Building Wire And Cable Manufacturing Industry
16 CFR Part 42 · Trade practice rules · in the Code of Federal Regulations 1959-1977 (12 annual editions)
Scanned CFR pages, OCR text may contain errors; the linked Library of Congress PDF is the authority. Not legal advice; not affiliated with the FTC. These rules and guides are historical: most were rescinded or replaced, so do not assume any is in force.
Latest edition: Library of Congress, 1977 CFR · Earliest edition: 1959 CFR
Text (1977 edition, OCR)
§ 41.30
person charged; and unless justification
shall be affirmatively shown, the Commission
is authorized to issue an order terminating
the discrimination: Provided, however, That
nothing contained in this section shall pre-
vent a seller rebutting the prima facie case
thus made by showing that his lower price or
the furnishing of services or facilities to any
purchaser or purchasers was made in good
faith to meet an equally low price of a come
petitor, or the services or facilities furnished
by @ competitor. See section 2-b, Clayton
Act.
§ 41.30 Aiding or abetting use of un-
fair trade practices.
It is an unfair trade practice for any
person, firm, or corporation to aid, abet,
coerce, or induce another, directly or
indirectly, to use or promote the use of
any unfair trade practice specified in
§§ 41.0 to 41.29.
PART 42—BUILDING WIRE AND
CABLE MANUFACTURING INDUSTRY
Sec.
42.0 Definitions.
42.1 Misrepresentation (general).
42.2 Substitution of products.
42.3 Misleading price lists.
42.4 Deceptive invoicing, etc.
42.6 Prohibited discrimination,
42.6 Prohibited forms of trade restraints
(unlawful price fixing, etc.).
42.7 Prohibited sales below cost.
428 Inducing breach of contract.
42.9 Consignment distribution.
42.10 Enticing away employees of com-
petitors.
42.11 Defamation of competitors or false
disparagement of their products.
42.12 Commercial bribery.
42.13 Arrangements to exclude sales of com-
petitors’ products.
42.14 Push money.
42.15 Tie-in sales; coercing purchase of one
product as @ prerequisite to the pur-
chase of other products.
42.16 Aiding or abetting use of unfair trade
practices.
AvuTHoRITY: The provisions of this Part 42
issued under secs. 6, 5, 38 Stat. 721, 719: 15
US.C. 46, 45, unless otherwise noted.
Source: The provisions of this Part 42
appear at 23 F.R. 5477, July 18, 1958, unless
otherwise noted.
§ 42.0 Definitions.
(a) Industry members. As used in
this part, “industry members” include
all persons, firms, corporations and or-
ganizations engaged in the manufacture
and sale of industry products as defined
in paragraph (b) of this section.
Title 16——Commercial Practices
(b) Industry products. As used in this
part, “industry products” are building
wire and cable products limited to 600
volts maximum capacity and generally
referred to as types R, RH, RW, RH-RW,
RHW, RR, TW, UF, SEU, SEA, SD, NM
and ABC.
§ 42.1 Misrepresentation (general).
It is an unfair trade practice for any
member of the industry, in connection
with the sale, offermg for sale, or dis-
tribution of industry products, to make
or publish, or cause to be made or pub-
lished, by way of advertising, labeling,
or otherwise, any statement or repre-
sentation which, directly or by implica-
tion, has the capacity and tendency or
effect of decetving purchasers or pro-
spective purchasers as to the kind, type,
grade, quality, price, size, weight,
strength, composition, durability, capac-
ity, safety, or availability, of any indus-
try product, or which has the capacity
and tendency or effect of deceiving pur-
chasers or prospective purchasers in any
other material respect.
§ 42.2 Substirution of products.
It is an unfair trade practice for a
member of the industry to make an un-
authorized substitution of products,
where such substitution has the capacity
and tendency or effect of misleading 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 representations
made prior to securing the order, with-
out advising the purchaser of the sub-
stitution and obtaining his consent
thereto prior to making shipment or de-
livery; or
(b) Falsely representing the reason for
making a substitution.
§ 42.3 Misleading price lists.
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 price lists which have
the capacity and tendency or effect of
misleading or deceiving purchasers or
prospective purchasers in any material
respect.
§42.4 Deceptive invoicing, etc.
It is an unfair trade practice for mem-
bers of the industry to issue invoices,
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Chapter I—Federal
pilings, or sales slips which by reason of
misstatements therein or omissions
therefrom have the capacity and tend-
ency or effect of deceiving purchasers or
prospective purchasers in any material
respect.
§ 42.5 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 custom-
ers of elther of them: Provided, how-
ever:
(1) That the goods involved in any
such transaction are sold for use, con-
sumption, or resale within any place
under the jurisdiction of the United
States, and are not purchased by schools,
colleges, universities, public libraries,
churches, hospitals, and charitable in-
stitutions not operated for profit, as
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 differ-
ing methods or quantities in which such
14s used in this part, the word “com-~-
merce” means “trade or commerce among
the several States and with foreign nations,
or between the District of Columbia or any
Territory of the United States and any State,
Territory, or foreign nation, or between any
insular possessions or other places under
the jurisdiction of the United States, or be-
tween any such possession or place and any
State or Territory of the United States or
the District of Columbia or any foreign na-
tion, or within the District of Columbia or
any Territory or any insular possession or
other place under the jurisdiction of the
United States.”
Trade Commission § 49.5
commodities are to such purchasers sold
or delivered;
Norm: Cost justification under the above
proviso depends upon net savings in cost
based on all facts relevant to the trans-
actions under the terms of subparagraph
(2) of this paragraph. For example, if a
seller regularly grants a discount based upon
the purchase of a specified quantity by a
single order for a single delivery, and this
discount is justified by cost differences, it
does not follow that the same discount can
be cost justified if granted to a purchaser of
the same quantity by multiple orders 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 shali 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 falth in discontinuance of busi-
ness in the goods concerned;
(5) That nothing contained in this
section shall prevent the meeting in
good falth 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 following paragraph (f)
of this section.
(b) The following are examples of
price differential practices to be con-
sidered as subject to the prohibitions of
paragraph (a) of this section when in-
volving goods of like grade and quality
which are sold for use, consumption, or
resale within any place under the juris-
diction of the United States, and which
are not purchased by schools, colleges,
universitles, public libraries, churches,
hospitals, and charitable institutions not
operated for profit, as supplies for their
own use, and when:
(1) The commerce requirements spec-
ified in paragraph (a) of this section
are present; and
(2) The price differential has a rea-
sonable probability of substantially
lessening competition or tending to
create a monopoly in any line of com-
merce, or of -injuring, destroying, or pre-
venting competition with the industry
member or with the customer receiving
B77
§ 42.5
the benefit of the price differential, or
with customers of either of them; and
(3) The price differential is not justi-
fied by cost savings (see paragraph (a)
(2) of this section); and
(4) The price differential is not made
in response to changing conditions
affecting the market for or the market-
ability of the goods concerned (see para-
graph (a) (4) of this section); and
(5) The lower price was not made to
meet in good faith an equally low price
of a competitor (see paragraph (a) (5)
of this section).
Example 1. The granting of a discount on
& purchase made by a customer which is
not granted on purchases made by all other
customers, or which is not granted in the
same amount on the purchases of all other
customers.
Example 2. At the end of a given period
an industry member grants a discount to 4
customer equivalent to a fixed percentage of
the total of such customer’s purchases dur-
ing the period and fails to grant a discount
of the same percentage to all other customers
on their purchases during such period.
Ezample 3. An industry member selis
goods to one or more of his customers at a
higher price than he charges other custom-
ers for like merchandise. It is immaterial
whether or not such discrimination 1s ac-
complished by misrepresentation as to the
grade and quality of the products sold.
Ezample ¢@. Terms of 2/10th prox. are
granted by an industry member to some cus-
tomers on goods purchased by them from the
‘price adjustments upon inventory of cus-
tomers are granted to some customers and
additional discount when making payment
to the industry member within the time
prescribed.
Ezample &. At the time of price decline,
price of adjustments upon inventory of cus-
tomers are granted to some customers and
not to other customers.
Nore: As previously indicated, the forego-
ing 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, exclusions,
or defenses set forth in this paragraph.
(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 Neu
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
Title 16—Commercial Practices
an agent, representative, or other inter-
mediary therein where such intermedi-
ary 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.
(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
products or commodities manufactured,
sold or offered for sale by such member,
unless such payment or consideration is
available 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 en-
gaged in commerce to discriminate in
favor of one purchaser against another
purchaser or purchasers of a commodity
bought for resale, with or without proc-
essing, by contracting to furnish or fur-
nishing, or by contributing to the fur-
nishing of, any services or facilities con-
nected with the processing, handling, sale
or offering for sale of such commodity so
purchased upon terms not accorded to
ail competing purchasers on proportion-
ally equal terms.
Note: See subsection (b) of section 2 of
the Clayton Act, as amended, which is set
forth in the note following paragraph (f) of
this section.
(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 {ts prohib-
ited by the foregoing provisions of this
section.
Nors: This paragraph is a restatement of
section 2(f) of the Clayton Act 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 received the lower price
knowing, or Knowing facte from which he
should have Known, that such price was vio-
378
Chapter I—Federal
lative of section 2(a) of said act and not
justified under subparagraph (2), (4), or
(5) of paragraph (a) of this section. When,
in any such proceeding, the issue 1s limited to
the question of whether the price differential
involved made only due allowance for dif-
ferences in cost of manufacture, sale, or de-
livery resulting from the differing methods or
quantities in which the goods were sold and
Gelivered, the Commission 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 seller, 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
differential.
Note: This section is based on the pro-
vislons 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
(a) (5) 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 dis-
crimination 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 vio-
lation of this section, and unless justification
shall be affirmatively shown, the Commission
is’ authorized to issue an order terminating
the discrimination: Provided, however, That
nothing herein contained shall prevent a
seller rebutting the prima facie case thus
made by showing that his lower price or the
furnishing of services or facilities to any
purchaser or purchasers was made in good
faith to meet an equally low price of a com-
petitor, or the services or facilities furnished
by 8 competitor.”
§ 42.6 Prohibited forms of trade re-
ou (unlawful price fixing,
ete.
It is an unfair trade practice for any
member of the industry, either directly
*The inhibitions of this section are sub-
ject to Public Law 542, approved July 14,
1952, 66 Stat. 632 (the McGuire Act) which
provides that with respect to a commodity
which bears, or the label or container of
which bears, the trade-mark, brand, or name
Trade Cemmission § 42.7
or indirectly, to engage in any planned
common course of action, or to enter
into or take part in any understanding,
agreement, combination, or conspiracy,
with one or more members of the in-
dustry, or with any other person or
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 in-
duce 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 under-
standing, agreement, combination, or
conspiracy.
§ 42.7 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 reasonable probability that the effect
will be, to substantially injure, suppress,
or stifle competition or to create a mo-
nopoly. Among the situations in which
the requisite purpose 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 obsolescent goods; (3) made under
judicial process; or (4) made in bona
of the producer or distributor of such com-
modity and which is in free and open compe-
tition with commoditles of the same general
class produced or distributed by others, a
seller of such a commodity may enter into a
contract or agreement with a buyer thereof
which establishes a minimum or stipulated
price at which such commodity may be re-
sold by such buyer when such contract or
agreement is lawful as applied to intrastate
transactions under the laws of the State,
Territory, or territorial jurisdiction in which
the resale is to be made or to which the.
commodity is to be transported for such re-
sale, and when such contract or agreement
is not between manufacturers, or between’
wholesalers, or between brokers, or between
factors, or between retailers, or between
persons, firms, or corporations in competi-
tion with each other.
379
$42.8 .
fide discontinuance of business in the
goods concerned.
(c) As used in paragraphs (a) and
(b) of this section, the term “cost” means
the respective seller’s cost and not an
average cost in the industry whether
such average cost be determined by an
industry cost survey or some other
method. It consists of the total outlay
or expenditure by the seller in the ac-
quisition, production, and distribution
of the products involved, and comprises
all elements of cost such as labor, ma-
terial, depreciation, 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, manufac-
ture, processing, preparation for market-
ing, sale, and delivery of the products.
Not to be included are dividends or
interest on borrowed or invested capital,
er noneperating losses, such as fire losses
and losses from the sale or exchange of
eapital assets. Operating cost should
not be reduced by items of nonoperating
income such as income from invest-
ments, and gain on the sale of capital
assets.
(d) Nothing in this section shall be
construed as relieving an industry mem-
ber from compliance with any of the re-
quirements of the Robinson-Patman
Act.
§ 42.8 Inducing breach of contract.
(a) Knowingly inducing or attempting
to induce a breach of existing lawful
contracts between competitors and their
customers or their suppllers, or inter-
fering with or obstructing the preform-
ance of any such contractual duties or
services under any circumstance having
the capacity and tendency or effect of
substantially injuring or lessening pres-
ent or potential competition, is an un-
fair trade practice.
(b) Nothing in this section is intended
to imply that it is improper for any in-
dustry member to sollcit 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.
Title 16—Commercial Practices
§ 42.9 Consignment distribution.
It is an unfair trade practice for any
member of the industry to employ the
practice of shipping industry products on
consignment or pretended consignment
for the purpose of or with the effect of
artificially clogging or closing trade out-
lets and unduly restricting competitors’
use of said trade outlets in getting their
products to consumers through regular
channeis of distribution, thereby injur-
ing, destroying, or preventing competi-
tion, or tending to create a monopoly or
unreasonably to restrain trade. Nothing
in this section shall be construed as re-
stricting or preventing consignment
shipping or marketing of industry prod-
ucts in good faith where suppression of
competition, restraint of trade, or undue
interference with competitors’ use of the
usual channels of distribution is not ef-
fected; nor shall anything in this section
be construed to authorize any agreement,
understanding, or planned common
course of action by and between indus-
try members mutually to conform or
restrict their practice of shipping goods
on consignment with the intent or effect
of lessening competition.
§ 42.10 Enticing away
competitors.
Knowingly enticing away employees
or sales representatives of competitors
under any circumstance having the
capacity and tendency or effect of sub-
stantially injuring or lessening competi-
tion is an unfair trade practice: Pro-
vided, That nothing in this section shall
be construed as prohibiting employees
from seeking more favorable employ-
ment, or as prohibiting employers from
hiring or offering employment to em-
ployees of competitors in good faith and
not for the purpose of injuring, destroy-
ing, or preventing competition.
§ 42.11 Defamation of competitors or
false disparagement of their prod-
ucts.
The defamation of competitors by
falsely imputing to them dishonorable
conducts, inability to perform contracts,
questionable credit standing, or by other
false representations, or the false dis-
paragement of the quality, grade, origin,
use, construction, design, performance,
properties, manufacture, or distribution
of the products of competitors or of their
business methods, selling prices, values,
credit terms, policies or services, is an
unfair trade practice.
employees of
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Chapter I—Federal Trade Commission
§ 42.12 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, employees, or
representatives of customers or prospec-
tive customers, or to agents, employees
or representatives of competitors’ cus-
tomers or prospective customers, with-
out the knowledge of their employers or
principals, as an inducement to influence
their employers or principals to purchase
or contract to purchase products manu-
factured or sold by such industry mem-
ber or the maker of such gift or offer,
or to influence such employers or prin-
cipals to refrain from dealing in the
products of competitors or from dealing
or contracting to deal with competitors.
§ 42.13 Arraugements to exclude sales
of competitors’ prodncts.
It is an unfair trade practice for any
member of the industry to sell or con-
tract for the sale of any industry prod-
ucts for use or resale, 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 new or used 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 to substan-
tially lessen competition or tend to create
a monopoly in any line of commerce.
§ 42.14 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 industry
member, as compensation for, or as an
inducement to obtain, special or greater
effort or service on the part of the sales-
person in promoting the resale of prod-
ucts 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 Jottery or
chance; or
(c) When any provision of the agree-
ment or understanding requires or con-
§ 42.16
templates practices or a course of con-
duct unduly and intentionally hamper-
ing sales of products of competitors of
an industry member; or
(d) When, because of the terms and
conditions of the understanding or agree-
ment, including its duration, or the at-
tendant circumstances, the effect may he
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.
Note: Payments made by an industry
member to a salesperson of a customer under
any agreement or understanding that all or
any part of such payments is to be trans-
ferred by the salesperson to the customer, or
is to result In @ corresponding decrease in
the salesperson’s salary, are not to be con-
sidered within the purview of this section,
but are to be considered as subject to the re-
quirements and provisions of section 2(a) of
the Clayton Act.
§ 42.15 Tic-in sales; coercing purchase
of one product as a prerequisite to
the purchase of other products.
The practice of coercing the purchase
of one or more products of the industry
as @ prerequisite to the purchase of one
or more other products, where the effect
may be substantially to lessen competi-
tion or tend to create a monopoly or
unreasonably to restrain trade, is an
unfair trade practice.
§ 42.16 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, directly or in-
directly, to use or promote the use of any
unfair trade practice specified m this
part.
PART 43—OUTLET AND SWITCH
BOX MANUFACTURING INDUSTRY
Sec.
43.0 Definitions.
43.1 Misrepresentation and deception
(general).
43.2 Substitution of products.
43.3 Prohibited forms of trade restraints
(unlawful price fixing, etc.).
43.4 Misrepresentation as to character of
business,
43.6 Defamation of competitors or false
disparagement of their products.
43.6 Procurement of competitors’ confi-
dential information.
381