cilities 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: Section 2(b) of the Clayton Act, as amended, which is set forth in Note 1 following paragraph (a)(5) of this section, is applicable to paragraph (c).

(d) Prohibited discriminatory services or 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 accorded to all competing purchasers on proportionally equal terms.

NOTE: Section 2(b) of the Clayton Act, as amended, which is set forth in Note 1 following paragraph (a)(5) of this section, is applicable to paragraph (d).

(e) 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 § 221.1.

(f) Proportional equality of treatment of competing customers. (1) The following is presented for the purpose of clarifying the requirements of paragraphs (c) and (d) of this § 221.1 with respect to the supplying of marketing services, facilities or allowances by industry members to their customers, but it is not intended to imply by such presentation that other methods which assure of proportional equality of treatment of competing customers may not also be used.

(2) An industry member may simultaneously offer to each of his customers competing in the resale of his products

the same kind of promotional service, facility or allowance of a cost value equal to a uniform percentage of the sales (or purchases) of the industry member's products by each customer during a specified and identical period of time: Provided, however, That when the service, facility, or allowance offered is of a type which under reasonable terms and conditions is not usable or suitable to the facilities and business of all customers, and is offered to any one customer, the member offer each of those customers to whom the service, facility, or allowance is not usable or suitable an alternate type of promotional service, facility or allowance which is of equivalent measurable cost, is usable by the customer, and is suitable to his facilities and business, and promptly inform all competing customers of the kind and amount of services, facilities or allowances which he has offered to each and the respective terms and conditions under which such services, facilities or allowances are to be furnished by the industry member: And provided, further, That when the offer of any service, facility, or allowance to any customer is conditioned on such customer supplying some reciprocal service, facility, or payment, a reciprocal service, facility, or payment be required in the offers to all other customers and there be an equality of ratio among all customers as to the measurable cost of that which is supplied by the industry member and the recriprocal service, facility, or payment required of any customer. The industry member must take every reasonable precaution to see that services, facilities, or allowances which he furnishes to customers are used in accord with the terms of his offer; and upon failure of the customer to perform any obligation on his part the industry member must cease supplying the customer any further service, facility, or allowance.

Explanatory analysis. In other words, one, but not the only, method of complying with paragraphs (c) and (d) of this § 221.1, is as follows:

The industry member may offer, simultaneously, to each competing resale customer, the same kind of

1. Promotional service, or 2. Facility, or

3. Allowance,

The value of which must be equal to a uniform percentage of dollar volume.

1. Of the sales or purchases by each customer of the industry member's products,

2. Computed for an identical, specified period of time. However, if the same kind is not usable and suitable under reasonable terms and conditions to all such customers, and is offered to one,

The others must be offered an alternate type of

1. Promotional service, or

2. Facility, or

3. Allowance, and

The alternate type must be→

1. Of equivalent measurable cost, and

2. Usable by the customer and suitable with respect to his facilities and character of business; and

All such customers must be promptly informed of

1. The kind,

2. The amount, and

3. Terms and conditions of the offer.

Also. When the offer is conditioned upon something reciprocal to be furnished by the customer, the member

1. Must require of all customers the same proportionate reciprocity (equality of ratio as to the measurable cost of that supplied by the customer to that supplied by the member);

2. Must take every reasonable precaution to see that what he pays or furnishes is used in accordance with the terms of his offer; and

3. Must cease furnishing or paying it to the customer when the industry member knows, or has reason to believe, it is not so used. (Rule 1.)

§ 221.2

Misrepresentation in general.

It is an unfair trade practice to use, or cause or promote the use of, any false, untrue, or deceptive statement, representation, guarantee, warranty, testimonial, or endorsement, by way of advertising (through newspapers, magazines, circulars, booklets, or by radio, or any other medium), oral representation, or otherwise, which has the capacity and tendency or effect of misleading or deceiving purchasers, prospective purchasers, or the consuming public with respect to the efficacy, permanency of the effects, medicinal or curative properties, grade, quality, quantity, substance, character, origin, size, preparation, manufacture, or distribution of any product of the industry, or concerning the purported approval or endorsement of such product by State, Federal, medical, or other authority, or in any other material respect.

NOTE: Among the prohibitions of this section is "false advertisement," as defined in section 15 of the Federal Trade Commission Act, of any "cosmetic" as such term is defined in the same section. Furthermore, nothing

in this Part 221 is to be construed as relieving anyone of the necessity of complying with the cosmetic labeling requirements of the "Federal Food, Drug and Cosmetic Act" and the general regulations thereunder. (Rule 2.)

§ 221.3

Deception as to origin.

(a) In connection with the sale or offering for sale of cosmetic and toilet preparations, it is an unfair trade practice to misrepresent, through any means or device, the country of origin thereof.

(b) In connection with the sale or offering for sale of any cosmetic or toilet preparation product not wholly made (i.e., in form for distribution to the public except for bottling and/or packaging) in a foreign country or countries, it is an unfair trade practice to:

(1) Represent directly that such product was made in a foreign country, or

(2) Use any foreign word, term or phrase in the brand or product name or otherwise, or any depiction or other device, which may tend to convey the erroneous impression that the product is of foreign origin, unless clear and conspicuous disclosure is made in close connection and conjunction therewith of the fact that such product was made, compounded, mixed, blended, or diluted in the United States. ("Brand or product name" as used in this section shall refer to any name including company or trade name, when used to designate products.)

Notes on application of the section. 1. Provision (b)(1) of the section is intended to prevent the use of such statements as "Made in France," "Imported from Italy," etc., in connection with products not wholly made in the foreign country referred to.

2. When a bottle or other immediate container used in connection with any such product bears terminology or depictions referred to in provision (b)(2) of the section, the disclosure required by the section must be placed clearly and conspicuously on at least one face (or the top) of the bottle or other immediate container

3. When a package, box, or other wrapping encasing the bottle or other inner container, used in connection with any such product. has a distinct front face, on which terminology or depictions referred to in provision (b) (2) of the section appear, the disclosure required by the section must be placed clearly and conspicuously on such front face of each such package, box and other wrapping. When such disclosure has been made, it will not be necessary to repeat the disclosure although terminology or depictions referred to in provision (b) (2) of the section may also appear on other parts of said package, box, or other wrapping.

4. When a package, box or other wrapping does not have a distinct front face, or has such a face upon which no terminology or depictions referred to in provision (b)(2) of the section appear, the disclosure required by the section must be placed clearly and conspicuously on the package, the box and other wrapping, in close connection and conjunction with any such terminology or depiction wherever used.

5. When any terminology or depiction referred to in provision (b) (2) of the section is used in promotional material, including, but not limited to, display or sampler bottles, display cards or display packages, or in other advertising, to refer to such products, disclosure required by the section shall appear clearly and conspicuously in close connection and conjunction with such terminology or depiction.

Nothing in above notes 2, 3, 4, or 5 shall be deemed to permit any representation prohibited by provision (b)(1) of the section.

The section does not require disclosure of domestic bottling and/or packaging of products wholly made in a foreign country, imported in bulk, and bottled or otherwise packaged in the United States.

Provisions of outstanding Cease and Desist Orders pertaining to subject matter covered by this § 221.3 shall not be construed by the Commission as prohibiting or requiring more than the section. (Rule 3.)

[31 F.R. 9059, July 1, 1966, as amended at 31 F.R. 9267, July 7, 1966]

221.4 Deceptive imitation of trade

marks, trade names, etc.

The imitation of trademarks, trade names, or other exclusively owned marks of identification of competitors, with the capacity and tendency or effect of misleading or deceiving purchasers, prospective purchasers, or the consuming public, is an unfair trade protection. (Rule 4.)

§ 221.5 Misrepresentation as to character of business.

It is an unfair trade practice for any concern, in the course of or in connection with the distribution of industry products, to represent, directly or indirectly, that it is a manufacturer of Industry products, or that it owns or controls a factory making such products, when such is not the fact, or in any other manner to misrepresent the character, extent, or type of its business. (Rule 5.)

$221.6 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 advertisements or in other offers to the public, as descriptive of an article of merchandise, or service, which is not an unconditional gift, under the following circumstances:

(a) When all the conditions, obligations, or other prerequisites to the receipt and retention of the "free" article 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;

(b) When, with respect to any article of merchandise required to be purchased in order to obtain the "free" article or service, the offerer (1) increases the ordinary and usual price of such article of merchandise, or (2) reduces its quality, or (3) reduces the quantity or size thereof.

NOTE: The disclosure required by paragraph (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 6.)

§ 221.7 Deceptive pricing.

Members of the industry shall not 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 deceive purchasers or prospective purchasers with respect to the price of any product offered for sale; or furnish any means or instrumentality by which others engaged in the sale of industry products may make any such representation.

NOTE: The Commission promulgated Guides Against Deceptive Pricing effective January 8, 1964, superseding the Guides adopted October 2, 1958. The 1964 Guides are appended to these rules for additional guidance with respect to price savings representations. (Rule 7.)

§ 221.8 Passing off an industry product as and for the product of a competi

tor.

The passing off, or causing to be passed off, of any industry product as and for the product of a competitor through appropriation or simulation of such competitor's trademarks, labels, or by any

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 manufactured or sold by such industry member 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 contracting to deal with competitors. (Rule 10.) § 221.11 Procurement of competitor's confidential information by unfair means and wrongful use thereof.

It is an unfair trade practice for any member of the industry to obtain information concerning the business of a competitor by bribery of an employee or agent of such competitor by false or misleading statements or representations, by the impersonation of one in authority, or by any other unfair means, and to use the information so obtained so as substantially to injure competition or unreasonably restrain trade. (Rule 11.)

§ 221.12 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 for any industry member 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 12.)

§ 221.13 Use of lottery schemes, etc.

It is an unfair trade practice to sell, distribute, or promote the sale or distribution of any industry product or other merchandise by means of a gift enterprise or lottery scheme. (Rule 13.) 221.14 Prohibited forms of trade re

straints (unlawful price fixing, etc.).1 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 with any other person or persons, to fix or maintain the price of any

1 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 trademark, 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.

The circulation of threats of suit for infringement of patents or trademarks 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 prejudicing competitors in their business, is an unfair trade practice. (Rule 15.) § 221.16 Exclusive deals.

It is an unfair trade practice for any member of the industry to contract to sell or sell any industry product, or fix a price charged therefor, or discount from, or rebate upon, such price, on the condition, agreement, or understanding that the purchaser thereof shall not use or deal in the products of a competitor or competitors of such industry member, where the effect of such sale or contract 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 16.)

§ 221.17 Push money.

It is an unfair trade practice for an industry member to pay or contract to pay anything of value to a salesperson employed by a customer of the industry member as compensation for, or as an inducement to obtain, special or greater effort or service on the part of the salesperson in promoting the resale of products supplied by the industry member to the customer

(a) When the agreement or understanding 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 salesperson or customer is dependent on lottery; or (c) When any provision of the agreement or understanding requires or con

templates practices or a course of conduct unduly and intentionally hampering sales of products of competitors of an industry member; or

or

(d) When, because of the terms and conditions of the understanding agreement, including its duration, or the attendant circumstances, the effect may be to substantially lessen competition 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 section 2 (d) and (e) of the Clayton Act.

NOTE: 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 customer, or is to result in a corresponding decrease in the salesperson's salary, are not to be considered within the purview of this § 221.17, but are to be considered as subject to the requirements and provisions of section 2(a) of the Clayton Act. (Rule 17.)

Sec. 222.0

222.1

222.2

222.3

222.4

222.5

222.6

222.7

222.8

222.9

222.10 222.11

PART 222-CHEMICAL SOIL CONDITIONER INDUSTRY

Definition.

GROUP I

Misrepresentation and deception in the sale of industry products. Guarantees, warranties, etc.

Fictitious price lists.

Substitution of products.

Defamation of competitors or false disparagement of their products. Imitation of trade-marks, etc.

Misrepresentation as to character of business.

Procurement of competitors' confi

dential information.

Selling below cost.

Prohibited discrimination.

Prohibited forms of trade restraints (unlawful price fixing, etc.). 222.12 Aiding or abetting use of unfair trade practices.

AUTHORITY: The provisions of Part 222 issued under secs. 6, 5, 38 Stat. 721, 719; 15 U.S.C. 46, 45, unless otherwise noted.

SOURCE: The provisions of this Part 222 appear at 19 F.R. 6626, Oct. 15, 1954, unless otherwise noted.