Work Glove Industry

16 CFR Part 46 · Trade practice rules · in the Code of Federal Regulations 1960-1978 (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 These rules and guides are historical: most were rescinded or replaced, so do not assume any is in force.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, 1978 CFR · Earliest edition: 1960 CFR

Text (1978 edition, OCR)

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


§ 46.1

§ 46.1 Deception (general).

(a) It is an unfair trade practice for
members of the industry to offer for
sale or sell any industry product under
any representation, description, cir-
cumstance or condition which has the
capacity and tendency or effect of mis-
leading or deceiving purchasers or pro-
spective purchasers thereof, as to the
type, kind, grade, quality, quantity,
size, weight, cut, color, character, sub-
stance, durability, serviceability,
origin, price, terms of sale, value, prep-
aration, production, manufacture, or
distribution of such industry product
or components thereof, or which has
the capacity and tendency or effect of
misleading or deceiving the purchas-
img or consuming public in any other
material respect.

(b) The inhibitions of this section
are applicable to all forms of advertis-
ing, whether written or oral, in perio-
dicals, on the radio or television, and
to any form of marking or labeling of
industry products or the packages or
containers in which they may be
shipped, offered for sale or sold.

Nore 1: On October 2, 1958, the Commis-
sion adopted “Guides Against Deceptive
Pricing” which appear in the October 15,
1958, issue of the FEDERAL REGISTER as a
notice at pages 7965-7966 and which consti-
tute an appendix to these rules. They
supply specific guidance respecting pricing
representations and are to be considered as
supplementing this section.

Note 2: Application of the Textile Fiber
Products Identification Act. Work gloves
falling within the scope of the Textile Fiber
Products Identification Act shall, upon the
Act’s effective date (March 3, 1960), be la-
beled, invoiced, and advertised in accor-
dance with the provisions of such Act and
Commission regulations promulgated there-
under.

§ 46.2 Misrepresentation as to character of
business.

It is an unfair trade practice for any
member of the industry to represent,
directly or indirectly, through the use
of any word or term in his corporate
or trade name, in his advertismg or
otherwise, that he is a manufacturer
of industry products, or that he is the
owner or operator of a factory manu-
facturing them, when such is not the
fact, or in any other manner to mis-

Title 146—Commercial Practices
represent the character, extent,
volume, or type of his business.

§ 46.3 Misrepresenting products as con-
forming to standard.

In connection with the sale or offer-
ing for sale of industry products, it is
an unfair trade practice to represent,
through advertising or otherwise, that
such products conform to any stan-
dards recognized in or applicable to
the industry when such is not the fact.

§ 46.4 Guarantees, warranties, etc.

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

(1) To represent that any industry
product is guaranteed unless, in close
conjunction with such representation,
the identity of the guarantor, the
extent and nature of the guarantee,
and any material conditions or limita-
tions relating to the liability of the
guarantor under the guarantee, are
adequately and nondeceptively dis-
closed; or

(2) To offer or use any guarantee re-
specting an mdustry product nnder
which the guarantor fails to observe
his obligations; or

(3) To offer or use any guarantee
which is otherwise deceptive or unfair.

(b) 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.

§ 46.5 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
(m 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

358


Chopter I—Federal Trade Commission

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

§ 46.6 Deceptive use or imitation or simu-
lation of trade or corporate names,
trademarks, ete.

It is an unfair trade practice for any
member of the industry:

(a) To imitate or simulate the trade-
inarks, trade names, brands, or labels
of competitors, with the capacity and
tendency or effect of misleading or de-
ceiving purchasers or prospective pur-
chasers; or

(b) To use any trade name, corporate
name, trademark, or other trade desig-
nation, which has the capacity and
tendency or effect of misleading or de-
ceiving purchasers or prospective pur-
chasers as to the name, nature, or
origin of any product of the industry,
or of any material used therein, or
which is false, deceptive, or misleading
in any other material respect.

§ 46.7 False invoicing.

It is an unfair trade practice for
members of the industry to issue in-
voices, billings, or sales slips which by
reason of misstatements therein or
omissions therefrom have the capacity
and tendency or effect of deceiving
purchasers or prospective purchasers
in any material respect.

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

It is an unfair trade practice for any
industry member:

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

(b) To falsely disparage competitors’
products as to grade, quality, or
method of manufacture and distribu-
tion, 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 competitor’s products with the
products of another industry member
before purchasers or prospective purchas-
ers.

§ 46.11

$46.9 Inducing breach of contract.

(a) Knowingly inducing or attempt-
ing to induce the breach of existing
lawful contracts between competitors
and their customers, or between com-
petitors and their suppliers, or inter-
fering with or obstructing the perfor-
mance of any such contractual duties
or services, under any circumstances
having the capacity and tendency or
effect of substantially injuring or less-
ening present or potential competi-
tion, is an unfair trade practice.

(b) Nothing in this section ls 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 any wise
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.

§ 46.10 Enticing away employees of com-
petitors.

It is an unfair trade practice wilfully
to entice away employees or sales rep-
resentatives of competitors with the
intent and effect of thereby unduly
hampering or injuring competitors in
their business and destroying or sub-
stantially lessening competition: Pro-
vided, That nothing in this section
shall be construed as prohibiting em-
ployees from seeking more favorable
employment, or as prohibiting employ-
ers from hiring or offering employ-
ment to employees of competitors in
good faith and not for the purpose of
injuring, destroying, or preventing
competition.

§ 46.11 Consignment distribution.

(a) It is an unfair trade practice for
any member of the industry to employ
the practice of shipping industry prod-
ucts on consignment without the ex-
press request or prior consent of the
purchasers.

(b) It is an unfair trade practice for
any member of the industry to employ
the practice of shipping industry prod-
ucts on consignment or pretended con-
signment for the purpose and with the
effect of artificially clogging or closing
trade outlets and unduly restricting

359 .

30-034 O - 78 - 24


§ 46.12

competitors’ use of said trade outlets
in getting their products to purchasers
through regular channels of distribu-
tion, thereby injuring, destroying, or
preventing competition or tending to
create a monopoly or unreasonably to
restrain trade.

(c) Nothing in this section shall be
construed to authorize any under-
standing or agreement, coinbination or
conspiracy, or planned common course
of action, by and between industry
members, mutually to conform or re-
strict their practices of shipping goods
on consignment with the intent or
effect of lessening competition.

§ 46.12 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 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 to and pur-
sued with the wrongful intent or pur-
pose referred to and where the effect
is, or where there is reasonable prob-
ability that the effect will be, to sub-
stantially injure, suppress, or stifle
competition or to create a monopoly.
Among the situations in which the
requisite purpose or intent would ordi-
narily be lacking are cases in which
such sales were: (1) Of obsolescent
goods; (2) of perishable goods in re-
spect to which deterioration is immi-
nent; (3) made under judicial process;
or (4) made in bona fide discontinu-
ance of business in the goods con-
cerned.

(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 com-
prises all elements of cost such as
labor, material, depreciation, taxes
(except taxes on net income and such

Title 16—-Commercial Practices

other taxes as are not properly appli-
cable to cost), and general overhead
expenses incurred by the seller in the
acquisition, manufacture, processing,
preparation for marketing, sale, and
delivery of the products. Not to be in-
cluded 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
capital assets. Operating cost should
not be reduced by items of nonoperat-
ing income such as income from in-
vestments, and gain on the sale of cap-
ital 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.

§ 46.13 Tie-in sales; coercing purchase of
one product as a prerequisite to tbe
purchase of other products.

The practice of coercing the pur-
chase of one or more products of the
industry as a prerequisite to the pur-
chase of one or more other products,
where the effect may be substantially
to lessen competition or tend to create
a monopoly or unreasonably to re-
strain trade, is an unfair trade prac-
tice.

§ 46.14 Probibited forms of trade re-
straints (unlawful price fixing, etc.).'

'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.

360


Chapter I—Federal Trade Cammissian

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
coercion to induce any member of the
industry or other person or persons to
engage in any such planned common
course of action, or to become a party
to any such understanding, agreement,
combination, or conspiracy.

§ 46.15 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 ten-
dency or effect of misleading or de-
ceiving purchasers or prospective pur-
chasers in any material respect.

Note: Attention is directed to the Guides
Against Deceptive Pricing referred to above
in NoTE 1 to § 46.1.

§ 46.16 Misuse of terms “close-outs,” “dis-
continued lines,” “special bargains,”
etc.

It is an unfair trade practice to offer
for sale, sell, advertise, describe, or
otherwise represent regular lines of in-
dustry products as “Close-Outs,” “Dis-
continued Lines,” “Special Bargains,”
or by words or representations of simi-
lar import, when such are not. true in
fact; or to so offer for sale, sell, adver-
tise, describe, or otherwise represent
industry products where the capacity
and tendency or effect thereof is to
lead the purchaser or prospective pur-
chaser 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.

Norte: Attention is directed to the Guides
Against Deceptive Pricing referred to above
in NOTE 2 to § 46.1.

§ 46.18

§ 46.17 Seconds, irregulars, and rejects.

The industry products which fall
below quality specifications of the
manufacturer for his first quality, and
which are sold and offered for sale
under the same trade name or designa-
tion as his first quality, shall be
marked, tagged or labeled, as ‘‘sec-
onds,” “irregulars,’’ or “rejects,” or
with some other word or term of simi-
lar import, so as to prevent deception
of purchasers and prospective pur-
chasers as to the quality of such prod-
ucts. The mark, tag, or label shall be
on or attached to the product, and the
immediate package, if any, in which it
is sold or offered for sale to consumer
purchasers, and the disclosure shall be
of such degree of permanency and
conspicuousness as to be noticeable
upon casual inspection when the prod-
uct is offered for sale to consumer pur-
chasers. A similar disclosure shall also
be made on invoices, and in all adver-
tisements relating to the product.

Note 1: The term “second,” “irregular,” or
“reject’”’ is not to be considered as an ade-
quate disclosure of a defect in material or
construction which seriously impairs the
safety of an industry product. When having
any such defect the product shall be con-
spicuously marked and described so as to
disciose the nature and extent of the defect,
and the limitations applicable to safe use
that exist by reason of such defect. Thus a
marking of “second,” though proper and
adequate for a cotton, with leather palm,
glove designed for use while performimg or-
dinary manual labor, when a small portion
of its stitching is irregular, or the color of
the leather portion thereof is not uniform
would not be proper and adequate for an
electric lineman’s or welder’s glove having a
defect which seriously impairs its efficacy in
protecting the wearer during his perfor-
mance of such special work.

Note 2: Nothing in this section is to be
construed as relieving any mdustry member
of the necessity of complying with the re-
quirements of section 2 of the Clayton Act,
as amended, as interpreted by § 46.18.

§ 46.18 Prohibited discrimination. ?

(a) Prohibited discriminatory prices,
rebates, refunds, discounts, credits,
etc., which effect unlawful price dis-

2As used in this section, the word ‘“‘com-
merce” means “trade or commerce among
the several States and with foreign na-
tionas, or between the District of Columbia
or any Territory of the United States and

361


§ 46.18

crimination. It is an unfair trade prac-
tice for any member of the industry
engaged in commerce, in the course of
such commerce, to grant or allow, se-
cretly, or openly, directly or indirectly,
any rebate, refund, discount, credit, or
other form of price differential, where
such rebate, refund, discount, credit,
or other form of price differential, ef-
fects a discrimination in price between
different purchasers of goods of like
grade and quality, where either or any
of the purchases involved therein are
in commerce, and where the effect
thereof may be substantially to lessen
competition or tend to create a mo-
nopoly in any line of commerce, or to
injure, destroy, or prevent competition
with any person who either grants or
knowingly receives the benefit of such
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
schoois, colleges, universities, public li-
braries, churches, hospitals, and chari-
table institutions not operated for
profit, as supplies for their own use;

Norte: Purchases by U.S. Government: In
an opinion submitted to the Secretary of
War under date of December 26, 1936, the
U.S. Attorney General advised that the
Robinson-Patman Anti-discrimination Act
‘ds not applicable to Government contracts
for supplies.” (38 Opinions, Attorney Gener-
al 539)

(2) That nothing contained in this
paragraph shall prevent differentiais
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 1: Cost justification to be based on
net savings in cost of manufacture, sale or
delivery. Cost justification under the above
proviso depends upon net savings in cost

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 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

based on all facts relevant to the transac-
tions under the terms of paragraph (a)(2) of
this section. For example, if a seller regular-
ly grants a discount based upon the pur-
chase 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.

Note 2: Credit or refund for returned
goods. In determining whether a price dif-
ferential based on cost savings under the
above proviso is warranted there shall be
taken into account any portion of the goods
involved which are returned by the custom-
er-purchaser to the seller for credit or
refund. See also Note 2 under paragraph (d)
of this section.

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

(4) That nothing contained in this
paragraph shall prevent price changes
from time to time where made in re-
sponse to changing conditions affect-
ing the market for or the marketabil-
ity of the goods concerned, such as but
not limited to obsolescence of seasonal
goods, distress sales under court pro-
cess, or sales in good faith in discon-
tinuance of business in the goods con-
cerned;

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

Note 1: 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 or facilities furnished, the burden
of rebutting the prima facie case thus nade
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 his lower price or the furnish-
ing of services or facilities to any purchaser
or purchasers was made in good falth to
meet. an equally low price of a competitor,
or the services or facilities furnished by a
competitor.”

362


Chapter I—Federal Trade Commissian

NoTE 2; In complaint proceedings, justifi-
cation of price differentials under para-
graphs (a)(2), (4) and (5) of this section is a
matter of affirmative defense to be estab-
lished by the person or concern charged
with price discrimination.

(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
involving goods of like grade and qual-
ity which are sold for use, consump-
tion, or resale within any place under
the jurisdiction of the United States,
and which are not purchased by
schools, colleges, universities, public li-
braries, churches, hospitals, and chari-
table institutions not operated for
profit, as supplies for their own use,*
and when:

(1) The commerce requirements
specified in paragraph (a) of this sec-
tion 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
preventing competition with the in-
dustry member or with the customer
receiving the benefit of the price dif-
ferential, 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 nade
in response to changing conditions af-
fecting the market for or the market-
ability of the goods concerned (see
paragraph (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 No. 1. At the end of a given
period an industry member grants a dis-
count to a customer equivalent to a fixed
percentage of the total of such customer’s
purchases during the period and fails to
grant a discount of the same percentage to
all other customers during such period.

Example No. 2. An industry member sells
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 the goods sold at the lower price
are classified by the industry member as
“seconds,” “secondary line,” “rejects,” or

3%See also note under paragraph (a)(1) of
this section.

§ 46.18

are otherwise represented by the industry
member as inferior, if the goods are in fact
of like grade and quality as the goods sold
at the higher price.

Example No. 3. Terms of 2%/20 net 40 are
granted by an industry member to some cus-
tomers on goods purchased by them from
the industry member. Another customer or
customers are, nevertheless, allowed to take
a 5 percent instead of a 2 percent discount
when making payment to the industry
member within the time prescribed. a

Example No. 4. An industry member selis
goods to one or more of his custoiners at a
lower price than he charges other customers
therefor, basing his justification for the
price difference solely on the fact that the
goods sold at the lower price bear the pri-
vate brand name of customers.

Example No. 5. An industry member in-
voices goods to all his customers at the same
price but supplies additional quantities of
such goods at no extra charge to one or
more, but not to all, such customers; or sup-
plies other goods or premiums to one or
more, but not to all, such custoiners for
which he makes no extra charge and which
effects an actual price difference in favor of
certain of his customers.

Note: 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, exclu-
sions, or defenses set forth in this para-
graph.

(c) 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.

(d) Prohibited advertising or promo-
tional allowances, etc. It is an unfair
trade practice for any member of the
industry engaged in commerce to pay
or contract for the payment of adver-
tising or promotional allowances or

363


§ 46.19

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.

Nore 1: Industry members _ giving
allowances for advertising or sales promo-
tlon must, in addition to according same to
all competing customers on proportionally
equal terms, exercise precautlon and dili-
gence in seeing that all such allowances are
used by the customers for such purpose.
Customers receiving such allowances must
not use same for any other purpose.

When an allowance is made ostensiby for
advertising or sales promotion of products
and is not in fact used for that purpose the
practice may constitute a price discrimina-
tion. In such case, the party giving the
allowance may violate paragraph (a) of this
section and the party receiving same may
violate paragraph (f) of this section.

Nore 2: When an industry member gives
allowances to competing customers for ad-
vertising in a newspaper or periodical, the
fact that a lower advertising rate for equiv-
alent space is avallable to one or more, but
not all, such customers, is not to be regard-
ed by the industry member as warranting
the retention by such customer or custom-
ers of any portion of the allowance for his
or their personal use or benefit.

(e) Prohibited discriminatory ser-
-vices of facilities. It is an unfair trade
practice for any member of the indus-
try engaged in commerce to discrimi-
nate in favor of one purchaser against
another purchaser or purchasers of a
commodity bought for resale, with or
without processing, by contracting to
furnish or furnishing, or by contribut-
ing to the furnishing of, any services
or facilities connected with the 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.

Note 1: See subsection (b) of section 2 of
the Clayton Act, as amended, which is set

Title 16—Cammercial Practices

forth in Note 1 to paragraph (a)(5) of this
section.

Note 2: Among the practices inhibited by
section V of this rule is that of an industry
member according to one or more customers
the privilege of returning for credit or
refund any or all of the goods purchased by
them and failing to accord the same privi-
lege to another or other competing custom-
ers on proportionally equal terms. In this
connection see also NoTE 2 under cost justi-
fication proviso (2) (paragraph (a)(2) of this
section.)

(f) Inducing or receiving an illegal
discrimination in price. It is an unfair
trade practice for any member of the
industry engaged in commerce, in the
course of such commerce, knowingly
to induce or receive a discrimination in
price which is prohibited by the fore-
going provisions of this rule.

Norte: Section 46.18 is based on the provi-
sions of section 2 of the Clayton Act as
amended by the Robinson-Patman Act.

§46.19 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 the foregoing sections.

PART 54—WALNUT WOOD
INDUSTRY

Group I

Sec.
54.1 Misuse of word “walnut.”

Grovor II
54.101 Standards of nomenclature.

Source: Trade practice rules, Walnut
Wood Industry, FTC, Sept. 12, 1931, unless
otherwise noted.

Group I

§ 54.1 Misuse of word “walnut.”

The false use of the term “walnut”,
either alone or in conjunction with
other words, as applied to wood other
than the wood of the tree of the bo-
tanical wainut family, or the genus
Juglans, with the tendency and capac-
ity to deceive or mislead purchasers or
prospective purchasers, is an unfair
trade practice.

364