Steel Bobby Pin And Steel Hair Pin Manufacturing Industry
16 CFR Part 39 · 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 These rules and guides are historical: most were rescinded or replaced, so do not assume any is in force.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
Decisions that mention this industry's rules (1)
Text (1977 edition, OCR)
§ 36.27
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 Heu
thereof, except for services 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 in-
termediary therein where such inter-
mediary 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.
(da) 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 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 facil-
ities furnished by or through such cus-
tomer in connection with the processing,
handling, sale, or offering for sale of any
preducts or commodities manufactured,
sold, or offered for sale by such member,
unless such payment or consideration is
avallable on proportionally equal terms
to all other customers competing in the
distribution of such products or com-
modities.
(e) Prohibited discriminatory services
or facilities. It is an unfair trade prac-
tice for any member of the industry
engaged 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 fur-
nishing, or by contributing to the fur-
nishing of, any services or facllities
connected with the processing, handling,
sale, or offering for sale of such com-
modity so purchased upon terms not
accorded to all competing purchasers on
proportionally equal terms.
Notgr: See subsection (b) of section 2 of
the Clayton Act, as amended, which is set
forth in the note concluding paragraph (a)
of this sectlon.
(f) Inducing or receiving an illegal
discrimination in price. It is an unfair
trade practice for any person engaged
in commerce, in the course of such com-
merce, knowingly to induce or receive a
discrimination in price which is pro-
hibited by the foregoing provisions of
Title 16—Commercial Practices
paragraphs (a) to (e) of this section.
CRule 26]
§ 36.27 Aiding or abetting use of unfair
trade practices.
It is an unfair trade practice for any
person, firm, or corporation to ald, abet,
coerce, or induce another, directly or
indirectly, to use or promote the use of
any unfair trade practice specified in
this part. [Rule 27]
Group IT
§ 36.101 Shipping chicks to fictitious
consignees, etc.
The industry condemns the practice
of disposing of chicks by shipping them
to fictitious consignees or without an
order from, or consent of, the consignee,
necessitating the sale of such undeliver-
able shipments at public auction by
agents of the common carrier in order
to secure payment for transportation
costs. Such practice is deemed by the
industry to be harmful to the chicks and
to facilitate the spread of disease.
(Rule Al
PART 39—STEEL BOBBY PIN AND
STEEL HAIR PIN MANUFACTURING
INDUSTRY
Sec.
39.0 Definitions.
; Group I
39.1 Misrepresentation and deception in
general.
$9.2 Imitation or simulation of trade-
marks, trade names, etc.
39.8 Inducing breach of contract.
39.4 Commercial bribery.
39.6 Defamation of competitors or false
disparagement of their products.
39.6 False invoicing.
89.7 Prohibited forms of trade restraints
(unlawful price fixing, etc.).
39.8 False and misleading price quotations
ete.
$9.9 Prohibited sales below cost.
39.10 Misrepresenting products as conform.
ing to standard.
$9.11 Prohibited discrimination.
$9.12 Substitution of products.
39.18 Exclusive deals.
$9.14 Push money.
$9.15 Enticing away employees of competi-
tors.
$9.16 Aiding or abetting use of unfair trade
practices.
AutHoriIry: The provisions of this Part 39
issued under secs 6, 5, 38 Stat. 721, 719;
15 U.S.C. 46, 45, unless otherwise noted.
354
Chapter 1—Federal
Source: The provisions of this Part 38
appear at 22 F.R. 4437, June 25, 1957, unless
otherwise noted.
§ 39.0 Definitions.
(a) The industry and its products:
Products of the industry consist of steel
bobby pins and steel hair pins.
(b) Members of the Industry are per-
sons, firms, corporations, and organiza-
tions engaged in the manufacture and
sale of any such products.
Group I
§ 39.1 Misrepresentation and deception
in general.
(a) Misrepresentation. It is an unfair
trade practice to use, or cause or promote
the use of, any statement, representa-
tion, guarantee, warranty, testimonial or
endorsement, by way of advertising
(through newspapers, magazines, circu-
lars, booklets, or by radio or any other
medium), oral representation, or other-
wise, which has the capacity and tend-
ency or effect of misieading or deceiving
purchasers, prospective purchasers, or
the consuming public with respect to
the grade, quality, quantity, substance,
character, origin, type, length, size prep-
aration manufacture or distribution of
any product of the industry or in any
other material respect.
(b) Deception. In advertising, offer-
ing for sale, or selling industry prod-
ucts, it is an unfair trade practice for
any member of the industry to fail to
disclose any material facts relating to
such products when such failure has the
capacity and tendency or effect of mis-
leading or deceiving purchasers or pro-
spective purchasers of such products.
§ 39.2 Imitation or simulation of trade-
marks, trade names, etc.
The imitation or simulation of trade-
marks, trade names, brands, or labeis of
competitors, with the capacity and tend-
ency or effect of misleading or deceiving
purchasers, prospective purchasers, or
the consuming public, is an unfair trade
practice.
§ 39.3 Inducing breach of contract.
(a) Knowingly inducing or attempting
to induce the breach of existing lawful
contracts between competitors and their
customers or their suppliers, or interfer-
ing with or obstructing the performance
of any such contractual duties or serv-
ices, under any circumstance having the
capacity and tendency or effect of sub-
stantlally injuring or lessening present
Trade Commission § 39.6
or potential competition, is an unfair
trade practice.
(b) Nothing in this section 1s intended
to imply that it is improper for any in-
dustry member to solicit the business of
@ customer of a competing industry
member; nor is the section to be con-
strued as in anywise authorizing 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.
§ 39.4 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 per-
mit or cause to be given, money or any-
thing of value to agents, salesclerks, em-
ployees, or representatives of customers
or prospective customers of an industry
member, without the knowledge of the
employers or principals of such agents,
salesclerks, employees, or representa-
tives, as an inducement:
(a) To influence such employers or
principals to purchase or contract to
purchase products manufactured or sold
by the industry member; or
(b) To influence such employers or
principals to refrain from dealing in the
products of competitors or from dealing
or contracting to deal with competitors;
or
(c) For the purpose of causing said
agents, salescierks, employees, or repre~
sentatives to push and promote the re-
sale of the industry member’s products
over competing products being offered
for resale by the employers or principals
of said agents, salesclerks, employees, or
representatives. (See also § 39.14.)
§39.5 Defamation of competitors or
false disparagement of their prod-
ucts.
The defamation of competitors by
falsely imputing to them dishonorable
conduct, inability to perform contracts,
questionable credit standing, or by other
false representations, or the false dispar-
agement of the quality, grade, origin, use,
construction, design, manufacture, or
distribution of the products of competi-
tors, or of their business methods, sell-
ing prices values, credit terms, policies,
or service, is an unfair trade practice.
§ 39.6 False invoicing.
Withholding from or inserting in in-
voices or sales slips any statements or in-
355
§ 39.7
formation by reason of which omission or
insertion a false record is made, wholly
or in part, of the transactions repre-
sented on the face of such invoices or
sales slips, with the capacity and tend-
ency or effect of thereby misleading or
deceiving purchasers, prospective pur-~
chasers, or the consuming public, is an
unfair trade practice.
39.7 Prohibited forms of trade Te
§ straints (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, agree-
ment, combination, or conspiracy, with
one or more members 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, intimida-
tion, or coercion to induce any member
of the industry or other person or per-
sons to engage in any such planned com-
mon course of action, or to become a
party to any such understanding, agree-
ment, combination, or conspiracy.
§ 39.8 False and misleading price quota-
tions, etc.
It is an unfair trade practice for any
industry member, in the course of or in
connection with the offering for sale,
sale, or distribution of industry products,
to publish or circulate to or among pur-
chasers or prospective purchasers false
1 The inhibitions of this section are subject
to Public Law 642, 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 seller of
such a commodity may enter into a contract
or agreement with a buyer thereof which es-
tablishes a minimum or stipulated price at
which such commodity may be resold 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 commodity is to
be transported for such resale, and when
such contract or agreement is not between
manufacturers, or between wholesalers, or
between brokers, or between factors, or be-
tween retailers, or between persons, firms, or
corporations in competition with each other.
Title 16—Commercial Practices
price quotations, price lists, or terms or
conditions of sale; or to publish, or
circulate among purchasers or pro-
spective purchasers, any price quotations,
price lists, or terms or conditions of sale
which have the capacity and tendency
or effect of thereby misleading or deceiv-
ing purchasers or prospective purchasers
in any material respect.
§ 39.9 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
there is a reasonable probability that the
effect will be, to substantially injure,
suppress, or stifle competition or tend
to create a monopoly, is an unfair trade
practice.
(b) This section is not to be construed
as prohibiting all sales below cost, but
only such selling below the seller’s cost
as is resorted to and pursued with the
wrongful intent or purpose referred to
and where the effect is, or where there
is a reasonable probability that the effect
will be, to substantially injure, suppress,
or stifle competition or to create a mo-
nopoly. Among the situation in which
the requisite purpose or intent would
ordinarily be lacking are cases in which
such sales were: (1) Of obsolescent
goods; (2) made under judicial process 3
or (3) made in bona fide discontinuance
of business in the goods concerned.
(c) As used in paragraph (b) of this
section, the term “cost” means the re-
spective seller’s cost and not an average
cost In the industry whether such aver-
age cost be determined by an industry
cost survey or some other method. It
consists of the total outlay or expendi-
ture by the seller in the acquisition, pro-
duction, and distribution of the products
involved, and comprises all elements of
cost such as labor, material, depreciation,
taxes (except taxes on net income and
such other taxes as are not properly ap-~
plicable to cost), and general overhead
expenses, incurred by the seller in the ac-
quisition, manufacture, processing, prep-
aration for marketing, sale, and delivery
of the products. Not to be included are
dividends or interest on borrowed or in-
vested capital, or nonoperating losses,
such as fire losses and losses from the
sale or excllange of capital assets. Oper-
ating cost should not be reduced by items
of nonoperating income, such as income
from investments, and gain on the sale
of capital assets.
356
Chapter I—Federal
(a) Nothing in this section shall be
construed as relieving an industry mem-
ber from compliance with any of the re-
auirements of the Robinson-Patman Act.
§ 39.10 Misrepresenting products as
conforming to standard.
In connection with the sale or offering
for sale of industry products, it is an un-
fair trade practice to represent, through
advertising or otherwise, that such prod-
ucts conform to any standards recog-
nized in or applicable to the industry
when such is not the fact.
§ 39.11 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 discrimina-
tion in price between different pur-
chasers of goods of like grade and qual-
ity, 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
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 un-
der the jurisdiction of the United States,
and are not purchased by schools, col-
leges, universitles, public libraries,
churches, hospitals, and charitable in-
2As 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 Ter-
ritory 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 Dis-
trict of Columbia or any foreign nation, or
within the District of Columbia or any Ter-
ritory or any insular possession or other
place under the jurisdiction of the United
States.”
Trade Commission § 39.11
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;
Nore: Cost justification under the above
proviso depends upon net savings in cost
based on all facts relevant to the transac-
tions under the terms of proviso (2). For
example, if a seller regularly grants a dis-
count based upon the purchase of a specified
quantity by a single order for a single de-
livery, and this discount is justified by cost
differences, it does not follow that the same
aiscount can be cost justified {f granted to
@ purchaser of the same quantity by multiple
orders or 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,
distress sales under court process, or
sales in good faith in discontinuance of
business in the goods concerned;
(5) That nothing contained in this
section shall prevent the meeting in good
faith of an equally low price of a
competitor.
Nore: See subsection (b) of section 2 of
the Clayton Act as amended, which is set
forth in the note folowing paragraph (g)
of this section.
(b) The following are examples of
price differential :practices to be consid-
ered 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 Hbraries, churches,
hospitals, and charitable institutions not
operated for profit, as supplies for their
own use, and when:
(1) The commerce requirements spec-
tfied in paragraph (a) of this section are
present; and
357
§ 39.11
(2) The price differential has a rea-
sonable probability of substantially less-
ening competition or tending to create
a monopoly 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 elther 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 differential is not made
in response to changing conditions af-
fecting the market for or the marketa-
bility 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 paragraph (a) (5)
of this section).
Exrample A. At the end of a given period
an industry member grants a discount to a
customer equivalent to a fixed percentage
of the totai of the customer’s purchases dur-
ing such period and fails to grant such dis-
count to other customers under like con-
ditions.
Example B. An industry member selis goods
to one or more of his customers at a higher
price than he charges other customers for
{ike merchandise. It is immaterial whether
or not such discrimination is accomplished
by misrepresentation as to the grade and
quality of the products sold.
Ezample C. Terms of 2 percent 10 days are
granted by an industry member to some
customers on goods purchased by them from
the industry member. Another customer or
customers are, nevertheless, allowed to take
a & percent instead of a 2 percent discount
when making payment to the industry mem-
ber within the time prescribed.
Example D. An industry member sells goods
to one or more of his customers at a tower
price than he charges other customers there-
for, basing his justification for the price
difference solely on the fact that the goods
sold at the lower price bear the private brand
name of customers.
Example E. An industry member invoices
goods to all his customers at the same price
but supplies additional quantities of such
goods at no extra charge to one or more, but
not to all, such customers; or supplies other
goods or premiums to one or more, but not
to all, such customers for which he makes
no extra charge and which effects an actual
price difference in favor of certain of his
customers,
Nore: As previously indicated, the fore-
going are examples of practices to be consid-
ered violative of the prohibitions of para-
graph (a) of this section when involving
goods of like grade and quality and when
not subject to the other exemptions, exclu-
Title 16—Commercial Practices
sions, or defenses set forth in paragraph (b)
of this section.
(ce) 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 leu
thereof, except for services 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 in-
termediary therein where such inter-
mediary is acting in fact 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 compen-
sation is so granted or paid.
(d) 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 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 processing,
handling, sale, or offering for sale of
any products or commodities manufac-
tured, sold, or offered for sale by such
member, unless such payment or con-
sideration is available on proportionally
equal terms to all other customers com-
peting in the distribution of such prod-
ucts or commodities.
Nore 1: Industry members giving adver-
tising allowances to competing customers
must exercise precaution and diligence in
seeing that all of such allowances are used
in accordance with the terms of their offers.
Nore 2: When an industry member gives
allowances to competing customers for ad-
vertising in a newspaper or periodical, the
fact that a lower advertising rate for equiv-
alent space is available to one or more, but
not all, such customers, is not to be regarded
by the industry member as warranting the
retention by such customer or customers of
any portion of the allowance for his or their
personal use or benefit.
(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
358
Chapter |—Federal Trade Commission
bought for resale, with or without proc-
essing, by contracting to furnish or fur-
nishing, or by contributing to the fur-
nishing of, any services or facilities
including, but not iimited to, displays,
exhibits, and promotional material con-
neoted with the processing, handling,
sale, or offering for sale of such com-
modity so purchased upon terms not
accorded to ail competing purchasers on
proportionally equal terms.
Nore: See subsection (b) of section 2 of
the Clayton Act as amended, which ts set
forth in the note following paragraph (g)
of this section.
(f)(1) The following is presented for
the purpose of clarifying the require-
ments of paragraphs (d) and (e) of this
section with respect to the supplying of
marketing services, facilities or allow-
ances by industry members to their cus-
tomers, but it is not intended to imply by
such presentation that other methods
which assure of proportional equality of
treatment of competing customers may
not also be used.
(2) An industry member may simul-
taneously offer to each of his customers
competing in the resale of his products
the same kind of proportional service,
facility or allowance of a cost value equal
to a uniform percentage of the sales (or
purchases) of the industry member’s
products by each customer during a spec-
ified and identical period of time; Pro-
vided, however, That when the service,
facility or allowance offered is of a type
which under reasonable terms and con-
ditions is not usable or suitabie to the
facilities and business of ail customers,
and is offered to any one customer, the
member offer each of those customers to
whom the service, facility or allowance
is not usable or suitable an alternate type
of promotional service, facility or allow-
ance which is of equivalent measurable
cost, is usable by the customer, and is
suitable to his facilities and business, and
promptly inform all competing customers
of the kind and amount of services, facil-
ities or allowances which he has offered
to each and the respective terms and
conditions under which such services, fa-
cilities or allowances are to be furnished
by the industry member; And provided,
further, That when the offer of any
service, facility or allowance to any cus-
tomer is conditioned on such customer
supplying some reciprocal service, facil-
ity or payment, a reciprocal service, fa-
cility or payment be required in the offers
90-058—77-——24
§ 39.11
to all other customers and there be an
equality of ratio among all customers as
to the measurable cost of that which is
supplied by the industry member and the
reciprocal service, facility or payment
required of any customer. The industry
member must take every reasonable pre-
caution to see that services, facilities or
allowances which he furnishes to cus-
tomers are used in accord with the terms
of his offer; and upon failure of the cus-
tomer to perform any obiigatlon on his
part the industry member must cease
supplying the customer any further serv-
ice, facility, or allowance.
(g) Inducing or receiving an illegal
discrimination in price: It is an unfair
trade practice for any member of the in-
dustry 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.
Nore: Paragraph (g) 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, 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 Knowing facts
from which he should have known, that such
price was violative of section 2(a) of said
act and not justified under subparagraphs
(2), (4), or (5) of paragraph (a) of this sec-
tion. When, in any such proceeding, the
issue is limited to the question of whether
the price differential involved made only due
allowance for differences in cost of manufac-
ture, sale, or delivery resulting from the dif~
fering methods or quantities in which the
goods were sold and delivered, the Commis-
sion may establish a prima facile case in a
number of ways, including:
(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 seller were the same
as in the case of the competing buyer or buy-
ers 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 price or prices knew the nature and
extent of such differences and knew or should
have Known that they could not have re-
sulted in sufficient cost savings of the kind
and character specified as to justify the
price differential.
Nore: Section 39.11 is based on the pro-
visions of sectlon 2 of the Clayton Act
as amended by the Robinson-Patman Act.
Subsection (b) of section 2 of the Clayton
Act as amended, which reads as follows, is in
amplification of the note to subparagraph
359
§ 39.12
(5) of paragraph (a) of this section and of
the note to paragraph (e) of this section:
“Upon proof being made at any hearing
on a complaint under this section, that
there has been discrimination in price or
services of facilities furnished, the burden
of rebutting the prima facie case thus made
by showing justification, shall be upon the
person charged with a violation of this sec-
tion, and unless justification shall be affirm-
atively shown, the Commission is author-
ized to issue an order terminating the dis-
erlmination: Provided, however, That noth-
ing herein contained shall prevent a seller
rebutting the prima facie case thus made by
showing that his lower price or the furnish-
ing of services or facilities to any purchaser
or purchasers was made in good faith to
meet an equally low price of a competitor,
or the services or facilities furnished by a
competitor.”
§ 39.12 Substitution of products.
It is an unfair trade practice for an in-
dustry member to make an unauthorized
substitution of products, where such sub-
stitution has the capacity and tendency
or effect of misleading or deceiving the
purchasing or consuming public, by:
(a) Shipping or delivering industry
products which do not conform to sam-
ples submitted, to specifications upon
which the sale is consummated, or to
representations made prior to securing
the order, without advising the purchaser
of the substitution and obtaining his con-
sent thereto prior to making shipment
or delivery; or
(b) Falsely representing the reason for
making 2 substitution.
§ 39.13 Exclusive deals.
It is an unfair trade practice for any
member of the industry to contract to
sell.or seli any industry products, or to
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 products of a competitor or
competitors of such industry member,
where the effect of such sale or contract
for sale, or such condition, agreement, or
understanding, may be substantially to
lessen competition or tend to create a
monopoly in any line of commerce.
§ 39.14 Push money.
It is an unfair trade practice for any
industry member to pay or contract to
pay anything of value to a salesperson
employed by a customer of the in-
Title 16—Commercial Practices
dustry member, as compensation for, or
as an inducement to obtain, special or
greater effort or service on the part of
the salesperson in promoting the resale
of products supplied by the industry
member to the customer:
(a) When the agreement or under-
standing under which the payment or
payments are made or are to be made is
without the knowledge and consent of
the salesperson’s employer; or
(b) When the terms and conditions of
the agreement or understanding are such
that any benefit to the salesperson or
customer is dependent on lottery or
chance; or
(c) When any provision of the agree-
ment or understanding requires or con-
templates practices or a course of con-
duct unduly and intentionally hampering
sales of products of competitors of an
industry member; or
(d) When, because of the terms and
conditions of the agreement or under-
standing, including its duration, or the
attendant circumstances, the effect may
be substantially to lessen competition or
tend to create a monopoly; or
(e) When similar payments are not
accorded to salespersons of competing
customers on proportionally equal terms
in compliance with sections 2 (d) and (e)
of the Clayton Act.
Nore: Payments made by en industry
member to a salesperson of a customer un-
der any agreement or understanding that all
or any part of such payments js to be trans-
ferred by the salesperson to the customer, or
is to result in a corresponding decrease tn
the salesperson’s salary, are not to be con-
sidered within the purview of this § $9.14, but
are to be considered as subject to the re-
quirements and provisions of section 2(a)
of the Clayton Act.
§ 39.15 Enticing away employees of
competitors,
It is an unfair trade practice for any
member of the industry willfully to entice
away employees or sales-contact person-
nel of competitors with the intent and
effect of thereby unduly hampering or
and destroying or substantially lessening
competition: Provided, That nothing in
this section shall be construed as pro-
hibiting such persons from seeking more
favorable employment, or as prohibiting
employers from hiring or offering em-
ployment to employees of a competitor in
good faith and not for the purpose of
inflicting injury on such competitor.
860
Chapter I|—Federal
839.16 Aiding or abetting use of unfair
trade practices.
It is an unfair trade practice for any
person, firm, or corporation to ald, abet,
coerce, or induce another, directly or in-
directly, to use or promote the use of any
unfair trade practice specified in this
part.
PART 40-——ENVIRONMENTAL TESTING
EQUIPMENT MANUFACTURING IN-
DUSTRY
Sec.
40.0 The industry defined.
Group I
40.1 Misrepresentation and deception in
general.
40.2 Deceptive pricing.
409 Misrepresentation 28 to experience
and production capacity.
40.4 Misrepresentation of performance of
equipment.
405 Defamation of competitors or false
7 disparagement of their equipment.
40.6 Substitution of equipment.
40.7 Misrepresenting equipment as con-
forming to standard.
40.8 Inducing breach of contract.
40.9 Commercial bribery.
40.10 Prohibited forms of trade restraints.
40.11 Guarantees, warranties, ete.
40.12 Enticing away employees of competi-
tors.
40.18 Prohibited sales below cost.
40.14 Prohihited discrimination.
40.15 Exclusive deals.
40.16 Aiding or abetting use of unfair trade
practices.
COMMITTEE ON THE PRACTICES
40.201 Industry committee.
AvurHosrrr: The provisions of this Part 40
issued under secs. 6, 5, 38 Stat. 721, 719; 15
U.S.C. 46, unless otherwise noted.
Sovgce: The provisions of this Part 40
appear at 22 F.R. 4441, June 25, 1957, unless
otherwise noted.
§ 40.0 The industry defined.
The industry for which trade practice
rules are established through this pro-
ceeding consists of persons, firms, corpo-
rations, and organizations engaged in the
sale of equipment designed to test the
reaction and performance of products
under varying degrees of temperature,
shock, noise, combustion, gravity, and
other environmental conditions, and
which is manufactured in whole or sub-
Trade Commission § 40.1
stantial part at factories maintained and
operated by them. Not included are per-
sons, firms, corporations, or organiza.
tions who merely install and/or repair
such equipment.
Grover I
§ 40.1 Misrepresentation and deception
in general.
In connection with the distribution,
sale, or offering for sale of industry
equipment, it is an unfair trade practice
to use, or cause or promote the use of, any
trade promotional literature, advertising
matter, guarantee, warranty, mark,
brand, label, trade name, picture, de-
sign or device, designation, or any
other type of oral or written representa-
tion, however disseminated or published,
or to fall to disclose any material fact,
when such representation or failure to
disclose has the capacity and tendency
or effect of misleading or decetving pur-
chasers or prospective purchasers in any
material respect.
§ 40.2 Deceptive pricing.
(a) It is an unfair trade practice for
any industry member, in the course of or
in connection with the offering for sale
or distribution of industry equipment, to
publish or circulate, in advertising or
otherwise, false or misleading price quo-
tations, price lists, or lists stating terms
or conditions of the sale or installation of
industry equipment, which have the ca-
pacity and tendency or effect of thereby
misleading or deceiving purchasers or
prospective purchasers in any material
respect.
(b) Among the practices inhibited by
this section are:
(1) Mitsrepresenting the total cost
price or expense of the complete, final,
and efficient installation.
(2) Misrepresenting the need for ex-
tra parts, gadgets, or devices required for
the satisfactory and efficient perform-
ance of the installation.
(3) Misrepresenting the need for
malntenance or replacement of parts of
such equipment after such instailation
has been made, or with respect to any
services offered concerning maintenance
of such equipment or installation.
§ 40.3 Misrepresentation as to experi-
ence and production capacity.
In connection with the sale, offering
for sale, or distribution of environmental
361