Outlet And Switch Box Manufacturing Industry

16 CFR Part 43 · 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 These rules and guides are historical: most were rescinded or replaced, so do not assume any is in force.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)

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


§ 43.0

Seo.

43.7 Inducing breach of contract.
43.8 Exclusive deals.

43.9 Prohibited discrimination.
43.10 Misleading price lists.

43.11 Deceptive invoicing, etc.
43.12 Prohibited sales below cost.
43.13

Aiding or abetting use of unfair trade
practices.

Avruorirr: The provisions of this Part 43
issued under secs, 6, 5, 38 Stat. 721, 719;
15 U.S.C. 46, 45, unless otherwise noted.

Source: The provisions of this Part 43
appear at 23 F.R. 9546, Dec. 10, 1958, unless
otherwise noted.

$43.0 Definitions.

As used in this part the terms “indus-
try member” and “industry products”
shall have the following meanings,
respectively:

(a) Industry member. Any person,
firm, corporation or organization en-
gaged in the manufacture and sale of in-
dustry products as defined below.

(b) Industry products. The follow-
ing products used in the electrical field:
Formed metai switch boxes, outlet boxes,
gang boxes, utility boxes, concrete boxes,
extension rings, box covers, bar hanger
sets, and combination and parts of such
products, exclusive of (1) boxes and cab-
inets which have interior pre-assembled
wiring, (2) hinged cover and pre-assem-
bled screw cover metal] cabinets, (3)
junction boxes and fittings for under
fioor-duct systems, (4) floor boxes, (5)
fittings and accessories manufactured as
part of surface raceway systems, (6) and
combination and parts of such excluded
products.

§ 43.1 Misrepresentation and deception
(general).

It is an unfair trade practice for any
industry member, in connection with the
offering for sale, sale, or distribution of
industry products, to use, or cause or pro-
mote the use of, any trade promotional
literature, advertising matter, guarantee,
warranty, mark, brand, label, trade
name, picture, design or device, desig-
nation, or other type or oral or written
representation, however, disseminated or
published, or to fail to disclose any ma-
terial fact, when such representation or
failure to disclose has the capacity and
tendency or effect of misleading or de-
ceiving purchasers or prospective pur-
chasers with respect to the price, type,
grade, quallty, quantity, use, size or size
symbol, material, finish, strength, thick-
ness, composition, origin, preparation,

Title 16—Commercial Practices

manufacture, or distribution of any
product of the industry, or in any other
material respect.

§ 43.2 Substitution 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 sam-
ples submitted, to specificatlons (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 substi-
tution and obtaining his consent thereto
prior to making shipment or delivery; or

(b) Falsely representing the reason

for making a substitution.

§ 43.3 Prohibited forms of trade re-
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 com-
mon course of action, or to enter into or
take part in any understanding, agree-
ment, combination, or consplracy, 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

1The inhibitions of this section are subject
to Public Law 542, approved July 14, 1952—
66 Stat. 682 (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 com-
modity and which ts tn free and open com-
petition with commodities of the same gen-~
eral class produced or distributed by others,
8 seller of such a commodity may enter into
®@ 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 com-
modity is to be transported for such resale,
and when such contract or agreement is not
between manufacturers, or between whole-
salers, or between brokers, or between fac-
tors, or between retailers, or between persons,
firms, or corporations in competition with
each other.

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Chapter |—Federal

of the industry or other person or persons
to engage in any such pianned common
course of action, or to become & party to
any such understanding, agreement,
combination, or conspiracy.

§ 43.4 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 manner to misrepresent the
character, extent, or type of his business.

§ 43.5 Defamation of competitors or
false disparagement of their prod-
ucts.

It is an unfair trade practice for any
industry member:

(a) To defame competitors by falsely
imputing to them dishonorable conduct,
inability to perform contracts, question-
able credit standing, or by other false
representations; or

(b) To falsely disparage competitors’
products as to grade, quality, or method
of manufacture and distribution, or in
any other respect; or

(c) To falsely disparage the business
methods, selling prices, values, credit
terms, policies, services, or conditions of
employment, of competitors.

Nore: Nothing in this section shall be con-
strued as preventing the full, fair, and non-
deceptive comparison, by demonstration or
otherwise, of competitors’ products with the
products of another industry member before
Purchasers or prospective purchasers.

§ 43.6 Procurement of competitors’ con-
fidential information.

It is an unfair trade practice for any
member of the industry to obtain infor-
mation concerning the business of a com-
petitor by bribery of an employee or
agent of such competitor, by false or mis-
leading statements or representations, by
the impersonation of one in authority,
or by any other unfair means, and to use
the information so obtained so as to in-
jure said competitor in his business or to
suppress competition or unreasonably
restrain trade.

§ 43.7 Inducing breach of contract.

(a) Knowingly inducing or attempting
to induce the breach of existing lawful
contracts between competitors and their

Trade Commission § 43.9
customers, or between competitors and
their suppliers, or interfering with or ob~
structing the performance of any such
contractual duties or services, under any
circumstance having the capacity and
tendency or effect of substantially injur-
ing or lessening present or potential
competition, is an unfair trade practice.

(b) Nothing in this section is intended
to imply that it is improper to solicit the
business of a customer of a competing
industry member; nor is the section to be
construed 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.

§ 43.8 Exclusive deals.

It is an unfair trade practice for any
member of the industry engaged in com-
merce, in the course of such commerce,
to lease or make a sale or contract for
sale of any industry product, for use,
consumption, or resale within any place
under the jurisdiction of the United
States, or fix a price charged therefor,
or discount from, or rebate upon, such
price, on the condition, agreement, or
understanding that the lessee or pur-
chaser thereof shall not use or deal in the
goods of a competitor or competitors of
the lessor or seller, where the effect of
such lease, sale, or contract for sale, or
such condition, agreement, or under-
standing, may be to substantially lessen
competition or tend to create a monopoly
in any line of commerce.

§ 43.9 Prohibited discrimination?

(a) Prohibited discriminatory prices,
rebates, refunds, discounts, credits, ete.,
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

3 As used in this section, the word “com-
merce” means “trade or commerce among
the several States and with foreign nations,
or between the District of Columbia or any
Territory of the United States and any State,
Territory, or foreign nation, or 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.”

383


$ 43.9

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
quality, where either or any of the pur-
chases involved therein are in commerce,
and where the effect thereof may be
substantially to lessen competition or
tend to create a monopoly in any line of
commerce, or to injure, destroy, or pre-
vent 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, 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 shali prevent differentials
which make only due allowance for dif-
ferences in the cost of manufacture, sale,
or delivery resulting from the differing
methods or quantities in which such
commoditles are to such purchaser sold
or delivered:

NoTE: Cost justification to be based on
net savings in cost of manufacture, sale or
delivery. Cost justification under aubpara-
graph (2) of this paragraph depends upon
net savings in cost based on all facts relevant
to the transactions under the terms of such
subparagraph. For example, if a seller regu-
larly grants a discount based upon the pur-
chase of a specified quantity by a single
order for a singie delivery, and this discount
1s 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
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 affecting
the market for or the marketability of

Title 16—Commercial Practices

the goods concerned, such as, but not
limited to, distress sales under court
process, or sales in good faith in dis-
continuance of business in the goods
concerned;

(5) That nothing contained in this
section shall prevent the meeting in good
faith cf an equally low price of a com-
petitor.

Notre: Subsection (b) of section 2 of the
Clayton Act, as amended, reads as follows:
“Upon proof being made, at any hearing
on a complaint under this section, that there
has been discrimination in price or services
er facilities furnished, the burden of re-
butting the prima facie case thus made by
showing justification shall be upon the pere
son charged with a violation of this section,
and unless justification shall be affirma-
tively shown, the Commission 1s authorized
to issue an order terminating the discrimina-
tion: 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 pur-
chasers was made in good faith to meet an
equally low price of a competitor, or the
services or facilities furnished by «a
competitor.”

(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,
universities, public libraries, churches,
hospitals, and charitable institutions not
operated for profit, as supplies for their
own use, and when:

(1) The commerce requirements spec-
ifled in paragraph (a) of this section
are present; and

(2) The price differential has a rea-
sonable probability of substantially less-
ening competitlon or tending to create
@ monopoly in any line of commerce,
or of injuring, destroying, or preventing
competition with the industry membér
or with the customer receiving the bene-
fit of the price differential, or with cus-
tomers 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 af-
fecting the market for or the market-
ability of the goods concerned (see para-
graph (a) (4) of this section) ; and

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Chapter I—Federal

(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 No. 1. The granting of a dis-
count on a purcbase 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 No. 2. At the end of # given pe-
riod an industry member grants a discount
to a customer equivalent to « fixed percentage
of the total of such customer’s purchases
during the period and fails to grant a dis-
count of the same percentage to all other
customers on their purchases during such
period.

Example No. 3. An tndustry member sells
goods to one or more of his customers at a
higher price than he charges other customers
for Uke merchandise. It is immaterial
whether or not such discrimination 1s ac-
complished by misrepresentation as to the
grade and quaiity of the products sold.

Erample No. 4. Terms So prox. are
granted by an industry member to some
customers on goods purchased by them from
the industry member. Another customer or
oustomers are, nevertheless, allowed to take
an additional discount when making pay-
ment to the tndustry member within the
time prescribed,

Example No. 5. At the time of price de-
cline, price adjustments upon inventory of
customers are granted to some customers and
not to other customers.

(ec) Prohibited brokerage and com-
missions. 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 lieu
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 inter-
mediary therein where such intermediary
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 compen-
sation is so granted or paid.

(d) Prohibited advertising or promo-
tional allowances, ete. It is an unfair
trade practlce 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

Trade Commission $ 43.9
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 manufactured,
sold or offered for sale by such member,
unless such payment or consideration is
available on proportionally equal terms
to all customers competing in the distri-
bution of such products or commodities.

(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
furnishing, or by contributing to the
furnishing of. any services or facilities
connected with the processing, handling,
sale or offering for sale of such com-
modity so purchased upon terms not ac-
corded to all competing purchasers on
proportionally equal terms.

Note: See subsection (b) of Section 2 of
the Clayton Act, as amended, which is set
forth in the note concluding paragraph (a8)
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 is pro-
hibited by the provisions of paragraphs
(a) to (e) of this section.

Note: Paragraph (f) of this section ls 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 vioiation, the Commission must
show that the favored buyer induced or Tre-
ceived the lower price knowing, or knowing
facta from which he should have known,
that such price was violative of section 2 (a)
of said Act and not justified under subpara-
graph (2), (4), or (5) of paragraph (a) 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-
sion may establish a prima facie case in &
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

385


§ 43.10

(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 competing
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 suf-
ficient cost savings of the kind and character
specified as to justify the price differential.

§ 43.10 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. ,

§ 43.11 Deceptive invoicing, etc.

It is an unfair trade practice for mem-
bers of the industry to issue invoices,
‘billings, 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.

§ 43.12 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, sup-
press, 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 1s
reasonable probability that the effect
will be, to substantially injure, suppress,
-or stifie 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 obsolescent
goods; (2) of perishable goods in respect
to which deterioration is imminent; (3)
made under judicial process: or (4)
made in bona fide discontinuance of
business in the goods concerned.

Title 16—Commercial Practices

(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, mate-
rial, depreciation, taxes (except taxes on
net income and such other taxes as are
not properly applicable to cost), and gen-
eral overhead expenses incurred by the
seller in the acquisition, manufacture,
processing, preparation for marketing,
sale, and delivery of the products. Not
to be included are dividends or interest
on borrowed or invested capital, or non-
operating losses, such as fire losses and
losses from the sale or exchange of capi-
tal assets. Operating cost should not be .
reduced by items of nonoperating income
such as income from investments, and
gain on the sale of capital assets.

(d) Nothing in this section shall be
construed as relieving an industry mem-
ber from compliance with any of the re-
quirements of the Robinson-Patman Act.

§ 43.13 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 in this
part.

PART 46—WORK GLOVE INDUSTRY

Sec.

46.0 Definitions.

46.1 Deception (general).

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 false
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.

386