Appendix I—Institutional and Noninstituticnal Providers of Health Services.

Appendix II-Price Commission Reporting Forms.

Appendix III-Average Annual Rate of Productivity Gain by Standard Industrial Classification (Sic).

Appendix IV-Procedures and Reports of Independent Public Accountants.

AUTHORITY: The provisions of this Part 300 issued under the Economic Stabilization Act of 1970, as amended (Public Law 91-379, 84 Stat. 799; Public Law 91-558, 84 Stat. 1468; Public Law 92-8, 85 Stat. 13; Public Law 9215, 85 Stat. 38), Executive Order No. 11627 (36 F.R. 20139, Oct. 16, 1971), and Cost of Living Council Order No. 4 (36 F.R. 20202, Oct. 16, 1971).

SOURCE: The provisions of this Part 300 appear at 36 FR. 23975, Dec. 16, 1971, unless otherwise noted.

(c) Except for sales of goods and services by firms in the several States and the District of Columbia to firms in the Commonwealth of Puerto Rico, this part does not apply to transactions for sales, leases, or services occurring outside the United States. For the purposes of this paragraph, a transaction is considered to occur outside the United States if delivery of the property or performance of the service which is the subject matter of the transaction occurs outside the United States. If personal property which is the subject of a lease is used both inside and outside the United States during the period of the lease, the transaction is considered to have occurred exclusively in the United States. Similarly, if services are partially performed in the United States and partially outside the United States, the services are considered to have been performed exclusively in the United States.

[36 F.R. 23975, Dec. 16, 1971, as amended at 36 F.R. 25386, Dec. 30, 1971; 37 F.R. 7622, Apr. 18, 1972]

The following definitions apply in this part: "Allowable cost" means any cost, direct or indirect, unless disallowed by the Price Commission.

"Base period" means any two, at the option of the person concerned, of that person's last 3 fiscal years ending before August 15, 1971, and in determining a base period for the purpose of computing a profit margin during a base period, a weighted average of its profits during the 2 years chosen shall be used.

"Base price" means the base price determined under Subpart F of this part.

"Class of purchasers" means purchasers to whom a person has charged a comparable price for comparable property or service during the freeze base period pursuant to customary price dif

ferentials between those purchasers and other purchasers.

"Controlled group" means a controlled group of corporations, as defined in section 1563 (a) of title 26, United States Code.

"Customary initial percentage markup" means the markup applied to the cost (purchase price actually paid by the selling person and transportation charges to be allocated to the merchandise) of merchandise when first offered for sale, determined on an item, product line, department, store, or other pricing unit basis, according to the person's customary pricing practice.

"Customary price differential" includes a price distinction based on a discount, allowance, add-on, premium, and an extra based on a difference in volume, grade, quality, or location or type of purchaser, or a term or condition of sale or delivery.

“Department” means the organizational unit customarily treated by the seller as a department.

"Freeze base period" means either—

(a) The period beginning on July 16, 1971, and ending on August 14, 1971; or (b) For a person who had no transactions during the period stated in paragraph (a) of this section, the nearest preceding 30-day period in which he had a transaction.

"Including" means including but not limited to.

"Lease" means a contract whereby a person having a legal estate in any personal property conveys a part of his interest to another person in consideration of rent or other compensation, but does not include a license.

"Manufacturer" means a person who carries on the trade or business of making, fabricating, or assembling a product or commodity by manual labor or machinery for sale to another person, and also includes the mining of natural deposits, the production or refining of oil from wells, and the refining of ores, and whenever the Price Commission considers it appropriate, also includes any manufacturing subsidiary, division, affiliate, or similar entity that is a part of, or is directly or indirectly controlled by, another person.

"Person" includes any individual, trust, estate, partnership, association, company, firm, or corporation, a government, and any agency or instrumentality of a government, but does not include a foreign government, or any international

organization established by treaty or agreement between participating governments.

"Prenotification firm" means a firm subject to § 101.11 of Part 101 of this title.

"Price" means any compensation for the sale or lease of any property or services and includes rent, commissions, dues, fees, margins, rates, charges, tariffs, fares, or premiums, regardless of form.

"Price increase" means an increase in the unit price of a property or service or a decrease in the quality of substantially the same property or services.

"Product" means an item of tangible personal property offered for sale to another person.

"Product line" means an aggregation of products of the same manufacturer or different manufacturers, substantially similar as to intended function, usage, and structure, which are offered for sale simultaneously, or within the same commercial season, by a person.

"Profit margin" means the ratio that operating income (net sales less cost of sales and less normal and generally recurring costs of business operations, determined before non-operating items, extraordinary items, and income taxes) bears to net sales as reported on the person's financial statement prepared in accordance with generally accepted accounting principles consistently applied.

"Reporting firm” means a firm subject to § 101.13 of Part 101 of this title.

"Rent" means any price for the use of personal property of any description, including any charge no matter how identified in a lease or other agreement, for the use of any property or for any service in connection with the use of leased property.

"Retailer" means a person who carries on the trade or business of purchasing property and, without substantially changing the form of that property, reselling it to ultimate consumers, and, whenever the Price Commission considers it appropriate, includes any retailing subsidiary, division, affiliate, or similar entity that is a part of, or is directly or indirectly controlled by, another person.

"Sale" includes exchange, transfer, or other disposition.

"Service" includes any service performed by a person for another person, other than in an employment relationship, and also includes professional services of any kind and services performed

by membership organizations for which dues are charged, and the leasing or licensing of property to another person.

"Service organization" means a person who carries on the trade or business of selling or making available services, including nonprofit organizations, governments, and government agencies or instrumentalities which carry on those activities, and a person who provides professional services; and, whenever the Price Commission considers it appropriate, also including any service organization subsidiary, division, affiliate, or similar entity that is part of, or is dianother rectly or indirectly controlled by,

person.

"Transaction" means an arms-length transaction between unrelated persons which are not members of a controlled group, and is considered to occur at the time and place a binding contract is entered into between the parties.

"United States" means the several States and the District of Columbia.

"Unrelated person" means a person other than a person described in section 267(b) of title 26, United States Code.

"Wholesaler" means a person who carries on the trade or business of purchas.ing property and, without substantially changing the form of that property. reselling it to retailers for resale or to industrial, commercial, institutional, or professional business users. It also includes, whenever the Price Commission considers it appropriate, any wholesaling subsidiary, division, affiliate, or similar entity that is a part of, or is directly or indirectly controlled by, another person.

[36 F.R. 23975, Dec. 16, 1971, as amended at 36 F.R. 25386, Dec. 30, 1971; 37 F.R. 3914, Feb. 24, 1972; 37 F.R. 11472, June 8, 1972; 37 F.R. 13716, July 1, 1972]

§ 300.11 General rule.

(a) No person may charge a price with respect to any sale or lease of an item of property or a service after November 13, 1971, which exceeds the base price (or other price authorized under this part) for that item of property or that service.

(b) No person may knowingly pay a price with respect to any sale or lease of an item of property or a service for use in his trade or business which exceeds the base price (or other price authorized under this part) for that item of property or that service. However, this

paragraph (b) does not apply to the sale or lease of an item of property or a service to any person under circumstances of economic or other coercion in which the buyer or lessee, because of his need for that property or service, had no reasonable alternative but to pay the illegal price, and he reports the sale or lease to the Internal Revenue Service for investigation as soon as is reasonably possible after it occurs.

[37 F.R. 3828, Feb. 23, 1972]

§ 300.11a Calculation of productivity gains by manufacturers and construction contractors.

(a) General. For the purposes of determining whether a price may be increased by any manufacturer or construction contractor under any provision of this part, except § 300.31, productivity gains shall be calculated on the basis of the average percentage gain in the applicable industrial category, as set forth in the table in Appendix III to this part. To the extent provided in the table in Appendix III, productivity gains shall be taken into account in the calculation of all price increases during any fiscal year of a manufacturer or construction contractor but only until the full productivity offset, derived from Appendix III and calculated under paragraph (b) of this section, has been used within that fiscal year.

(b) Calculation. (1) For the purposes of determining whether a price increase is justified, each manufacturer or construction contractor shall calculate the sum of all of its actual labor costs (of the type required to be included under Part IV of Form PC-1, whether or not the form is required to be filed) as a percentage of total costs, and shall multiply that percentage by the average annual rate of productivity gain for the applicable industrial category, as set forth in the table in Appendix III to this part. The result is the productivity gain, stated as a percentage, by which the total cost increase must be reduced in order to be an allowable cost for the purposes of a price increase under this part.

(2) If the business of the manufacturer or construction contractor extends to more than one industrial category, the average percentage gain in productivity in each category must be weighted in proportion to the ratio which its expected sales (at present prices for the 12-month period following the proposed

date of the increase) in each industrial category bears to the total sales for that period affected by the price increase.

(3) A productivity offset calculated under subparagraphs (1) or (2) of this paragraph during any fiscal year of a manufacturer or construction contractor which is greater than a productivity offset previously calculated during that fiscal year must be used by the manufacturer or construction contractor as the total productivity offset for that fiscal year. A productivity offset calculated under subparagraphs (1) or (2) of this paragraph during any fiscal year of a manufacturer or construction contractor which is lower than a productivity offset previously calculated during that fiscal year may not be used by the manufacturer or construction contractor as the total productivity offset for that fiscal year.

(4) The percentage of unit cost decrease in nonvariable costs that results from an increased volume shall be treated as provided in Parts IV and V of the instructions to Form PC-1. Negative volume may not be shown.

(c) Subsidiaries, etc., not included. This section does not apply to a wholesaling, retailing, or service organization (other than a construction contractor), public utility, insurer, regulated seller of milk or milk products, or health provider subsidiary, devision, affiliate, or similar entity that is a part of, or is directly or indirectly controlled by, a manufacturer or construction contractor.

(d) Filings received before August 12, 1972. In the case of a Form PC-1 received from a prenotification or reporting firm by the Price Commission before August 12, 1972, the Price Commission will revise the form as required to conform to this section. A Form PC-1 received after August 11, 1972, which does not comply with this section will be returned to the person making the submission for revision.

[37 F.R. 15429, Aug. 2, 1972]

price does not result in an increase in its profit margin over that which prevailed during the base period.

[37 F.R. 775, Jan. 19, 1972]

§ 300.13

Retailers and wholesalers.

(a) General. A retailer or wholesaler may charge a price in excess of the base price whenever its customary initial percentage markup after November 13, 1971, with respect to the property sold, is equal to or less than its last customary initial percentage markup before November 14, 1971, or, at its option, its customary initial percentage markup during its last fiscal year ending before August 15, 1971. However, the increased price may not result in an increase in its profit margin over that which prevailed during the base period.

(b) Posting requirements—(1) General. Each retailer shall display prominently in its place of sale, base prices with respect to

(1) All of its foods or food products, except those offered for sale for the first time after the list is posted; and

(ii) At least those 40 items in each department which had the highest dollar sales during its last fiscal year ending before January 1, 1972, or those items which accounted for at least 50 percent of its total dollar sales in each department during that fiscal year, whichever is less.

(2) Posting guidelines—(i) Retail food or food product stores. The base prices which a retail food or food products store is required to post under subparagraph (1) of this paragraph are considered to be displayed prominently if they are available for inspection at a convenient central location in the store, to which the public has access without having to obtain the permission or assistance of a store employee, and if a sign is prominently posted in each department clearly indicating the location of the central base price list.

(ii) Sellers of prescription drugs. The base prices of drugs which are sold by a retailer only upon the presentation of a prescription or other authorization, and which are required to be posted under subparagraph (1) of this paragraph, are considered to be displayed prominently if the retailer has available, in a convenient location in the retail drug section of his store to which the public has access without having to obtain the permission or assistance of a store employee, a stand