Stationers Industry

16 CFR Part 61 · Trade practice rules · in the Code of Federal Regulations 1966-1978 (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 These rules and guides are historical: most were rescinded or replaced, so do not assume any is in force.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: 1966 CFR

Decisions that mention this industry's rules (1)

Text (1978 edition, OCR)

§ 61.0

ties, which is prohibited by the forego-
ing provisions of this section. [Rule
12)

PART 61—STATIONERS INDUSTRY

Sec.
61.0
61.1

Definitions.

Deception (general).

61.2 Misleading illustrations.

61.3 Misrepresentation as to character of
business.

61.4 Deceptive pricing.

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

61.6 Substitution of products.

61.7 Use of the word “free.”

61.8 Guarantees, warranties, etc.

61.9 Misrepresentation as to origin and dis-
closure of foreign origin.

61.10 Deceptive use and imitation of trade
or corporate names, trade-marks, etc.

61.11 False invoicing.

61.12 Commercial bribery.

61.13 Consignment distribution.

61.14 Inducing breach of contract.

61.15 Defamation of competitors or false-
disparagement of their products.

61.16 Enticing away employees of competi-
tors.

61.17 Push money.

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

61.19 Prohibited discrimination.

61.20 Exclusive dealing.

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

AvurnHority: Secs. 6, 5, 38 Stat. 721, 719; 15
U.S.C. 46, 45, unless otherwise noted.

Source: 27 FR 5702, June 15, 1962, unless
otherwise noted.

§61.0 Definitions.

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

(a) Industry products. Inks (other
than printing inks), pastes, blank
books, tablets, social stationery, art
supplies, calendars, paper clips, cray-
ons, filing cabinets and filing supplies,
globes, maps, pencil sharpeners,
rubber bands, staples and _ staplers,
stenographic supplies, desk accesso-
ries, and other office supplies and
equipment except furniture not speci-
fied above and furnishings such as
rugs, draperies and pictures. In addi-
tion to the products indicated which
are not included, products of the fol-

Title 16—Commercial Practices

lowing industries for which trade prac-
tice rules already exist are also ex-
cluded:

Gummed Paper and Sealing Tape Industry.
Fountain Pen and Mechanica] Pencil Indus-
ry.

Marking Devices Industry.

Wood Cased Lead Pencil Industry.

Engraved Stationery and Allied Products
Industry of the New York City Trade
Area.

Luggage and Related Products Industry.

Manifold Business Forms Industry.

Fine and Wrapping Paper Distributing In-
dustry.

School Supply and Equipment Industry.
Office Machine Marketing Industry.

(b) Industry member. Any person,
firm, corporation, or organization (in-
cluding manufacturers, wholesalers,
distributors, jobbers, importers, retail-
ers and others) engaged in the sale, of-
fering for sale, or distribution, in com-
merce, of industry products as defined
above.

§61.1 Deception (general).

(a) It is an unfair trade practice for
an industry member to sell or offer for
sale any industry product under any
representation, description, circum-
stance, or condition having the capac-
ity and tendency or effect. of deceiving
purchasers or prospective purcbasers
thereof as to the type, kind, grade,
quality, quantity, content, size, weight,
color, character, substance, durability,
serviceability, origin, price, value,
preparation, production, manufacture
or distribution of such industry prod-
uct, or which has the capacity and ten-
dency or effect of misleading or de-
ceiving the purchasing or consuming
public in any other material respect.

(b) The prohibitions of this section
are applicable to all forms of advertis-
ing, whether in periodicals, on the
radio or television, and whether writ-
ten or oral, and to any form of market-
ing or labeling of products or their
containers. [Rule 1]

§61.2 Misleading illustrations.

It is an unfair trade practice, in con-
nection with the offering for sale, sale,
or distribution of industry products, to
use, as part of any packaging material,
label, advertisement, or other sales
promotion matter, any visual repre-
sentation, picture, illustration, dia-

386


Chapter I—Federal Trade Cammissian

gram, or other depiction which, either
alone or in conjunction with any ac-
companying words or phrases, has the
capacity and tendency or effect of mis-
leading or deceiving purchasers or pro-
spective purchasers concerning the
type, kind, grade, quality, quantity,
content, size, weight, color, character,
substance, durability, serviceability,
origin, preparation, production, manu-
facture or distribution of any industry
product, or which has the capacity
and tendency or effect of misleading
or deceiving the purchasing or con-
suming public in any other material
respect. [Rule 2]

$61.3 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 advertising, or
otherwise, that he is a producer, man-
ufacturer, wholesaler, distributor, im-
porter or retailer of products of the in-
dustry, when such is not the fact, or in
any other manner to misrepresent the
character, extent, volume, or type of
his business. [Rule 3]

§61.4 Deceptive pricing.

It is an unfair trade practice for any
member of the industry to represent
directly or indirectly in advertising or
otherwise that an industry product
may be purchased for a specified price,
or at a saving, or at a reduced price,
when such is not the fact; or otherwise
receive purchasers or prospective pur-
chasers with respect to the price of
any product offered for sale; or fur-
nish any means or instrumentality by
which others engaged in the sale of in-
dustry products may make any such
representation.

Note: On December 20, 1963 the Commis-
sion adopted Guides Against Deceptive Pric-
ing which became effective on January 8,
1964 and which supersedes the Guides on
this subject as adopted October 2, 1958.
Copies of the Guides will be furnished upon
request.

[Rule 4]
[29 FR 7670, June 16, 1964)

§ 61.7

861.5 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, industry products
as “Close-Outs,” “Discontinued Lines,”
or “Special Bargains,” by use of such
terms, or by words or representations
of similar import, when such either is
false, or has the capacity and tenden-
cy or effect of leading the purchasing
or consuming public to believe such
products are being offered for sale or
sold at greatly reduced prices, or at so-
called “bargain” prices, when such is
not the fact. [Rule 5]

$61.6 Substitution of products.

It is an unfair trade practice for a
member of the industry to make unau-
thorized substitutions of products,
where such substitutions have the ca-
pacity and tendency or effect of mis-
leading or deceiving purchasers or pro-
spective purchasers, by:

(a) Shipping or delivering industry
products which do not conform to
samples submitted, to specifications
upon which the sale is consummated,
or to representations made prior to se-
curing the order, without advising the
purchaser of the substitution and ob-
taining his consent thereto prior to
making shipment or delivery; or

(b) Faisely representing the reason
for making substitutions. [Rule 6]

861.7 Use of the word “free.”

In connection with the sale, offering
for sale, or distribution of industry
products, it is an unfair trade practice
to use the word “free,’”’ or any other
word or words of similar import, in ad-
vertisements or in other offers to the
public, as descriptive of an article of
merchandise, or service, which is not
an unconditional gift, under the fol-
lowing circumstances:

(a) When all the conditions, obliga-
tions, or other prerequisites to the re-
ceipt and retention of the “free” arti-
cle of merchandise or service offered
are not clearly and conspicuously set
forth at the outset so as to leave no
reasonable probability that the terms
of the offer will be misunderstood,
and, regardless of such disclosure:

387


§ 61.8

(b) When, with respect to any article
of merchandise required to be pur-
chased in order to obtain the “free”
article or service, the offerer (1) in-
creases the ordinary and usual price of
such article of merchandise, or (2) re-
duces its quality, or (3) reduces the
quantity on size thereof.

Note: The disclosure required by para-
graph (a) of this section shall appear in
close conjunction with the word “free” (or
other word or words of similar import)
wherever such word first appears in each
advertisement or offer. A disclosure in the
form of a footnote, to which reference is
made by use of an asterisk or other symbol
Placed next to the word “free,” will not be
regarded as compliance.

(Rule 7}

§61.8 Guarantees, warranties, etc.

(a) It is an unfair trade practice to
represent in advertising or otherwise
that a product is “guaranteed” with-
out clear and conspicuous disclosure in
conjunction therewith of:

(1) The nature and extent of the
guarantee, and

(2) Any material conditions or limi-
tations in the guarantee which are tn-
posed by the guarantor, and

(3) The manner in which the guar-
antor will perform thereunder, and

(4) The identity of the guarantor.

Representations that a product is
“guaranteed for life’ or has a “life-
time guarantee” in addition to meet-
ing the above requirements, shall con-
tain a conjunctive and conspicuous dis-
closure of the meaning of “life’’ or
“lifetime” as used (whether that of
the purchaser, the product or other-
wise).

(b) Guarantees shall not be used

which under normal conditions are im--

practical of fulfillment or which are
for such a period of time or are other-
wise of such nature as to have the ca-
pacity and tendency of misleading pur-
chasers or prospective purchasers into
the belief that the product so guaran-
teed has a greater degree of service-
ability, durability or performance ca-
pability in actual use than is true in
fact.

(c) This section has application not
only to “guarantees” but also to ‘‘war-
ranties,” to purported “guarantees”

Title 16—Commercial Practices

and “warranties,” and to any promise
or representation in the nature of a
“guarantee” or “warranty.” [Rule 8]

§61.9 Misrepresentation as to origin and
disclosure of foreign origin.

(a) It is an unfair trade practice to
misrepresent the place of origin, pro-
duction, or manufacture of industry
products or their components.

(b) It is an unfair trade practice to
offer for sale, sell, or distribute any in-
dustry product manufactured or pro-
duced in a foreign country, or any in-
dustry product containing a substan-
tial or material part or parts manufac-
tured or produced in a foreign coun-
try, .without affirmatively disclosing
thereon, or in immediate conjunction
therewith, by a truthful, conspicuous
and nondeceptive mark, stamp, brand,
or label, the country of origin of such
product, or part, where failure to so
disclose the country of origin has the
capacity and tendency or effect of mis-
leadimg or deceiving the purchasing or
consuming public. [Rule 9]

§ 61.10 Deceptive use and imitation of
trade or corporate names, trade-marks,
ete.

It is an unfair trade practice for any
member of the industry, to use any
trade name, corporate name, trade-
mark or other trade designation,
which has the capacity and tendency
or effect of misleading or deceiving
purchasers or prospective purchasers
as to the character, name, nature, or
origin of any product of the industry,
or of any material used therein, or
which is false or misleading in any
other material respect. (See aiso
§ 61.3.) [Rule 10)

§ 61.11 Faise invoicing.

Withholding from or insertimg in in-
voices or sales slips any statements or
information by reason of which omis-
sion or insertion a false record is
made, wholly or in part, of the trans-
actions represented on the face of
such invoices or sales slips, with the
capacity and tendency or effect of
thereby misleading or deceiving pur-
chasers, prospective purchasers, or the
consuming public, in any material re-
spect, is an unfair trade practice.
(Rule 11)

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Chapter I—Federal Trade Commissian

$61.12 Commercial bribery.

It is an unfair trade practice for a
member of the industry, directly or m-
directly, to give, or offer to give, or
permit or cause to be given, money or
anything of value to agents, employ-
ees, or representatives of customers or
prospective customers, or to agents,
employees, or representatives of com-
petitors’ customers or prospective cus-
tomers, without the knowledge of
their employers or principals, as an in-
ducement to influence their employers
or principals to purchase or contract
to purchase products sold or offered
for sale by such mdustry member, or
to influence such employers or princi-
pals to refram from dealing in the
products of competitors or from deal-
mg or contracting to deal with com-
petitors. [Rule 12]

861.13 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) Nothing in this section shall be
construed to authorize any under-
standing or agreement, combination or
conspiracy, or planned common course
of action, by and between mdustry
members, mutually to conform or re-
strict their practice of shipping goods
on consignment. (Rule 13]

§ 61.14 Inducing breacb of contract.

(a) Knowingly inducmg 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 circumstance
having the capacity and tendency or
effect of substantially injuring or less-
ening competition, is an unfair trade
practice.

(b) Nothing in this section is intend-
ed to imply that it is improper to solic-
it the business of a customer of a com-
peting industry member; nor is the
section to be construed as in anywise
authorizing any agreement, under-
standing, or planned common course
of action by two or more industry

§ 61.17

members not to solicit business from,
or to sell to, the customers of either of
them, or customers of any other indus-
try member. (Rule 14]

§61.15 Defamation of competitors or false
disparagement of tbeir products.

The defamation of competitors by
falsely imputing to them dishonorable
conduct, mability to perform con-
tracts, questionable credit standing, or
by other false representations, or the
false disparagement of competitors’
products m any respect, or of their
busmess methods, _ selling prices,
values, credit terms, policies, or ser-
vices, is an unfair trade practice. [Rule
15]

§61.16 Enticing away employees of com-
petitors.

It is an unfair trade practice for any
member of the mdustry wilfully to
entice away employees or sales-contact
personnel of competitors with the
intent and effect of thereby hamper-
ing or injuring competitors in their
business or destroying or substantially
lessening competition: Provided, That
nothing in this section shall be con-
strued as prohibiting such persons
from seeking more favorable employ-
ment, or as prohibiting employers
from hiring or offering employment to
employees of a competitor in good
faith and not for the purpose of in-
flictmg competitive injury. [Rule 16]

§ 61.17 Pusb 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 indus-
try member, as compensation for, or as
an inducement to obtam, special or
greater effort or service on the part of
the salesperson in promoting the
resale of products supplied by the in-
dustry 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 salesper-
son or customer is dependent on lot-
tery; or

389


§ 61.18

(c) When any provision of the agree-
ment or understanding requires or
contemplates practices of a course of
conduct unduly and_ intentionally
hampering sales of products of com-
petitors of an industry member; or

(d) When, because of the terms and
conditions of the agreement or under-
standing, including its duration, or the
attendant circumstances, the effect
. may be to substantially lessen compe-
tition or tend to create a monopoly; or

(e) When similar payments are not
accorded to salespersons of competing
customers on proportionally equal
terms in compliance with sections 2 (d)
and (e) of the Clayton Act.

Nore: Payments. made by 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
transferred by the salesperson to the cus-
tomer, or is to result in a corresponding de-
crease in the salesperson’s salary, are not to
be considered within the purview of this sec-
tion, but are to be considered as subject to
the requirements and provisions of section
2(a) of the Clayton Act, as amended.

(Rule 17]

§61.18 Prohibited forms of trade re-
straints (unlawful price fixing, etc.). +

It is an unfair trade practice for any

member of the industry, either direct-

ly or indirectly, to engage in any

'The prohibitions of this section are sub-
ject to Pub. L. 542, approved July 14, 1952-
66 Stat. 632 (the McGuire Act, commonly
referred to as the Fair Trade Amendment)
which provides that with respect to a com-
modity which bears, or the label or contain-
er 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 comméddity
may be resold by such buyer when such con-
tract or agreement is lawful as applied to m-
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.

Title 146—Cammercial Practices

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. [Rule 18]

§61.19 Prohibited discrimination.

(a) Prohibited discriminatory prices,
rebates, discounts, etc. It is an unfair
trade practice for any member of the
industry engaged in commerce, in the
course of such commerce, to grant or
allow, secretly or openly, directly or
indirectly, any rebate, refund, dis-
count, credit, or other form of price
differential, where such _ rebate,
refund, discount, credit, or other form
of price differential, effects a discrimi-
nation in price between different pur-
chasers of goods of like grade and
quality, where either or any of the
purchases involved therein are in com-
merce, and where the effect thereof
may be substantially to lessen compe-
tition or tend to create a monopoly in
any line of commerce, or to injure, de-
stroy, or prevent competition with any
person who either grants or knowingly
receives the benefit of such discrimi-
nation, 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 li-
braries, churches, hospitals, and chari-
table institutions 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 dif-
fering methods or quantities in which
such commodities are to such purchas-
ers sold or delivered;

390


Chapter I—Federal Trade Cammissian

Nore 1: Cost justification under para-
graph (a)(2) of this section depends upon
net savings in cost based on all facts rel-
evant to the transactions under the terms of
such subparagraph. 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.

Nore 2: In determining whether a price
differential based on cost savings under
paragraph (a)(2) of this section is warranted
there shall be taken into account any por-
tion of the goods involved which are re-
turned by the customer-purchaser to the
seller for credit or refund. See aiso Note 2
under paragraph (e) 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 restrain 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.

Nore: 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 rebut-
ting the prima facie case thus made by
showing justification shall be upon the
person charged with a violation of this sec-
tion, and unless justification shall be affir-
matively shown, the Commission is autho-
rized to issue an order terminating the dis-
crimination: Provided, however, That noth-
ing herein contained shall prevent a seller
rebutting the prima facie case thus made by
showing that his lower price or the furnish-
ing of services or facilities to any purchaser
or purchasers was made in good faith to
meet an equally low price of a competitor,
or the services or facilities furnished by a
competitor.”

§ 61.19

(b) Examples of prohibited price dif-
JSerential practices. The following are
examples of price differential prac-
tices to be considered as subject to the
prohibitions of paragraph (a) of this
section when involving goods of like
grade and quality which are sold for
use, consumption, or resale within any
place under the jurisdiction of the
United States, and which are not pur-
chased by schools, colleges, universi-
ties, public libraries, churches, hospi-
tals, or charitable institutions not op-
erated 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 benefits 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 made
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).

EXaMpPLe 1. At the end of a given period an
industry member grants a discount to a cus-
tomer equivalent to a fixed percentage of
the total of the customer’s purchases during
such period and faiis to grant a discount of
the same percentage to other customers on
their purchases during such period.

ExampLteE 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 or not such discrimination is ac-
complished by misrepresentation as to the
grade and quality of the products sold.

(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

391

30-034 © ~ 78 - 26


§ 61.20

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
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 made known to and is
available on proportionally equal
terms to all other customers compet-
ing in the distribution of such prod-
ucts or commodities.

Note 1: Industry members giving advertis-
ing allowances to competing customers must
exercise precaution and diligence in seeing
that all of such allowances are used in ac-
cordance with the terms of their offers.

Note 2: When an industry member gives
allowances to competing customers for ad-
vertising in a newspaper or periodical, the
fact that a lower advertising rate for equiv-
alent space is available to one or more, but
not all, such customers, is not to be 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 or 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-

Title 16—Commerciol Proctices

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.

Norte 1: Subsection (b) of section 2 of the
Clayton Act, as amended, which is set forth
in the note concluding paragraph (a) of this
section is applicable to this paragraph.

Nore 2: Among the practices prohibited by
this paragraph 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 (paragraph (a)(2) of this
section).

(f) Inducing or receiving an illegal
discrimination in price, advertising or
promotional allowances, or services or
JSacilities, It is an unfair trade practice
for any member of the industry en-
gaged in commerce, in the course of
such commerce, knowingly to induce
or receive a discrimination in price, ad-
vertising or promotional allowances, or
services or facilities, prohibited by the
foregoing provisions of this section.
(Rule 19]

§61.20 Exclusive dealing.

It is an unfair trade practice for any
member of the industry to lease, con-
tract to sell or sell any industry prod-
uct, 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 products of a competitor or com-
petitors of such industry member,
where the effect of such sale or con-
tract for sale, or of such condition,
agreement, or understanding, may be
substantially to lessen competition or
tend to create a monopoly in any line
of commerce. [Rule 20]

$61.21 Tie-in sales—coercing purchase of
one product as a prerequisite to the
purchase of other products.

The practice of coercing the pur-
chase of one or more products as a
prerequisite to the purchase of one or
more other products, where the effect

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Chapter Il—Federal Trode Commission

may be substantially to lessen compe-
tition or tend to create a monopoly or
unreasonably to restrain trade, is an
unfair trade practice. [Rule 21]

PART 62—REBUILT, RECONDITIONED
AND OTHER USED AUTOMOTIVE
PARTS INDUSTRY

Sec.

62.0 Definitions.

62.1 Deception as to previous use of prod-
ucts.

62.2 Deception as to identity of rebuilder,
remanufacturer, reconditioner or re-
liner. .

62.3 Misrepresentation as to condition of
products and misuse of the terms ‘‘re-
built,” “factory rebuilt,” “remanufac-
tured,” etc.

Auruonriry: Secs. 6, 5, 38 Stat. 721, 719; 15
U.S.C. 46, 45, unless otherwise noted.

Source: 27 FR 6210, June 30, 1962, unless
otherwise noted.

§ 62.0 Definitions.

(a) Industry member. Any person,
firm, corporation or organization en-
gaged in the sale or distribution of any
industry product as defined below.

(b) Industry products. Industry
products are automotive parts and
automotive assemblies which have
been used or which contain used parts,
whether such parts or assemblies have
been rebuilt, remanufactured, recondi-
tioned, relined, or otherwise. The
terms “automotive parts” and “auto-
motive assemblies” as herein used
mean any part or assembly designed
for an automobile, truck, motorcycle,
tractor or similar self-propelled vehi-
cle. Industry products include, but are
not limited to, armatures, generators,
starters, carburetors, clutches, distrib-
utors, connecting rods, crankshafts,
cylinder blocks, engine assemblies, fuel
pumps, brakes, master and wheel
brake cylinders, power brakes, shock
absorbers, starter drives, solenoids,
automatic transmissions, regulators,
spark plugs, springs, windshield wiper
motors and water pumps. Automobile
tires are not products of the industry.

$62.1 Deception as to previous use of
products.

(a) It is an unfair trade practice to

represent, directly or by implication,

§ 62.1

that any industry product is new or
unused, or that any part of an indus-
try product is new or unused when
such is not the fact, or to misrepresent
the extent of previous use thereof.

(b) It is an unfair trade practice for
an industry member to offer for sale
or sell any industry product unless a
clear and conspicuous disclosure that
such product has been used or con-
tains used parts is made in all the in-
dustry member’s advertising, sales pro-
motional literature and invoices con-
cerning the product, on the container
in which the product is packed and if
the product has been rebuilt, remanu- |
factured, reconditioned or has the ap-
pearance of being new, on the product
with sufficient permanency to remain
thereon after installation for a reason-
able period of time under ordinary
conditions of use, and in such manner
that said disclosure cannot be easily
removed or obliterated.

(1) Form of disclosure. The disclo-
sure that an industry product has
been used or contains used parts as re-
quired by this section may be made by
use of a word such as, but not limited

to, “Used,” “Secondhand,” “Re-
paired,” “Remanufactured,” ‘““Recondi-
tioned,” “Rebuilt,” or ‘Relined,”

whichever is applicable to the product
involved. On invoices to the trade only
the disclosure required by this section
may be made by use of any number,
mark, or other symbol which is clearly
understood by all purchasers receiving
such invoices as meaning that the
products, or parts thereof, identified
on the invoices have been used.

(2) Conspicuousness of disclosure.
The disclosure required by this section
shall be of such size or color contrast
and so placed as to be readily notice-
able to purchasers or prospective pur-
chasers reading advertising, sales pro-
motional literature, or invoices con-
taining same, or reading any represen-
tation as to content on the container
in which an industry product is
packed, or inspecting an _ industry
product before installation, or with a
minimum of disassembly after installa-
tion.

(c) It is an unfair trade practice to
place any means or instrumentality in
the hands of others whereby they inay
mislead purchasers or prospective pur-

393