tion, or creates or tends to create a monopoly, at any competitive level in the trade area or areas where the practice is employed.

NOTE: To be considered as subject to the prohibitions of paragraph (c) of this section, when effecting, or having a reasonable probability of effecting, substantial injury to competition at any competitive level in the trade area or areas where the practice is employed, are tyings of dispensing with refractions which are accomplished by:

(1) Refusal of the doctor to perform refractions, or to supply prescriptions based thereon, when and because the patient desires to have the dispensing of the product done by another party lawfully qualified to dispense same.

(2) The doctor requiring a higher fee for his refraction service when he does not dispense the products he prescribes than when he does dispense such products.

(3) The doctor falsely disparaging the competency or workmanship of others competing with him in the dispensing of the products.

See also § 192.15 of this part, entitled "False Disparagement of Competitors or Their Products," § 192.16 of this part, entitled "Coercing Purchase of One Product as a Prerequisite to the Purchase of Another or Other Products," $192.20 of this part, entitled "Prohibited Forms of Trade Restraints (Unlawful Price Fixing, Etc.)" and § 192.21 of this part, entitled "Exclusive Dealing," which are applicable to all industry members. [Rule 71

§ 192.8

Prohibited discrimination. (a) Prohibited discriminatory prices, rebates, refunds, discounts, credits, etc., which effect unlawful price discrimination: 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, discount, credit, or other form of price differential, where such rebate, refund, 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 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, consumption, or resale within any place under the jurisdiction of the United States, and are not purchased by schools, colleges, universities, public libraries, churches, hospitals, and charitable 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 differing methods or quantities in which such commodities are to such purchasers sold or delivered;

NOTE 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 based on all facts relevant to the transactions under the terms of subparagraph (2) of this paragraph. For example, if a seller regularly grants a discount based upon the purchase of a specified quantity by a single order for a single delivery, and this discount is justified by cost differences, it does not follow that the same discount can be cost justified if granted to a purchaser of the same quantity by multiple orders or for multiple deliveries.

NOTE 2: Credit or refund for returned goods. In determining whether a price differential 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 customer-purchaser to the seller for credit or refund. See also Note 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 restraint of trade;

(4) That nothing contained in this paragraph shall prevent price changes from time to time where made in response to changing conditions affecting the market for or the marketability of the goods concerned, such as but not limited to obsolescence of seasonal goods, distress sales under court process, or sales in good faith in discontinuance of business in the goods concerned;

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

NOTE 1: In complaint proceedings, justification of price differentials under subparagraphs (2), (4) and (5) of this paragraph

is a matter of affirmative defense to be established by the person or concern charged with price discrimination.

NOTE 2: 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 made by showing justification shall be upon the person charged with a violation of this secshall unless justification be tion, and the Commission is affirmatively shown, authorized to issue an order terminating the discrimination: Provided, however, That nothing herein contained shall prevent a seller rebutting the prima facie case thus made by showing that his lower price or the furnishing of services or facilities to any purchaser or purchasers was made in good faith to meet an equally low price of a competitor, or the services or facilities furnished by a competitor."

(b) The following are examples of some of the price differential practices which are to be considered as subject to the prohibitions of paragraph (a) of this section when:

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

(2) The goods involved are of like grade and quality and are sold for use, consumption, or resale within any place under the jurisdiction of the United States, and are not purchased by schools, colleges, universities, public libraries, churches, hospitals, and charitable institutions not operated for profit, as supplies for their own use; and

(3) The price differential has a reasonable probability of substantially lessening competition or tending to create a monopoly in any line of commerce, or of injuring, destroying, or preventing competition with the industry member or with the customer knowingly receiving the benefit of the price differential, or with customers of either of them; and

(4) The price differential is not justifled by cost savings (see paragraph (a) (2) of this section); and

(5) The price differential is not made in response to changing conditions affecting the market for or the marketability of the goods concerned (see paragraph (a) (4) of this section); and

(6) The lower price was not made to meet in good faith an equally low price of a competitor (see paragraph (a) (5) of this section).

EXAMPLE 1: Payment terms of 2/10th prox. are granted by an industry member to

EXAMPLE 4: An industry member sells, to a customer, which operates as both a wholesaler and a retailer, industry products which the customer resells in its capacity as a retailer, and the industry member charges such customer a lower price therefor than such industry member charges other retailers for like products.

(c) Prohibited brokerage and commission: 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 commission, brokerage, or other compensation, or any allowance or discount in lieu thereof, except for services rendered in connection with the sale or purchase of goods, wares, or merchandise, either to the other party to such transaction or to an agent, representative, or other intermediary therein where such intermediary is acting in fact for or in behalf, or is subject to the direct or indirect control, of any party to such transaction other than the person by whom such compensation is so granted or paid.

(d) Prohibited advertising or promotional allowances, etc.: It is an unfair trade practice for any member of the industry engaged in commerce to pay or contract for the payment of advertising or promotional allowances or any other thing of value to or for the benefit of a customer of such member in the course of such commerce as compensation or in consideration for any service or facilities furnished by or through such customer in connection with the processing, handling, sale, or offering for sale of any products or commodities manufactured,

sold, or offered for sale by such member, unless such payment or consideration is made known to and is available on proportionally equal terms to all other customers competing in the distribution of such products or commodities.

NOTE 1: Industry members giving allowances for advertising or sales promotion must, in addition to according same to all competing customers on proportionally equal terms, exercise precaution and diligence 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 ostensibly for advertising or sales promotion of products and is not in fact used for that purpose the practice may constitute a price discrimination. 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.

NOTE 2: When an industry member gives allowances to competing customers for advertising in a newspaper or periodical, the fact that a lower advertising rate for equivalent space is available to one or more, but not all, such customers, is not to be regarded by the industry member as warranting the retention by such customer or customers of any portion of the allowance for his or their personal use or benefit.

(e) Prohibited discriminatory services of facilities: It is an unfair trade practice for any member of the industry engaged in commerce to discriminate 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 contributing to the furnishing of, any services or facilities connected with the processing, handling, sale, or offering for sale of such commodity so purchased upon terms not made known to and accorded to all competing purchasers on proportionally equal terms.

NOTE NO. 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 paragraph (e) of this section.

NOTE NO. 2: Among the practices prohibited by paragraph (e) of this section 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 privilege to another or other competing customers on proportionally equal terms. In this connection see also Note No. 2 under cost justification proviso (paragraph (a) (2) of this section).

(f) Inducing or receiving an illegal discrimination in price, advertising or promotional allowances, or services or facilities: 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, advertising or promotional allowances, or services or facilities, prohibited by the foregoing provisions of this section. [Rule 8] § 192.9 Deception as to origin or place of manufacture.

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

(1) To misrepresent the origin or place of manufacture of an industry product or any part thereof; or

(2) Subject to the exemptions hereinafter specified, to fail to adequately disclose that an industry product, or any substantial part thereof, is of foreign origin, or has been manufactured, processed, or assembled in a foreign country, when the failure to make such disclosure has the capacity and tendency or effect of deceiving purchasers or prospective purchasers.

(b) The disclosure required by paragraph (a) (2) of this section shall be in the form of a legible marking or stamping on the industry product, or on a label or tag which is affixed thereto with such degree of permanency as to remain on or attached to the product, in legible form, until consummation of the consumer sale thereof, and shall be of such conspicuousness as to be likely observed by purchasers and prospective purchasers making casual inspection of the product. The disclosure shall name the foreign country of origin or manufacture, and when not applicable to the entire product, shall specify the part or parts to which it has applicability. If such disclosure on the product is concealed or obscured by reason of packaging or manner in which it is mounted in a container or on a display card, and is displayed and offered for consumer sale in such form, then the disclosure shall also appear on such packaging, container, or display card with such conspicuousness as to be likely observed by consumer purchasers and prospective consumer purchasers before consummation of their purchase of the product.

EXEMPTIONS: To be regarded as exempt from the disclosure requirements of paragraph (a) (2) of this section are:

Sheet, wire, tubing, and similar basic material, whether of plastic, metal, or other substance, when imported in that form; and

Rivets, springs, screws, bolts, brads, washers and similar small parts of eyeglass frames, when imported in an unassembled state and thereafter used in the manufacture of eyeglass frames;

Small and basically decorative and nonfunctional imported parts; and

Imported parts, which because of substantial domestic processing or merger with other parts after importation, no longer retain the appearance and essential characteristics possessed by them at the time of their importation.

NOTE: In this connection it is to be understood that the installation of lenses into frames in this country, though involving cutting, edging, and beveling of the lenses, and boring of holes in the frames or edges of the lenses, does not exempt from the requirements of paragraph (a) (2) of this section when either the lenses or frames so assembled, or both such parts, have been imported from a foreign country.

NOTE: Nothing in this section is to be construed as relieving any industry member from compliance with the requirements of custom laws of the U.S. having application to industry products and parts imported from a foreign country.

[Rule 9]

§ 192.10 Misrepresenting products as conforming to a standard.

In the sale, offering for sale or distribution of industry products, it is an unfair trade practice to represent, directly or indirectly, that any such product, or any part thereof, has been designed or constructed so as to conform to a standard when:

(a) No disclosure is made of the identity of the standard (whether private, official, or otherwise); or

(b) The standard to which reference is made has been rescinded, amended, or superseded, and no disclosure is made of such fact; or

(c) The product or part does not fully conform to the requirements of the standard. [Rule 10]

192.11 Misrepresentation as to character of business.

It is an unfair trade practice for any industry member, in connection with his sale, offering for sale, or distribution of industry products, to misrepresent the character, extent, or type of his business. [Rule 111

§ 192.12 False invoicing.

(a) It is an unfair trade practice to withhold from or insert in invoices any

statements or information by reason of which omission or insertion a false record is made, wholly or in part, of the transactions represented on the face of such invoices, with the capacity and tendency or effect of thereby misleading or deceiving purchasers, prospective purchasers, or the buying public in any material respect.

(b) In order to prevent misunderstanding, confusion, or deception, the invoice or billing should disclose that the products of the industry covered thereby are seconds, defective, or other than first-quality merchandise, when such is the fact. [Rule 12]

§ 192.13 Consignment distribution.

(a) It is an unfair trade practice for any member of the industry to employ the practice of shipping industry products on consignment without the express request or prior consent of the purchasers.

(b) Nothing in this section shall be construed as authorizing any understanding or agreement, combination or conspiracy, or planned common course of action, by and between industry members, mutually to conform or restrict their practice of shipping goods on consignment. [Rule 13]

§ 192.14 Commercial bribery.

It is an unfair trade practice for a member of the industry, directly or indirectly, to give, or offer to give, or permit or cause to be given, money or anything of value to agents, employees, or representatives of customers or prospective customers, or to agents, employees, or representatives of competitors' customers or prospective customers, without the knowledge of their employers or principals, as an inducement to influence their employers or principals to purchase or contract to purchase products sold or offered for sale by such industry member, or to influence such employers or principals to refrain from dealing in the products of competitors or from dealing or contracting to deal with competitors. [Rule 14]

§ 192.15 False disparagement of competitors or their products.

It is an unfair trade practice for any industry member to represent or imply that a competitor is incompetent or not qualified to make, process, or fit industry products, or certain kinds or types of industry products, or that a competi

tor's products are inferior to those of the industry member, when such is not the case; or in any other manner to falsely disparage a competitor or his products. [Rule 15]

§ 192.16 Coercing purchase of one product as a prerequisite to purchase of another or 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 substantially lessen competition or tend to create a monopoly or to unreasonably restrain trade, is an unfair trade practice. [Rule 161

§ 192.17

Inducing breach of contract.

(a) Knowingly inducing or attempting to induce the breach of existing lawful contracts between competitors and their customers or between competitors and their suppliers, or interfering with or obstructing the performance of any such contractual duties or services, under any circumstance having the capacity and tendency or effect of substantially injuring or lessening competition, is an unfair trade practice.

(b) Nothing in this section is intended to imply that it is improper to solicit the business of a customer of a competing industry member; nor is the section to be construed as in anywise authorizing any agreement, understanding, or planned common course of action by two or more industry members not to solicit business from, or to sell to, the customers of either of them, or customers of any other industry member. [Rule 17]

§ 192.18 Enticing away employees of competitors.

It is an unfair trade practice for any member of the industry wilfully to entice away employees or sales-contract personnel of competitors with the intent and effect of thereby unduly hampering or injuring competitors in their business and destroying or substantially lessening competition: Provided: That nothing in this section shall be construed as prohibiting employees from seeking more favorable employment, or as prohibiting employers from hiring or offering employment to employees of a competitor in good faith and not for the purpose of inflicting injury on such competitor. [Rule 18]

§ 192.19 Deceptive use or imitation or simulation of trade or corporate names, trade-marks, etc.

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

(a) To imitate or simulate the trademarks, trade names, brands, or labels of competitors, with the capacity and tendency or effect of misleading or deceiving purchasers or prospective purchasers; or

(b) To represent by use of any trade name, corporate name, trade-mark, or other trade designation that any industry member is a manufacturer, wholesaler or importer when such is not the fact; or

(c) 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 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. [Rule 19]

§ 192.20 Prohibited forms of trade restraints (unlawful price fixing, etc.)* It is an unfair trade practice for any member of the industry, either directly or indirectly, to engage in any planned common course of action, or to enter into or take part in any understanding, agreement, combination, or conspiracy, with one or more members of the industry, or

2 The prohibitions of this section are subject to Public Law 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 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 contract or agreement is lawful as applied to intrastate transactions under the laws of the State, Territory, or territorial jurisdiction in which the resale is to be made or to which the commodity is to be transported for such resale, and when such contract or agreement is not between manufacturers, or between wholesalers, or between brokers, or between factors, or between retailers, or between persons, firms, or corporations in competition with each other.