear in close con-
junction with the word “free” (or other
word or words of similar import) wherever
such word first appears in each advertise-
ment or offer. A disclosure in the form of a
footnote, to which reference is made by use
of an asterisk or other symbol placed next
to the word “free,” will not be regarded as
compliance.

§ 34.19 Use of lottery schemes.

The offering or giving of prizes, pre-
miums, or gifts in connection with the
sale or distribution of industry prod-
ucts, or as an inducement thereto by
any method which involves a lottery
or scheme of chance, and the sale or
distribution or plan which involves a
lottery or scheme of chance, are unfair
trade practices.

§ 34.20 Defamation of competitors or false
disparagement of their products.

It is an unfair trade practice to
defame competitors by falsely imput-
ing to them dishonorable conduct, in-
ability to perform contracts, question-
able credit standing, or by other false
representations, or the false disparage-
ment of competitors’ products in any
respect, or of their business methods,
selling prices, values, credit terms,
policies, or services.

§ 34.21 Prohibited forms of trade re-
straints (unlawful price fixing, etc.). ?

It is an unfair trade practice for any
member of the industry, either direct-

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
Footnotes continued on next page

337


§ 34.22

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.

§ 34.22 Prohibited discrimination.’

(a) Prohibited discriminatory prices,
rebates, refunds, discounts, credits,
etc., which effect unlawful price dis-
crimination. It is an unfair trade prac-
tice for any member of the industry
engaged in commerce, in the course of
such commerce, to grant or allow, se-
cretly 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 discrimination in price between
different purchasers 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 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

Footnotes continued from last page

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 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.

1See footnote to § 34.14.

Title 16—Commercial Practices

discrimination, or with customers of
either of them: Provided, however:

(1) That the goods involved in any
such transaction are sold for use, con-
sumption, or resale within any place
under the jurisdiction of the United
States, and are not purchased by
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 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.

(3) That nothing contained in this
section shall prevent persons engaged
in selling goods, wares, or merchandise
in commerce from selecting their own
customers in bona fide transactions
and not in restraint of trade.

(4) That nothing contained in this
paragraph shall prevent price changes
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 proc-
ess, 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
competitor, or the services or facilities
furnished by a competitor. (See para-
graphs (c) and (d) of this section.)

(b) Prohibited brokerage and com-
missions. It is an unfair trade practice
for any member of the industry en-
gaged in commerce, in the course of
such commerce, to pay or grant, or to
receive or accept, anything of value as
a commission, brokerage, or other
compensation, or any allowance or dis-
count in lieu thereof, except for serv-
ices rendered in connection with the
sale or purchase of goods, wares, or
merchandise, either to the other party
to such transaction or to an agent,
representative, or other intermediary
therein where such intermediary is
acting in fact for or in behalf, or is

338


Chopter I—Federal Trade Commission

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 paid.

(c) Prohibited advertising or promo-
tional allowances, etc. It is an unfair
trade practice for any member of the
industry engaged in commerce to pay
or contract for the payment of adver-
tising or promotional allowances or
any other thing of value to or for the
benefit of a customer of such member
in the course of such commerce as
compensation or in consideration for
any services or facilities furnished by
or through such customer in connec-
tion with the processing, handling,
sale, or offering for sale of any prod-
ucts or commodities manufactured,
sold, or offered for sale by such
member, unless such payment or con-
sideration is available on proportional-
ly equal terms to all other customers
competing in the distribution of such
products or commodities.

(d) Prohibited discriminatory serv-

. ices 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 proc-
essing, 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. 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 fore-
going provisions of this section.

(f) Purchases by U.S. Government;
applicability of Robinson-Patman
Antidiscrimination 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 Antidis-
crimination Act “is not applicable to

§ 60.0

Government contracts for supplies.”
(38 Opinions, Attorney General 539.)

§ 34.23 Aiding or abetting use of unfair
trade practices.

It is an unfair trade practice for any
person to aid, abet, coerce, or induce
another, directly or indirectly, to use
or promote the use of any unfair trade
practice specified in this part.

PART 60—METALLIC WATCH BAND
INDUSTRY

Sec.
60.0
60.1
60.2

The industry and its products defined.

Deception (general).

Deception as ti) metallic content.

60.3 Misuse of ‘corrosion proof,’ “non-cor-
rosive,” ‘‘corrosion resistant,” “rust
proof,” “rust resistant,” etc.

60.4 Deceptive as to origin or place of man-
ufacture.

60.5 Misrepresentation as to character of
business.

60.6 Deceptive pricing.

60.7 Deception as to identity of manufac-
turer or seller.

60.8 Misrepresenting products as conform-
ing to standard.

60.9 Guarantees, warranties, etc.

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

60.11 Defamation of competitors or false
disparagement of their products.

60.12 Prohibited discrimination.

AvTuHonrity: Secs. 6, 5, 38 Stat. 721, 719; 15
U.S.C. 46, 45, unless otherwise noted.

Source: 27 FR 6205, June 30, 1962, unless
otherwise noted.

§60.0 The industry and its products de-
fined.

(a) Members of this industry are per-
sons, firms, corporations, or organiza-
tions which engage in the manufac-
ture, sale, offering for sale or distribu-
tion of industry products as the term
“industry products” is defined in the
paragraph which immediately follows.

(b) The term “industry products,” as
used in the foregoing paragraph and
in the following rules, includes any
kind of metallic wrist bands which are
designed for holding wrist watches to
the wrists of human beings and which
are not permanently attached to the
cases of such watches. When perma-
nently attached to the cases of wrist
watches, by soldering or otherwise,

339