Metal Awning Industry

16 CFR Part 41 · 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 These rules and guides are historical: most were rescinded or replaced, so do not assume any is in force.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)

§ 40.15

as amended. In a complaint proceeding
under this section, in order to make out a
prima facie violation, the Commission must
show that the favored buyer induced or re-
ceived 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 para-
graphs (a)(2), (4), or (5) of this section.

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 manu-
facture, sale, or delivery resulting from the
differing methods or quantities in which the
goods were sold and delivered, the Commis-
slon may establish a prima facie 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 selier, were the
same as in the case of the competing buyer
or buyers paying the higher price or prices;
or

(2) By showing, when there is a difference
in the methods or quantities in which the
goods were sold and delivered by the seller
to the buyer than in the case of the compet-
ing 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 resulted in
sufficient cost savings of the kind and char-
acter specified as to justify the price differ-
ential.

Norte: Section 40.14 is based on the provi-
sions of section 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 paragraph
(a5) of this section and of the note to
paragraph (d) of § 40.14:

“Upon proof being made, at any hearing
on a complaint under this section, that
there has been discrimination in price or
services or 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 affir-
matively shown, the Commission is autho-
rized to issue an order terminating the dis-
crimination: Provided, however, That noth-
ing herein contained shall prevent a seller
rebutting the prima facie case thus made by
showing that the 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.

Title 16—Commercio! Practices

§ 40.15 Exclusive deals.

It is an unfair trade practice for any
member of the industry to contract to
sell or sell any industry equipment, or
fix a price charged therefor, or dis-
count from, or rebate upon, such price,
upon the condition, agreement, or un-
derstanding that the purchaser there-
of shall not use or deal in the equip-
ment of a competitor or competitors of
such industry member, where the
effect of such sale or contract for sale,
or of such condition, agreement, or un-
derstanding, may be substantially to
lessen competition or tend to create a
monopoly in any line of commerce.

§ 40.16 Aiding or abetting use of unfair
trade practices.

It is an unfair trade practlce for any
person, firm, or corporation to aid,
abet, coerce, or induce another, direct-
ly or indirectly, to use or promote the
use of any unfair trade practice speci-
fied in the rules of this part.

COMMITTEE ON TRADE PRACTICES

§ 40.201 Industry committee.

The provisions of §16.1 of this sub-
chapter shall be applicable to an in-
dustry committee established under
this part.

PART 41—METAL AWNING
INDUSTRY

Sec.
41.0
41.1
41.2
41.3

Definitions.

Deception in general.

Misuse of term “windproof,” etc.

Misuse of the term “stormproof,” etc.

41.4 Misuse of the term “rustproof,” etc.

41.5 Deception as to temperature reduction
or control resulting from use of industry
products.

41.6 Deceptive pricing.

41.7 Bait advertising.
41.8 Misuse of terms “close-outs,” “discon-
tinued lines,” “special bargains,” etc.
41.9 Misrepresentation as to character of
business.

41.10 Deception as to nature of sales trans-
actions.

41.11 Deception as to agency status and au-
thority.

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

41.13 Deceptive testimonials or depictions.

41.14 Deceptive use of seals.

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Chapter |—Federal Trade Commission

Sec.

41.15 Misrepresenting products as con-
forming to standard. .

41.16 Misuse of terms
“custom-built,” etc.

41.17 Guarantees, warranties, etc.

41.18 Use of the word “free.”

41.19 Deceptive invoicing.

41.20 Substitution of products.

41.21 Misrepresentation or earnings of
salesmen or agents.

41.22 Defamation of competitors or false
disparagement of their products.

41.23 Unfair threats of infringement suits.

41.24 Enticing away employees, sales repre-
sentatives, dealers, or distributors of
competitors.

41.25 Inducing breach of contract.

41.26 Procurement of competitors’ confi-
dential information.

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

41.28 Prohibited sales below cost.

41.29 Prohibited discrimination.

41.30 Aiding or abetting use of unfair trade
practices.

Avrnonriry: Secs. 6, 5, 38 Stat. 721, 719; 15
U.S.C. 46, 45, unless otherwise noted.
SouRcE: 22 FR 4604, June 29, 1957, unless
otherwise noted.

$41.0 Definitions.

(a) “Industry products” consist of
those products which primarily are of
metal composition and are used for
the purpose of providing protection to
windows, doors, patios, terraces,
breezeways, porches, driveways, and
other outdoor areas, from sun, rain,
hail, snow, or sleet, including, but not
limited to, window awnings, door cano-
pies, and carports, and parts and ac-
cessories for such products.

(b) “Industry members” are persons,
firms, corporations, and organizations
engaged in the manufacture, fabrica-
tion, assembly, sale, offering for sale,
or distribution of industry products as
defined above, and their agents. Per-
sons who are not agents, but who pur-
port to act as agents of manufacturers
or suppliers of industry products, are
also to be regarded as industry mem-
bers, as well as so-called independent
contractors who engage in offering in-
dustry products for sale to consumer-
purchasers without having title to the
products or any agency status with a
manufacturer or other supplier of
such products, and who, after securing
orders for such products, or purport-
edly having made sales thereof, then
undertake to arrange for the transfer

“custom-made,”

§ 41.1

of title to the products from a manu-
facturer or other supplier to them or
to their purported vendees.

$41.1 Deception in general.

(a) It is an unfair trade practice to
sell, offer for sale, or distribute any in-
dustry product, or to promote the sale
or distribution thereof, under any rep-
resentation or by any method or under
any circumstance, including failure
adequately to disclose additional rel-
evant information, which has the ca-
pacity and tendency or effect of inis-
leading or deceiving purchasers or pro-
spective purchasers with respect to the
construction, composition, installation,
design, model, finish, color or color-
fastness, size, origin, manufacture,
value, price, quality, strength, weight,
gauge, durability, fit alignment, venta-
bility, or utility of such product or any
part thereof, or the ease of operation
of such products, or the benefits to be
derived from the use thereof, or with
respect to the immunity or resistance
of such product to wind, storm, or
other weather condition, warpage, fire,
rust, or sag, or the need for mainte-
nance, repair, or repiacement of all or ©
any part of such product, or in any
other material respect.

(b) Among the practices to which
the inhibitions of this section are ap-
plicable are:

(1) Representing that industry prod-
ucts require no maintenance or repair,
or that the initial cost is the only cost,
when such is not the fact.

(2) Representing that industry prod-
ucts, or any part or parts thereof, are
everlasting or are made of indestructi-
ble materials.

(3) Representing that the colors in
which industry products are finished
are impervious to the elements or will
jest a lifetime, when such is not the’

act.

Note: For requirements relating to use of
the terms “windproof,” “stormproof,’” and
“rustproof,” and terms of similar import,
and for representations concerning tem-
perature reduction or control resulting from
the use of industry products, see §§ 41.2,
41.3, 41.4, and 41.5, respectively.

(c) The inhibitions of this section
are applicable with respect to every

species of advertisement or form of
representation, whether oral, or in a

347


§ 41.2

newspaper or other periodical, tele-
phone directory, sales catalog, sales
promotional literature, radio or televi-
sion broadcast, or other media, or
whether in the form of a mark, tag, or
label on, affixed to, or accompanying,
the product.

Note: The inhibitions of this section shall
also be considered as extending to deception
of purchasers or prospective purchasers as
to the character, nature, or origin, of any
product of the industry, or as to any quality
or efficacy of such product, through use of
any corporate namie, trade name, or trade-
mark by any industry member in connection
with the sale or offering for sale of such
product.

§41.2 Misuse of term “windproof,” etc.

In the sale, offering for sale, or dis-
tribution of industry products, it is an
unfair trade practice for any member
of the industry to use the term “wind-
proof,” or any other word or term of
similar import, as descriptive of any
industry product, unless such product
and its installation attachments will
suffer no damage during the life ex-
pectancy thereof as the result of being
exposed to wind of any velocity or vio-

‘lence: Provided, however,

(a) That the term may be used as de-
scriptive of any product which, togeth-
er with its installation attachments,
will suffer no damage during the life
expectancy thereof as the result of
being exposed to winds of any degree
of velocity or violence which is less
than that involved in hurricanes, cy-
clones, or tornadoes, when the term is
immediately accompanied by a con-
spicuous exception of winds involved
in hurricanes, cyclones, or tornadoes
(e.g., ‘“windproof—except as to hurri-
canes, cyclones, or tornadoes”); and

(bd) That the term may be used as de-
scriptive of any product which, togeth-
‘er with its installation attachments,
will suffer no damage for a substantial
period of time, though less than the
life expectancy thereof, as the result
of being exposed to winds of any veloc-
ity or violence, when the term is im-
mediately accompanied by a conspicu-
ous disclosure of the period during
which the immunity of the product to
such damage will prevail (e.g., “wind-
proof for a period of three years’’).
(When for a substantial period of
time, though less than the expected

Title 16—Commercial Practices

life of the product, it will suffer no
damage as the result of being exposed
to winds of any’ degree or velocity or
violence which is less than that in-
volved in hurricanes, cyclones, or tor-
nadoes, the term may be used when
additionally qualified in accordance
with the requirements of paragraph
(a) of this section and this paragraph
(e.g., “windproof, except as to hurri-
canes, cyclones, or tornadoes, for a
period of 3 years’’)): And provided, fur-
ther, That the term may be used as de-
scriptive of a product, exclusive of the
installation attachments, when all
parts of such product except such at-
tachments meet the requirements of
paragraph (a) of this section and this
paragraph and in immediate conjunc-
tion with the term, and with equal
conspicuousness, there appears a spe-
cific exception of such attachments
from applicability of the term.

NotTE 1: It is the consensus of the industry
that no industry product of present com-
mercial manufacture is immune to damage
resulting to exposure to wind of the force
and violence involved in hurricanes, cy-
clones, or tornadoes.

Note 2: Immunity of products of this in-
dustry to wind damage is dependent not
only upon the composition and construction
of the product and its installation attach-
ments, but also upon the strength of the
building or other fixture to which such at-
tachments are to be affixed and the proper
application of such attachments thereto. In
order to avoid deception of purchasers or
prospective purchasers as to the extent of
the applicability of the term “windproof,”
or any other term of similar import, indus-
try inembers using the term must not only
comply with the foregoing provision of this
section, but also must take care not to imply
that the term has applicability to the instal-
lation of the product when they are not in a
position to assure of proper installation and
of the requisite strength of the building or
fixture to which the product is to be at-
tached. In such cases, when using the word
“windproof,” or any term of similar import,
as descriptive of industry products, they
should either affirmatively disclaim applica-
tion of the term to the installation or, in im-
mediate conjunction with the term and with
equal conspicuousness, disclose that the im-
inunity of the product to wind damage is de-
pendent in part upon proper installation
and the strength of the building or fixture
to which the product is attached.

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Chapter I—Federal Trade Cammissian

§ 41.3 Misuse of the term “stormproof,”
etc.

In the sale, offering for sale, or dis-
tribution of industry products, it is an
unfair trade practice for any member
of the industry to use the term
“stormproof,” or any other word or
term of similar import, as descriptive
of any industry product unless such
product and its installation attach-
ments will suffer no damage during
the life expectancy thereof as the
result of being exposed to any kind of
storm, whether wind, rain, hail, snow,
sleet, sand, or dust storm, and includ-
ing hurricanes, cyclones, and torna-
does: Provided, however,

(a) That the term may be used as de-
scriptive of any product which, togeth-
er with its installatlon attachments,
will suffer no damage during the life
expectancy thereof as the result of
being exposed to all storms of lesser
magnitude than hurricanes, cyclones,
or tornadoes, when the term is imme-
diately accompanied by a conspicuous
exception of hurricanes, cyclones, or
tornadoes (e.g., ‘“stormproof—except
as to hurricanes, cyclones, or torna-
does’’); and

(b) That the term may be used as de-
scriptive of any product which, togeth-
er with its installation attachments,
will suffer no damage for a substantial
period of time, though less than the
life expectancy thereof, as the result
of being exposed to any kind of storm,
including hurricanes, cyclones, or tor-
nadoes, when the term is immediately
accompanied by a conspicuous disclo-
sure of the period during which the
immunity of the product to such
damage will prevail (e.g., ‘“stormproof
for a period of 3 years”). (When for a
substantial period of time, though less
than the expected life of the product,
it will suffer no damage as a result of
being exposed to all storms of lesser
magnitude than hurricanes, cyclones,
or tornadoes, the term may be used
when additionally qualified in accor-
dance with the requirements of para-
graph (a) of this section and this para-
graph (e.g., ‘“stormproof, except as to
hurricanes, cyclones, or tornadoes, for
a period of 3 years’): And provided,
further, That the term may be used as
descriptive of a product, exclusive of
its installation attachments, when all

§ 41.4

parts of such product except such at-
tachments meet the requirements of
paragraph (a) of this section and this
paragraph and in immediate conjunc-
tion with the term, and with equal
conspicuousness, there appears a spe-
cific exception of such attachments
from applicability of the term.

Nore 1: It is the concensus of the industry
that no industry product of present com-
mercial manufacture is immune to damage
resulting from exposure to any kind of
storm, inciuding hurricanes, cyclones, or
tornadoes.

NoTE 2: Immunity of products of this in-
dustry to storm damage is dependent not
only upon the composition and construction
of the product and its installation attach-
ments, but also upon the strength of the
building or other fixture to which such at-
tachments are to be affixed and the proper
application of such attachments thereto. In
order to avoid deception of purchasers or
prospective purchasers as to the extent of
the applicability of the term ‘“‘stormproof,”
or any term of similar import, industry
members using the term must not only
comply with the foregoing requirements of
this section, but also must take care not to
imply that the term has applicability to the
installation of the product when they are
not in a position to assure of proper installa-
tion and of the requisite strength of the
buliding or fixture to which the product is
to be attached. In such cases when using the
term “stormproof,” or any term of similar
import, as descriptive of industry products,
they should either affirmatively disclaim
application of the term to the installation
or, in immediate conjunction with the term,
and with equal conspicuousness, disclose
that the immunity of the product to storm
damage is dependent in part upon proper in-
stallation and the strength of the building
or fixture to which the product is attached.

§ 41.4 Misuse of the term. “rustproof,” ete.

(a) In the sale, offering for sale or
distribution of industry products, it is
an unfair trade practice for any
wnember of the industry to use the
term “rustproof,” or any other word
or term of similar import, as descrip-
tive of any industry product unless no
part of such product will rust during
the life expectancy of the product
when exposed to rain, humidity, and
other weather conditions: Provided,
however, That the term may be used
as descriptive of any part or parts of a
product which are of such composition
and.construction that the same will be
and remain free from rust during the

349


§ 41.5

life expectancy of the product when
exposed to rain, humidity, and other
weather conditions, when such part or
parts are identified in immediate con-
junction with the term and the term is
so used as clearly to have no applica-
bility to any other part or parts not
possessing such immunity to rust (e.g.,
when the slats, but not the frame and
installation attachments, possess such
immunity—“aluminum slats of this
awning are rustproof”).

- (b) Nothing in this section is intend-
ed to inhibit the use of the term “rust
resistant” as descriptive of an industry
product or part thereof which is of
such composition, construction, or
finish as to assure of absence of any
material rust damage thereto for a
substantial period of time when in
normal use. *

§ 41.5 Deception as to temperature reduc-
tion or control resulting from use of
industry products,

(a) In the sale, offermg for sale, or
distribution of industry products, it is
an unfair trade practice for any
member of the industry to make any
representation which, directly or by
implication, or through failure ade-
quately to disclose additional relevant
information, has the capacity and ten-
dency or effect of deceiving purchas-
ers or prospective purchasers as to the
ability of such products to reduce or
control temperature in rooms, build-
ings, etc.

(b) Among the practices to which in-
hibitions of this section are applicable
are claims that industry products will
effect savings in any specified amount
or to any specified extent in the cost
of operation of air-conditioning units
or systems, or increase, to any speci-
fied extent or degree, the effectiveness
of such units or systems, when such is
not the fact, or when claims that such
benefits will be obtained have the ca-
pacity and tendency or effect of de-
ceiving purchasers or prospective pur-
chasers of such products because of
failure adequately to disclose the con-
ditions under which such savings or in-
crease of effectiveness will result.

Nore 1: The degree to which window,
door, or porch awnings will reduce or advan-
tageously affect the temperature of rooms,
building interiors, porches, etc., is depen-

Title 16—Commercial Practices

dent on favorable location and environmen-
tal conditions, such as, but not limited to,
the direction faced by the windows, doors,
porches, etc., which the awnings are to shel-
ter, and the shade already afforded to such
windows, doors, porches, etc., by adjacent
trees, structures, or elevations. Because
many purchasers and prospective purchas-
ers of such products may not be aware or
mindful of this when purchasing or contem-
plating the purchase of such products, in-
dustry members making claims or represen-
tations relating to the ability of such prod-
ucts to reduce or favorably affect tempera-
ture in rooms, buildings, porches, etc. (or re-
lating to savings in the cost of operating air-
conditioning units or systems or increasing
their effectiveness) should, when such bene-
fits will result only under favorable condi-
tions, accompany such claims or representa-
tions by a conspicuous disclosure of the fact
that the benefits can be expected only
under such conditions.

NoTeE 2: Order of the Commission, 22 FR
4604, June 29, 1957, provides that § 41.5 not
become operative until one year from the
date of promulgation of Part 41.

§ 41.6 Deceptive pricing.

(a) It is an unfair trade practice for
any member of the industry to repre-
sent or imply, in advertising or other-
wise, that an industry product may be
purchased for a specified price when
such is not the fact; or that any indus-
try product is being offered for sale at
a reduced price when such is not the
fact; or otherwise to deceive purchas-
ers or prospective purchasers with re-
spect to the price of products offered
for sale.

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

(1) Representing or implying that an
advertised or quoted price, whether
determined on the basis of a stated
price per square foot or otherwise, is
for a complete functional industry
product when in fact the product so
priced is deficient as to parts neces-
sary and usual to the proper function-
ing and appearance of such product
(such as, ends, valance, frame, hard-
ware, etc.).

(2) Representing or implying that
the price of an industry product in-
cludes installation, when such is not
the fact.

(3) Representing or implymg that a
stated price is the usual and regular
price of an industry product when in
fact such stated price is in excess of

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Chapter I—Federal Trade Commission

the price at which such industry prod-
uct is regularly and customarily sold
_in the usual course of business.

(4) Representing or implying that
the seiling price of an industry prod-
uct has been reduced from what is in
fact a fictitious price, or that such
price is a reduced or special price when
it is in fact the regular selling price of
such product, or when, over a substan-
tial period of time, the alleged ‘‘re-
duced” or “special” price has been the
price at which such product customar-
lly has been sold.

(5) Representing or implying that
prices applicable only to certain sizes
of industry products apply to other or
all sizes of such products.

(6) Making or publishing any false,
misleading, or deceptive representa-
tion concerning installment sales con-
tracts to be used in the sale of indus-
try products, the terms or conditions
of such contracts, the down payment
to be required, the rate of interest or
financing cost to be charged, or re-
specting any other matters relative to
such contracts. ;

(7) Representing or implying that in-
dustry products may be purchased at
factory prices (‘‘factory to you, etc.’’),
when such is not the fact.

(c) It is also an unfair trade practice
to sell, or offer for sale, any industry
product at a price less than the cost
thereof to the selier as a “loss leader,”
used in inducing and sold only in com-
bination with, the purchase of other
merchandise and/or services on which
the seller recoups such loss, when this
practice has the capacity and tendency
or effect of misleading or deceiving
the purchasing public.

§ 41.7 Bait advertising.

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

_ Norte: In determining whether there has
been a violation of this section, consider-
ation will be given to acts or practices indi-
cating that the offer was not made in good
faith for the purpose of seiling the adver-
tised product, but was made for the purpose
of contacting prospective purchasers and
selling them a product or products other
than the product offered. Among the acts or

§ 41.9

practices which will be considered in making
that determination are the following:

(a) The creation, through the initial offer
or advertisement, of a false impression of
the grade, quality, make, value, currency of
modei, size, usability, or origin of the prod-
uct offered.

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

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

(d) The showing, demonstrating, and in
the event of sale the delivery, of a product
which is unusabie or impractical for the
Purpose represented or implied in the offer.

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

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

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

§ 41.8 Misuse of terms “ciose-outs,” “dis-
continued fines,” “special bargains,”
ete.

It is an unfair trade practice to offer
for sale, sell, advertise, describe, or
otherwise represent, industry products
as ‘“‘close-outs,”’ “discontinued lines,’
or “special bargains,’’ by use of such
terms or by words or representations
of similar import, when such are not
true in fact; or to so offer for sale, sell,
advertise, describe, or otherwise repre-
sent, industry products where the ca-
pacity and tendency or effect thereof
is to lead the purchasing or consuming
public to believe such products are
being offered for sale or sold at great-
ly reduced prices, or at so-called “‘bar-
gain” prices, when such is not the fact.

§ 41.9 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 of industry
products, to represent, directly or indi-
rectly, that he is a manufacturer of in-
dustry products, unless he owns and
operates or directly controls a factory
wherein such products are made, or in
any other inanner to misrepresent the
character, extent, or type of his busi-
ness.

351


§ 41.10

§ 41.10 Deception as to nature of sales
transactions.

When an industry member sells in-
dustry products at both wholesale and
at retail in the same establishment, it
is an unfair trade practice for such in-
dustry member to sell any products
under circumstances having the capac-
ity and tendency or effect of causing
purchasers to believe that they are
buying at wholesale prices when such
is not the case.

' $41.11 Deception as to agency status and
authority.

(a) It is an unfair trade practice for
any member of the industry to aid or
abet any person in effecting deception
of purchasers or prospective purchas-
ers as to his authority to represent
and make commitments in behalf of
such industry member.

(b) It is an unfair trade practice for
any member of the industry to supply
any person with indicia of agency and
then refuse to fulfill commitments
made by such person within the ap-
parent scope of his authority as agent
of such industry member.

(c) It is also an unfair trade practice
for any person engaged in the sale of
industry products to represent that he
is an agent of, or otherwise affiliated
with, a manufacturer or distributor of
such products, or that he is in a posi-
tion to transfer title to industry prod-
ucts, or to assure of the delivery and/
or installation of any such products
when such is not the fact.

§ 41.12 Deception as to identity of manu-
facturer or seller.

In the sale, offering for sale, or dis-
tribution of industry products, it is an
unfair trade practice for any member
of the industry to use any corporate
name, trade name, trade-mark, slogan,
or other means of identification,
which, by reason of its similarity with
the corporate name, trade name,
trade-mark, slogan, or other means of
identification used by another party,
has the capacity and tendency or
effect of deceiving purchasers or pro-
spective purchasers as to the identity
of the manufacturer or vendor of any
industry product which is sold or of-
fered for sale by the industry member.

Title 16—Commercial Practices

Norte: The inhibitions of this section (and
of the other sections from § 41.1 to § 41.28,
inclusive, and § 41.30) are based on section 5
of the Federal Trade Commission Act as
amended. Corrective action relating to viola-
tions of such rules are subject to the Com-
mission’s published statement of policy con-
cerning private controversies, which reads
as follows: ‘“‘The Commission acts only in
the public interest, against alleged unfair
methods of competition or unfair, deceptive
or monopolistic practices in commerce. It
does not take action when the alleged viola-
tion of law is merely a matter of private
controversy and does not tend to adversely
affect the public.”

§ 41.13 Deceptive testimonials or depic-
tions. .

It is an unfair trade practice for a
member of the industry to use any tes-
timonial of a user of any industry
product, or of any other person, or to
use any picture or depiction thereof,
which is false or which has the capac-
ity and tendency or effect of mislead-
ing or deceiving purchasers or prospec-
tive purchasers.

§ 41.14 Deceptive use of seals.

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

Norte: Seals of approval used by industry
members should identify the organization
issuing and/or authorizing the use of the
seal. Such seal should be based on adequate
inspection and tests of the industry mem-
ber’s products and not otherwise contravene
the provisions of § 41.1 relating to deception
generally.

§ 41.15 Misrepresenting products as con-
forming to standard.

It is an unfair trade practice to rep-
resent, through advertising or other-
wise, that any product of the industry
conforms to any standard recognized
in or applicable to the industry when
such is not the fact.

352


Chapter |—Federal Trade Cammission

§ 41.16 Misuse of terms “custom-made,”
“custom-built,” etc.

In the sale, offering for sale, or dis-
tribution of industry products, it is an
unfair trade practice for an industry
member to use the term ‘custom-
made,” “custom-built,” ‘“made-to-
order,”’ or any other word or term of
similar import, as descriptive of any
industry product which has not been
made in accordance with specifications
as to size, fit, quality, etc., supplied by
or on behalf of the consumer-purchas-
er prior to the manufacture or assem-
bly of the industry product, as distin-
guished from a product which is a
ready-made or stock industry product.

§ 41.17 Guarantees, warranties, etc.

(a) It is an unfair trade practice to
represent, in advertising or otherwise,
that any industry product, or its in-
stallation, is ‘‘guaranteed’’ unless the
nature and extent of such guarantee is
conjunctively disclosed and without
deceptively minimizing the terms and
conditions relating to the obligations
of the guarantor.

(b) It is also an unfair trade practice
to use, or cause to be used, any guar-
antee 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.

(ec) This section shall be applicable
not only to guarantees but also to war-
ranties, to purported guarantees and
warranties, and to any promise or rep-
resentation in the nature of a guaran-
tee or warranty.

§ 41.18 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 word or
words of similar import, in advertise-
ments or in other offers to the public,
as descriptive of an article of merchan-
dise, or service, which is not an uncon-
ditional gift, under the following cir-
cumstances:

(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

§ 41.20

reasonable probability that the terms
of the offer will be misunderstood;
and, regardless of such disclosure;

(b) When, with respect to any article
of merchandise required to be 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.

Note: The disclosure required by para-
graph (a) of this section shall appear in
close conjunction with the word “free’’ (or
other word or words of similar import)
wherever such word first appears in each
advertisement 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.

§ 41.19 Deceptive invoicing.

Withholding from or inserting in in-
voices any statement or information
by reason of which omission or inser-
tion a faise, inaccurate, or incomplete
record is made, which has the capacity
and tendency or effect of deceiving
purchasers, prospective purchasers, or
the consuming public in any material
respect, is an unfair trade practice.

§ 41.20 Substitution of products.

It is an unfair trade practice for a
member of the industry to make an
unauthorized substitution of products,
where such substitution has the capac-
ity and tendency or effect of mislead-
ing or deceiving purchasers, by:

(a) Shipping or delivering industry
products which do not conform to
samples submitted, to specifications
(in bids or otherwise) upon which the
sale is consummated, or to representa-
tions made prior to securing the order,
without advising the purchaser of the
substitution and obtaining his consent
thereto prior to making shipment or
delivery; or

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

Nore: Nothing in this section shall be con-
strued as preventing the application of such
tolerances as are agreed upon between
buyer and seller or are otherwise deemed
reasonable and proper and where no misrep-
resentation or deception of purchasers, is
practiced or promoted in relation to the

353


§ 41.21

product or its deviation from samples or
specifications.

§ 41.21 Misrepresentation of earnings of
. salesmen or agents.

It is an unfair trade practice for any
meinber of the industry to make or
publish, or cause to be made or pub-
lished, any advertisement, offer, state-
ment, or other form of representation,
which directly or by implication is
false, misleading, or deceptive:

(a) Concerning the salary, commis-
sion, income, earnings, or other remu-
neration which agents, canvassers, so-
licitors, or sales representatives receive
or may receive; or

(b) Concerning any conditions or
contingencies affecting such remu-
neration or the opportunities therefor.

§ 41.22 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 disparagement 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.

§ 41.23 Unfair threats of
suits.

The circulation of threats of suit for
infringement of patents or trade-
marks among customers or prospective
customers of competitors, not made in
good faith but for the purpose or with
the effect of thereby harassing or in-
timidating such customers or prospec-
tive customers, or of unduly hamper-
ing, injuring, or prejudicing competi-
tors in their business, is an unfair
trade practice.

infringement

§ 41.24 Enticing away employees, sales
representatives, dealers, or distributors
of competitors.

It is an unfair trade practice for any
member of the industry wilfully to
entice away employees, sales represen-
tatives, dealers, or distributors of com-
petitors with the intent and effect of
thereby unduly hampering or injuring
competitors in their business and de-
stroying or substantially lessening

Title 16—Commerciol Practices

competition: Provided, That nothing
in this section shall be construed as
prohibiting employees, sales represen-
tatives, dealers, or distributors from
seeking more favorable employment or
business connections, or as prohibiting
industry members from hiring or of-
fering employment or business connec-
tions to employees, sales representa-
tives, dealers, or distributors of com-
petitors in good faith and not for the
purpose of injuring, destroying, or pre-
venting competition. .

§ 41.25 Inducing breach 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.

§ 41.26 Procurement of competitors’ confi-
dential information.

It is an unfair trade practice for any
member of the industry to obtain in-
formation concerning the business of a
competitor by bribery of an employee
or agent of such competitor, by false
or misleading statements or represen-
tations, by the impersonation of one in
authority, or by any other unfair
means, and to use the information so
obtained so as to injure said competi-
tor in his business or to suppress com-
petition or unreasonably restrain
trade.

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Chapter I—Federal Trade Cammission

§ 41.27 Prohibited forms of trade re-
straints (unlawful price fixing etc.).!

It is an unfair trade practice for any
member of the industry, either direct-
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 co-
ercion to induce any member of the in-
dustry 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.

§ 41.28 Probibited 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 reason-
able 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 con-
strued as prohibiting all sales below
cost, but only such selling below the
seller’s cost as is resorted and pursued
with the wrongful intent or purpose

‘The 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 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.

§ 41.29

referred to and where the effect is, or
where there is reasonable probability
that the effect will be, to substantially
injure, suppress, or stifle competition
or to create a monopoly. Among the
situations in which the requisite pur-
pose or intent would ordinarily be
lacking are cases in which such sales
were: (1) Of seasonal goods near the
conclusion of the season; (2) of perish-
able goods in respect to which deterio-
ration is imminent; (3) of obsolescent
goods; (4) made under judicial process;
or (5) made in bona fide discontinu-
ance of business in the goods con-
cerned.

(c) As used in this section, the term
“cost” means the respective seller’s
cost and not an average cost in the in-
dustry 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 acquisition, production,
and distribution of the products in-
volved, and comprises all elements of
cost such as labor, material, depreci-
ation, taxes (except taxes on net
income and such other taxes as are
not properly applicable to cost), and
general overhead expenses, incurred
by the seller in the acquisition, manu-
facture, processing, preparation for
marketing, sale, and delivery of the
products. Not to be included are divi-
dends or interest on borrowed or in-
vested capital, or nonoperating losses,
such as fire losses and losses from the
sale or exchange of capital assets. Op-
erating 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 shall be
construed as relieving an industry
member from compliance with any of
the requirements of the Robinson-
Patman Act.

$41.29 Prohibited discrimination. ?

(a) Prohibited discriminatory prices,
or rebates, refunds, discounts, credits,
etc., which effect unlawful price dis-
crimination. It is an unfair trade prac-

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
Territory of the United States and any

355


§ 41.29

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 mon-
oply 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 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: “Spingling’” of orders. This proviso
shal] not be construed as permitting the
practice of allowing a price differential,
whether in the form of a discount, rebate,
or other form, through billing as a single
order an aggregate of the amounts of two or
more orders separately delivered, when such
price differential] is not justified by savings
to the seller which make only due allowance
for differences in the cost of manufacture,
sale, or delivery resulting from the differing
methods or quantities in which such prod-
ucts are to such purchasers sold or deliv-
ered.

(3) That nothing contained in this
section shall prevent persons engaged
in selling goods, wares, or merchandise

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.” .

Title 16—Cammercial Practices

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 pro-
cess, or sales in good faith in discon-
tinuance of business in the goods con-
cerned. -

(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 ser-
vices 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
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 ser-
vices or facilities. It is an unfair trade
practice for any member of the indus-
try engaged in commerce to discrimi-

356


Chapter I—Federal Trade Commission

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 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. 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 this sec-
tion. .

(f) Exemptions. The inhibitions of
this sectlon 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.

Nore: In complaint proceedings charging
discrimination in price or services or facili-
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 seiler 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 meet an equally
low price of a competitor, or the services or
facilities furnished by a competitor. See sec-
tion 2-b, Clayton Act.

§ 41.30 Aiding or abetting use of unfair
trade practices.

It is an unfair trade practice for any
person, firm, or corporation to aid,
abet, coerce, or induce another, direct-
ly or indirectly, to use or promote the
use of any unfair trade practice speci-
fied in §§ 41.0 to 41.29.

PART 46—WORK GLOVE INDUSTRY

Sec.
46.0 Definitions.
46.1 Deception (general).

§ 46.0

Sec.

46.2 Misrepresentation as to character of
business.

46.3 Misrepresenting products as conform-
ing to standard.

46.4 Guarantees, warranties, etc.

46.5 Substitution of products.

46.6 Deceptive use or imitation or simula-
tion of trade or corporate names, trade-
marks, etc.

46.7 False invoicing.

46.8 Defamation of competitors or faise
disparagement of their products.

46.9 Inducing breach of contract.

46.10 Enticing away employees of competi-
tors.

46.11 Consignment distribution.

46.12 Prohibited sales below cost.

46.13 Tie-in sales; coercing purchase of one
product as a prerequisite to the pur-
chase of other products.

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

46.15 Misleading price lists.

46.16 Misuse of terms “close-outs,” ‘“discon-
tinued lines,” ‘‘special bargains,” etc.

46.17 Seconds, irregulars, and rejects.

46.18 Prohibited discrimination.

46.19 Aiding or abetting use of unfair trade
practices.

Avruonrity: Secs. 6, 5, 38 Stat. 721, 719; 15

U.S.C. 46, 45, unless otherwise noted.

Source: 24 FR 4135, May 22, 1959, unless
otherwise noted.

§ 46.0 Definitions.

As used in this part the terms ‘‘in-
dustry member” and “industry prod-
ucts” shall have the following mean-
ing:

(a) Industry member. Any person,
firm, corporation or organization en-
gaged in the manufacture, sale, offer-
ing for sale, or distribution of industry
products as defined below.

(b) Industry products. All kinds and
types of gloves and mittens which are
designed primarily for use in the per-
formance of work or manual effort
(such as, but not limited to, gloves
which are in whole or in part of
canvas, flannel, jersey, or leather com-
position which are used in the perfor-
mance of manual labor; welders’, elec-
tric linemen’s, and industrial gloves
and gauntlets of any composition; and
surgeons’ and household gloves of
rubber, plastic, or other composition),
as distinguished from gloves and mit-
tens which are designed primarily for
dress. “

357