Marking Devices Industry

16 CFR Part 97 · Trade practice rules · in the Code of Federal Regulations 1938-1976 (14 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 These rules and guides are historical: most were rescinded or replaced, so do not assume any is in force.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, 1976 CFR · Earliest edition: 1938 CFR

Text (1976 edition, OCR)

Chapter |—Federal

ability of the goods concerned (See para-
graph (a) (4) of this section) ; and

(5) The iower 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 purchase made by a customer
which is not granted on purchases made by
all other customers, or which is not granted
in the same amount on the purchases of all
other customers.

Example No. 2. At the end of a given
period an industry member grants a discount
to a customer equivalent to a fixed per-
centage of the total of such customer’s pur-
chases during the period and fails to grant
a discount of the same percentage to all
other customers on their purchases during
euch period.

Example No. 3. An industry member sells
goods to one or more of his customers at a
higher price than he charges other cus-
tomers for iike merchandise. It is imma-
terial whether or not such discrimination is
attended by misrepresentation as to the grade
and quality of the products sold.

Example No. 4. Terms of 2/10th prox. are
granted by an industry member to some
customers on goods purchased by them from
the industry member. Another customer or
customers are, nevertheless, allowed to take
@n additionai discount -when making pay-
ment to the industry member within the
time prescribed.

Nore: As previously indicated, the fore-
going are examples of practices to be con-
sidered violative of the prohibitions of para-
graph (a) of this section when involving
goods of iike grade and quality and when
not subject to the other exemptions, exclu-
sions, or defenses set forth in this paragraph,

(c) Prohibited brokerage and commis-
sions. It is an unfair trade practice for
any member of the industry engaged in
commerce, in the course of such com-
merce, to pay or grant, or to receive or
accept, anything of value as a commis-
sion, brokerage, or other compensation,
or any allowance or discount in lleu
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
intermediary therem where such inter-
mediary 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
compensation fs so granted or paid.

(ad) Prohibited advertising or promo-
tional allowances, etc. It is an unfair
trade practice for any member of the

Trade Commission § 92.91
industry engaged in commerce to pay or
contract for the payment of advertising
or promotional allowances or any other
thing of value to or for the benefit of a
customer of such member in the course
of such commerce as compensation or
in consideration for any services or fa-
cilities furnished by or through such
customer in connection with the proc-
essing, 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 avallable on propor-
tionally equal terms to all other cus-
tomers competing in the distribution 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 fur-
nishing, or by contributing to the
furnishing of, any services or facilities
connected with the processlng, 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 (a)
of this section.

(f) Inducing or receiving an illegal dis-
crimination in price. It 1s 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 foregoing provision of
paragraphs (a) to (e) of this section.
[Rule 20]

§ 92.21 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
indirectly, to use or promote the use of
any unfair trade practice specified in
this part. [Rule 211

PART 97—MARKING DEVICES

INDUSTRY
Group I
Sec.
97.1 Misbranding.
97.2 Misrepresentation of industry prod-

ucts.

509


$97.1

Sec.

97.3 Misrepresentation as to character of
business,

97.4 Substitution of products.

97.5 Misuse of word “free.”

97.6 Imitation of trade-marks, etc.

97.7 False invoicing.

97.8 False and misleading price quota-
tions.

97.9 Inducing breach of contract.

97.10 Enticing away employees of competi-
tors.

97.11 Defamation of competitors or dispar-
agement of their products.

97.12 Unfair threats of infringement suits.

97.18 Procurement of competitors’ confi-
dential information by unfair
means and wrongful use thereof.

97.14 Commercial bribery.

97.15 Coercing purchase of one product as
@ prerequisite to the purchase of

; other products.

97.16 Consignment shipping.

97.17 Selling below cost.

97.18 Unlawful interference.

97.19 Discriminatlon.

97.20 Aiding or abetting use of unfair trade
practices.

Group II

97.101 Publication of price lists and terms
of sale.

97.102 Return of merchandise.

97.103 Repudiation of contracts.

97.104 Arbitration.

AuTHoriry: Secs. 6(g), 5, 38 Stat. 722, 719;
15 U.S.C. 46(g), 45, unless otherwise noted.

Source: 4 FR 3670, Aug. 19, 1939, unless
otherwise noted.

Group I
§ 97.1 Misbranding.

The false or deceptive marking or
branding of products of the industry
with respect to the grade, quality, quan-
tity, use, size, material, content, sub-
stance, origin, preparation, manufacture
or distribution of such products, or in
any other material respect, is an unfair
trade practice.

§ 97.2 Misrepresentation of
prodncts.

It is an unfair trade practice to make
or publish, or cause to be made or pub-
shed, directly or indirectly, any false,
misleading or deceptive statement or
representation, by way of advertisement
or otherwise, concerning the grade, qual-
ity, quantity, use, size, material, content,
substance, origin, preparation, manufac-
ture or distribution of any product of
the industry, or in any other material
respect.

industry

Title 16—Commercial Practices

§ 97.3 Misrepresentation as to character
of business.

For any person, firm or corporation to
hold himself or itself out to the public
as a manufacturer or wholesaler when
such is not the fact, or in any other man-
ner to misrepresent the character, extent
or type of his or its business, is an un-
fair trade practice.

§ 97.4 Substitution of prodncts.

The practice of shipping or delivering
products which do not conform to sam-
ples submitted, to specifications upon
which the sale is consummated, or to rep-
resentations made prior to securing the
order, without the consent of the pur-
chasers to such substitutions, and with
the tendency, capacity or effect of mis-
leading or deceiving purchasers, prospec-
tive purchasers or the consuming public,
is an unfair trade practice.

§ 97.5 Misuse of word “free.”

The use of the word “free,” or the
equivalent thereof, where not properly or
fairly qualified when the article is in fact
not free, with the tendency or capacity to
mislead or deceive purchasers, prospec-
tive purchasers or the consuming public,
is an unfair trade practice.

§ 97.6 Imitation of trade-marks, ete.

The imitation or simulation of the
trade-marks, trade names, labeis or
brands of competitors, with the tendency
and capacity or effect of misleading or
deceiving purchasers, prospective pur-
chasers or the consuming public, is an
unfair trade practice.

§ 97.7 False invoicing.

- Withholding from or Inserting in an.
invoice, billing or statement any material
information by reason of which omission
or insertion a false record is made, wholly
or in part, of the transaction whlch such
invoice or billing or statement purports
to represent, with the effect of thereby
misleading or deceiving purchasers, pro-
spective purchasers or the consuming
public, is an unfair trade practice.

§ 97.8 False and misleading price quo-

tations. ,

The publishing or circulating by any
member of the industry of false or mis-
leading price quotations, price lists,
terms or conditions of sale, with the
tendency and capacity or effect of mis-
leading or deceiving purchasers, prospec-
tive purchasers or the consuming publlc,
is and unfair trade practice.

510


Chapter |—Federal

§ 97.9 Inducing breach of contract.

Inducing or attempting to induce the
breach of existing lawful contracts be-
tween competitors and their customers
or their suppliers by any false or decep-
tive means whatsoever, or interfering
with or obstructing the performance of
any such contractual duties or services
by any such means, with the purpose and
effect of unduly hampering, injuring, or
prejudicing competitors in their busi-
nesses, is an unfair trade practice.

§ 97.10 Enticing away employees of
competitors.

Willfully enticing away the employees
of coinpetitors, with the purpose and ef-
fect of unduly hampering, injuring or
prejudicing competitors in their busi-
nesses, Is an unfair trade practice.

§ 97.11 Defamation of competitors or
disparagement of their products.

The defamation of competitors by
falsely imputing to them dishonorable
conduct, inability to perform contracts,
questionable credit standing, or by other
false representations, or the false dispar-
agement of the grade, quality or manu-
facture of the products of competitors, or
of their business methods, selling prices,
values, credit terms, policies or services,
or conditions of employment, is an unfair
trade practice.

§ 97.12 Unfair threats of infringement
suits.

The circulation of threats of suit
for infringement of patents or trade-
marks among customers or prospective
customers of competitors, not made in
good faith but for the purpose or with the
effect of harassing or intimidating such
customers or prospective customers, or
of unduly hampering, injuring or prej-
udicing competitors in their businesses,
is an unfair trade practice.

§ 97.13 Procurement of competitors’
confidential information by unfair
means and wrongful use thereof.

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 and
misleading statements or representa-
tions, by the impersonation of one in
authority, or by any other unfair means,
and to use the information so obtained
in such a mauner as to injure said com-

Trade Commission § 97.16
petitor in his business or to suppress
competition or unreasonabiy restrain
trade.

§ 97.14 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 permit
or cause to be given, money or anything
of value to agents, emnployees or repre-
sentatives of customers or prospective
customers, or to agents, employees or
representatives of competitors’ customers
or prospective customers, without the
knowledge of their empioyers or prin-
cipals, 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 principals
to refrain from dealing in the products
of competitors or from dealing or con-
tracting to deal with competitors.

§ 97.15 Coercing purchase of one
product as a prerequisite to the pur-
chase of other products.

The practice of coercing the purchase
of one or more products as a prerequisite
to the purchase of one or more other
products, where the effect may be to sub-
stantially lessen competition or tend to
create a monopoly or to unreasonably
restrain trade, is an unfair trade
practice. ,

§ 97.16 Consignment shipping.

It is an unfair trade practice for any
member of the industry to use the prac-
tice of shipping goods to dealers or dis-
tributors on consignment or pretended
consignment for the purpose and witli
the effect of artifically clogging trade
outlets and unduly restricting competi-
tors’ use of said trade outlets in getting
their goods to consumers through regular
channels of distribution, or with such
purpose to entirely close said trade out-
lets to such competitors so as to sub-
stantially lessen competition or tend to
create a monopoly or to unreasonably
restrain trade: Provided, however, That
nothing in this section shall be construed
or used as restricting or preventing con-
signment shipping or marketing of com-
modities in good faith, and without artt-
ficiai interference with competitors’ use
of the usual channels of distribution in
such manner as thereby to suppress com-
petition or restrain trade.

511


§ 97.17

§ 97.17. Selling below cost.

(a) The practice of selling industry
products below the seller’s cost, when
pursued with wrongful intent of thereby
injuring a competitor and where the ef-
fect of such practice is to unreasonably
restrain trade, tend to create a monop-
oly, or substantially lessen competition,
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 as a monop-
olistic practice with the wrongful intent
referred to and coupled with the effect of
unreasonably restraining trade, tending
to create a monopoly or substantially
lessening competition. Sales below cost
by a competitor not in a sufficiently
strong competitive postion to produce,
and not actually producing, the monopo-
Hstic or restraining effect mentioned, do
not fall within the inhibitions of this
section.

(c) The costs referred to in this section
are actual costs of the respective seller
and not some other figure or average
costs in the industry, determined by an
industry cost survey or otherwise.

§ 97.18 Uulawful interference.

It is an unfair trade practice for any
member of the industry, by means of any
monopolistic practices, or through com-
bination, conspiracy, coercion, boycott,
threats or any other unlawful means,
directly or indirectly, to interfere with a
competitor’s right to purchase his ma-
terials and supplies from whomsoever he
chooses, or to sell to whomsoever he
chooses.

§ 97.19 Discrimination.

(a) Prohibited discriminatory prices
or rebates, refunds, discounts, credits,
etc.,* which effect unlawful price discrim-
ination. It is an unfair trade practice
for any member of the industry engaged
in commerce, in the course of such com-
merce, to grant or allow, secretly or
openly, directly or indirectly, any rebate,
refund, discount, credit, or other form of
price differential, where such rebate, re-
fund, discount, credit or other form of
price differential effects a discrimination
in price between different purchasers of
goods of like grade and quality, where
either or any of the purchases involved

1 Paragraph (a) of § 97.19 shall not be con-
atrued as embracing practices prohibited by
paragraph (b), (c) and (d) of this section,

Title 16—-Commercial Practices

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 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, consump-
tion, or resale within any place under
the jurisdiction of the United States;

(2) That nothing contained in this
section shall prevent differentials which
make only due allowance for differences
in the cost of manufacture, sale, or de-
livery resulting from the differing meth-
ods or quantities in which such commod-
ities are to such purchasers sold or de-
livered;

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

(4) That nothing contained in this
section shall prevent price change from
time to time where made in response to
changing conditions affecting either (i)
the market for the goods concerned, or
(ii) the marketability of the goods, such
as, but not limited to, actual or immi-
nent deterioration of perishable goods,
obsolescence of seasonal goods, distress
sales under court process, or sales in
good faith in discontinuance of business
in the goods concerned.

(b) 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
commerce, to pay or grant, or to receive
or accept, anything of value as a com-
mission, brokerage, or other compensa-
tion, 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 intermedi-
ary is acting in fact for or in behalf, or
is subject to the direct or indirect con-
trol, of any party to such transaction
other than the person by whom such
compensation is so granted or paid.

(ce) Prohibited advertising or promo-
tional allowances, etc. It is an unfair
trade practice for any member of the

512


Chapter I—Federal Trade Commission

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 compensa-
tion or in consideration for any services
or facilities furnished by or through such
customer in connection with the proc-
essing, handling, sale, or offering for sale
of any products or commodities manu-
factured, sold, or offered for sale by such
member, unless such payment or consid-
eration is available on proportionally
equal terms to all other customers com-
veting in the distribution of such prod-
ucts or commodities.

(ad) 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 by
furnishing, or by contributing to the
furnishing of any services or facilities
connected with the processing, handiing,
sale, or offering for sale of such commod-
ity so purchased upon terms not accorded
to all purchasers on proportionally equal
terms.

(ea) 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 section.

(Sec. 2, 38 Stat. 730, as amended, secs. 2, 3, 4,
49 Stat. 1527, 1528; 15 U.S.C. 13, 18a, 13b,
21a) .

§ 97.20 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 mduce another, directly or in-
directly, to use or promote the use of
any unfair trade practice specified in
this part.

Group IT
§ 97.101 Publication of price lists and
terms of sale.

The industry approves the practice of
each individual member of the industry
independently publishing and circulating
to the purchasing trade his own price
lists fully setting forth his terms of sale.

§ 97.104

§ 97.102 Return of merchandise.

The practice, by members of the in-
dustry, of selling merchandise and later
permitting the purchaser to return it for
credit or refund of purchase price, with-
out just cause, creates waste and loss,
increases the cost of doing business to
the detriment of both the industry and
the public, and is condemned by the in-
dustry, subject however, to the general
limitation that members of the industry
shall not engage in any combination or
conspiracy in restraint of trade or use
any other illegal methods in the regula-
tion, control or prevention of the return
of merchandise.

§ 97.103 Repudiation of contracts.

Lawful contracts are business obliga-
tions which should be performed in
letter and in spirit. The repudiation of
contracts by sellers on a rising market,
or by buyers on a declining market, 1s
condemned by the industry.

§ 97.104 Arhitration.

The industry approves the practice of
handling business disputes between
members of the industry and their cus-
tomers in a fair and reasonable manner,
coupled with a spirit of moderation and
good will, and every effort should be
made by the disputants themselves to
compose their differences. If unable to
do so they should, if possible, submit
these disputes to arbitration.

PART 99—BARRE GRANITE

INDUSTRY
Group I
Sec.
99.1 Deceptive deviation from established
standards.
99.2 Sales below cost.
99.4 False marking or branding.
99.6 Inducing breach of contract.
99.7 Imitation of trade-marks, trade
names, etc.
99.8 Consignment selling.
99.9 Enticing employees.
99.10 Defamation of competitors.
99.11 Substitution.
99.12 Deceptive selling methods.
99.13 Misrepresentation in general.
99.14 Espionage.
99.15 Substitution of inferior materials.
99.16 Deceiving competitors as to bids o
others. .
Group IT
99.101 Substitution of products.
99.102 Failure to accept delivery.
99.103 Violation of discount agreement.
99.104 Consumer protection.

513