§ 207.20 Selling of products which are "seconds" or which have latent defects.

It is an unfair trade practice for any industry member to offer for sale, sell, or cause to be sold, narrow fabrics which are "seconds," or which have latent defects, whether designated as special lots, close-outs, obsolete constructions, or otherwise, without making full and nondeceptive disclosure, by tag or label attached to the fabrics, and in all invoices, advertising, and trade promotional literature, of the fact that such narrow fabrics are "seconds," or have latent defects, as the case may be. § 207.21

Aiding or abetting use of unfair trade practices.

It is an unfair trade practice for any person, firm, organization, 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.

The industry approves the practice of handling business between disputes members of the industry and their customers 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.

§ 207.102 Repudiation of contracts.

Lawful contracts, either written or oral, are business obligations 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 is equally reprehensible and is condemned by the industry. § 207.103 Dissemination of credit in

formation.

The industry records its approval of distributing to its members information covering delinquent and slow accounts insofar as it may lawfully be done.

§ 207.104 Coercion in sales.

The use of buying power to force uneconomic or unjust terms of sale upon sellers, and the use of selling power to

force uneconomic or unjust terms of sale upon buyers, are condemned by the industry.

§ 207.105 Filing of trade-marks, etc.

To void confusion within the industry, it is recommended that each member thereof voluntarily file with a qualified agency designated by the industry all trade-marks, trade names, labels, or brands used by such member, and that such information be made equally available to all members of the industry and to the public.

§ 207.106 Giving of samples.

The industry disapproves the giving of samples without charge except only as may be necessary to acquaint purchasers or prospective purchasers with the grade or quality of the product offered for sale, and where the giving of such samples by any member of the industry is not practiced or accomplished in such way or to such extent as to effectuate an illegal discrimination in price contrary to the provisions of § 207.18.

§ 207.107 Use of written sales contracts. In order to avoid ambiguity and misunderstanding and between buyers sellers, all purchases and sales of products of the industry exceeding one piece, regardless of the total value thereof, should be made by written contract, signed by the buyer and seller. Such written contract should set forth the actual terms and conditions of the sale involved.

Wherever practicable, the delivery of all merchandise of any quantity should be made against a written receipt signed by the purchaser or a qualified agent or employee of the purchaser.

The provisions of this section shall not be construed as sanctioning or approving any agreement among competitors, or any planned common course of action among competitors, to agree upon, or to fix, specify, or determine, the prices, discounts, terms, or conditions of sale to be covered in any sales contract or transaction, but these shall be open to individual negotiation between the seller and buyer, subject to the requirements of §§ 207.1 to 207.21 and applicable provisions of law.

§ 207.108 Price lists.

(a) The industry approves the practice of each industry member independently publishing and circulating to

Sec.

SUBGROUP D

209.27 Prohibited aiding or abetting use of unfair trade practices.

COMMITTEE ON TRADE PRACTICES

209.201 Industry committee.

AUTHORITY: The provisions of this Part 209 issued under secs. 6, 5, 38 Stat. 721, 719; 15 U.S.C. 46, 45, unless otherwise noted.

SOURCE: The provisions of this Part 209 appear at 17 F.R. 2357, Mar. 19, 1952, unless otherwise noted.

NOTE: FTC Order, File No. 21-452, 21 F. R. 265, Jan. 13, 1956, provides in part that Part 22, Frozen Food Industry, of this subchapter. supersedes Part 209 with respect to persons, firms, corporations, and organizations engaged in the production and/or marketing of vegetables, fruits, juices, fish and shellfish, baked goods, and other miscellaneous prepared foods, which are packed, marketed, and delivered to the ultimate consumer in a frozen state. (Not included as products of the frozen food industry are meats and poultry, and frozen dairy products including ice cream and sherbets.)

Sections 209.3 to 209.8 contain rules which repeat the statutory language in section 2 (a) and (c) to (f) of the Clayton Act, as amended by the RobinsonPatman Act and otherwise. This law is qualified by the following meet-competition provisions in section 2(b) of the Clayton Act:

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 section, and unless justification shall be affirmatively shown, the Commission is 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.

§ 209.2 Definition of “commerce."

The term "commerce," as used in §§ 209.3 to 209.8, is to be construed as it is defined in section 1 of the Clayton Act. This definition is as follows:

"Commerce" • • means trade or commerce among the several States and with foreign nations, or between the District of Columbia or any Territory of the United States and any State, Territory, or foreign nation, or between any insular possessions or other places under the jurisdiction of the United States, or between any such possession or place and any State or Territory of the United States or the 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 jurisdiction of the United States: Provided, That nothing in this Act contained shall apply to the Philippine Islands. § 209.3

price.

Prohibited discrimination

in

It is an unfair trade practice for any member of the industry engaged in commerce, in the course of such commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality, whether either or any of the purchases involved in such discrimination are in commerce, where such commodities are sold for use, consumption, or resale within the United States or any Territory thereof or the District of Columbia or any insular possession or other place under the jurisdiction of the United States, and where the effect of such discrimination 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, That nothing contained in this section shall prevent:

(a) Differentials which make only due allowance for differences in the cost of manufacture, sale, or delivery resulting from the differing methods or quantities 1

1

This exemption of quantity price differentials is further qualified by the following additional provisions in amended section 2 (a) of the Clayton Act:

the Federal Trade Commission may, after due investigation and hearing to all interested parties, fix and establish quan

in which such commodities are to such purchasers sold or delivered; or

(b) Price changes from time to time where in response to changing conditions affecting the market for or the marketability of the goods concerned, such as but not limited to actual or imminent 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; or

(c) 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.

§ 209.4 Prohibited brokerage and commissions, etc.

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 purchased 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.

§ 209.5 Prohibited discrimination in ad

vertising or promotional allowances.

It is an unfair trade practice for any member of the industry engaged in commerce, in the course of such commerce, to pay or contract for the payment of anything of value to or for the benefit of a customer of such person as compensation or in consideration for any services or facilities furnished by or through such customer in connection with the processing, handling, sale, or

It is an unfair trade practice for any member of the industry engaged in commerce, in the course of such 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 accorded to all competing purchasers on proportionally equal terms. § 209.7

Prohibited inducing or receiving 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 §§ 209.3 to 209.8.

§ 209.8 Exemptions from §§ 209.3 to 209.7.

Nothing in §§ 209.3 to 209.7:

(a) Shall prevent a cooperative association from returning to its members. producers, or consumers the whole, or any part of, the net earnings or surplus resulting from its trading operations, in proportion to their purchases or sales from, to, or through the association,' or

(b) Shall apply to purchases of their supplies for their own use by schools, colleges, universities, public libraries. churches, hospitals, and charitable institutions not operated for profit.'

SUBGROUP B

§ 209.9 Statutory basis of §§ 209.11 to 209.25.

Sections 209.11 to 209.25 contain rules based on sections 5 and 12 of the Federal Trade Commission Act.

2Paragraph (a) repeats the statutory language in section 4 of the Robinson-Patman Act.

'Paragraph (b) repeats the statutory language in an amendment to the RobinsonPatman Act.

Said section 5 prohibits the use of all unfair methods of competition and of all unfair or deceptive acts or practices in commerce, and said section 12-a (1) prohibits the dissemination of "any false advertisement by United States mails, or in commerce by any means, for the purpose of inducing, or which is likely to induce, directly or indirectly the purchase of food, drugs, devices, or cosmetics." As used in said sections 5 and 12, the term "commerce" is to be construed as it is defined in section 4 of the Federal Trade Commission Act. This definition reads as follows:

"Commerce" means cominerce among the several States or with foreign nations, or in any Territory of the United States or in the District of Columbia, or between any such Territory and another, or between any such Territory and any State or foreign nation, or between the District of Columbia and any State or Territory or foreign nation. § 209.10

lic."

Definition of "purchasing pub

The term "purchasing public," as used in §§ 209.11 to 209.25, means actual and prospective trade or consumer purchasers, as the case may be.

§ 209.11 Prohibited wrongful selling below cost.

(a) It is an unfair trade practice for any member of the industry to advertise, offer, or sell a product at a price less than the cost thereof to the seller, with the purpose or intent, and where the effect may be, to injure, suppress, or stifle competition or tend to create a monopoly in the production or sale of such products. As used in this section, the term "cost" means the total cost to the seller, including the costs of acquisition, processing, preparation for marketing, sale, and delivery.

(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 monopolistic practice with the wrongful intent referred to and where the effect may be unreasonably to restrain trade, tend to create a monopoly, or substantially lessen competition.

§ 209.12 False use of the term "bargain” prohibited.

It is an unfair trade practice for any member of the industry to falsely represent in the advertisement, offer, or sale of a product, either expressly or impliedly, that the price at which such

$209.14

Prohibited use of any false or misleading term of sale.

It is an unfair trade practice for any member of the industry to quote or disseminate any price or any other term (including condition) of sale which is false, or which otherwise has the capacity and tendency or effect of misleading or deceiving the purchasing public.

§ 209.15 Prohibited use of any false or misleading invoice, etc.

It is an unfair trade practice for any member of the industry, in connection with the sale or purchase of a product, (a) to make an invoice a false record of a sale by adding or omitting any statement with respect to it, or (b) to falsify a purchase record by any manipulation of it, or (c) to use an invoice or purchase record which otherwise has the capacity and tendency or effect of misleading or deceiving the purchasing public.

§ 209.16 Prohibited misrepresentation of available product supply.

In connection with the advertisment, sale, offering for sale, or distribution of products, it is an unfair trade practice for any member of the industry, either expressly or impliedly, to misrepresent the available supply of a product. § 209.17 Prohibited use of any misleading or deceptive selling method.

It is an unfair trade practice for any member of the industry to use any method of selling a product which has the capacity and tendency or effect of misleading or deceiving the purchasing public in any material respect.

petitor.

It is an unfair trade practice for any member of the industry to defame a competitor, or to disparage his product, his business or its conduct, by any false or otherwise unfair representation. § 209.20 Prohibited enticing of competitor's employee.

It is an unfair trade practice for any member of the industry to entice away any employee of a competitor with the purpose and tendency or effect of unfairly injuring him: Provided, That nothing in this section shall be construed as prohibiting employees or agents from seeking or obtaining more favorable employment.

§ 209.21

Prohibited substitution of competitor's product.

It is an unfair trade practice to ship or deliver products which do not conform to samples submitted, to specifications upon which the sale is consummated, or to representations made prior to securing the order, without advising the purchasers as to such substitution and obtaining consent thereto at or before the time of shipment or delivery, and with the capacity and tendency or effect of misleading or deceiving the purchasing or consuming public.

§ 209.22 Prohibited interference with

competitor's contract.

(a) It is an unfair trade practice for any member of the industry (1) to induce the breach of a competitor's lawful purchase, sale, or other business contract, or (2) to interfere with or obstruct the performance of such a contract by a competitor, where either of such practices has the capacity and tendency or effect of substantially injuring or lessening present or potential competition.

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