§ 65.7 Misrepresentation in general.

It is an unfair trade practice for any industry member to make or cause to be made, directly or indirectly, in newspaper or periodical advertisements, sales promotional literature, by television, radio, or in connection with any demonstration or course of instruction or otherwise, any statement or representation, however published, which has the capacity and tendency or effect of misleading or deceiving purchasers or prospective purchasers:

(a) With respect to the identity of any product of the industry or its manufacture, distribution, or marketing;

(b) With respect to the brand, composition, grade, quality, quantity, or size of any product of the industry;

(c) With respect to the availability of the supply of a particular product or products of the industry;

(d) 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 "food" or other product within the scope of such section. Furthermore, nothing in these sections is to be construed as relieving anyone of the necessity of complying with the provisions of the Federal Food, Drug and Cosmetic Act in respect to labeling or any other matter coming within the purview of that Act.

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 disparagement of the grade, quality, or manufacture of the products of competitors, or of their business methods, selling prices, values, credit terms, policies, services, or conditions of employment, is an unfair trade practice. [Rule 81 § 65.9 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, trade-marks, 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 9]

§ 65.10 Enticing away employees of competitors.

Knowingly enticing away employees or sales representatives of competitors under any circumstances having the capacity and tendency or effect of substantially injuring or lessening present or potential competition is an unfair trade practice: 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 competitiors in good faith and not for the purpose of injuring, destroying, or preventing competition. [Rule 101

§ 65.11 Substitution of products.

It is an unfair trade practice for a member of the industry to make unauthorized substitutions of industry products, where such substitutions have the capacity and tendency or effect of misleading or deceiving the purchasing or consuming public, by:

(a) Shipping or delivering industry 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 purchaser of the substitution and obtaining his consent thereto prior to making shipment or delivery; or

(b) Falsely representing the reason for making a substitution. [Rule 11] § 65.12 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.

or

(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, planned common course of action by two or more industry members not to solicit business from the customers of either of them, or from customers of any other industry member. [Rule 12]

§ 65.13 Use of gift enterprise or lottery schemes.

The offering or giving of prizes, premiums, or gifts in connection with the sale or distribution of industry products, or as an inducement thereto, by any method which involves a lottery or gift enterprise, and the sale or distribution of industry products by any method or plan which involves a lottery or gift enterprise, are unfair trade practices. [Rule 13]

§ 65.14 Prohibited forms of trade restraints (unlawful price fixing, etc.).' It is an unfair trade practice for any member of the industry, either directly

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.

or

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 goods otherwise unlawfully to restrain trade; or to use any form of threat, intimidation, or coercion to induce any member of the industry or other person or persons to engage in any such planned common course of action, or to become a party to any such understanding, agreement, combination, or conspiracy. [Rule 14]

§ 65.15 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 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 15]

§ 65.16 Misrepresenting products as conforming to standards.

In connection with the sale or offering for sale of industry products it is an unfair trade practice to represent, through advertising or otherwise, that such prod

ucts conform to any standards recognized in or applicable to the industry when such is not the fact. [Rule 16]

§ 65.17 Procurement of competitors'

confidential information.

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 17]

66.12 Defamation of competitors or false disparagement of their products. Commercial bribery.

66.13 66.14 Push money. 66.15 Tie-in sales-coercing purchase of one product as a prerequisite to the purchase of other products. 66.16 Unlawful use of volume of freight traffic.

AUTHORITY: The provisions of this Part 66 issued under secs. 6, 5, 38 Stat. 721, 719; 15 U.S.C. 46, 45.

SOURCE: The provisions of this Part 66 appear at 28 F.R. 311, Jan. 11, 1963, unless otherwise noted.

gaged in the manufacture, sale or distribution of industry products as defined below.

(b) Industry products. Industry products are wire rope, wire cable, and fabricated assemblies consisting primarily (by value, weight or mass) of wire rope, cable, or strand.

§ 66.1 Misrepresentation (general).

It is an unfair trade practice for any member of the industry, in connection with the sale, offering for sale, or distribution of industry products, to make or publish, or cause to be made or published, by way of advertising, labeling, or otherwise, any statement or representation which, directly or by implication, has the capacity and tendency or effect of deceiving purchasers or prospective purchasers as to the kind, type, grade, quality, price, size, weight, strength, composition, durability, capacity, safety, origin or availability, of any industry product, or which has the capacity and tendency or effect of deceiving purchasers or prospective purchasers in any other material respect. [Rule 1]

§ 66.2 Deception as to origin and disclosure of foreign origin.

(a) It is an unfair trade practice for any member of the industry to offer for sale, sell, or distribute industry products under any representation which has the capacity and tendency or effect of misleading or deceiving purchasers or prospective purchasers as to the country of manufacture thereof.

(b) It is also an unfair trade practice for any member of the industry to offer for sale, sell, or distribute industry products of foreign manufacture without a clear and conspicuous disclosure of the country of manufacture thereof on reels or on any other packaging in which industry products are sold or if not sold on reels or in packaging, on labels affixed to the products, when the failure to make such disclosure has the capacity and tendency or effect of misleading or deceiving purchasers or prospective purchasers. The disclosure of country of manufacture as required by this section to be placed on reels or on or in any other packaging or on labels affixed to the products shall be in the form of a legible marking and shall be of such size conspicuousness, and degree of permanency as to be and remain noticeable and

legit le upon casual inspection during the marketing of the products and until consummation of their sale for use.

NOTE: Under this section it is an unfair trade practice to offer for sale, sell, or distribute industry products of foreign manufacture on reels or on or in any other packaging bearing trade names, trademarks, brands, labels, or other marks of, or identified with, domestic manufacturers unless the country of manufacture is stated in immediate connection and conjunction with such trade names, etc., and in letters of such size, conspicuousness, and degree of permanency, as to be and remain noticeable and legible upon casual inspection during the marketing of the products and until consummation of their sale for use.

[Rule 2]

§ 66.3 Substitution of products.

It is an unfair trade practice for a member of the industry to make unauthorized substitutions of products, where such substitutions have the capacity and tendency or effect of misleading or deceiving purchasers, by:

(a) Shipping or delivering industry products which do not conform to samples submitted, to specifications (in bids or otherwise) upon which the sale is consummated, or to representations made prior to securing the order, without advising the purchaser of the substitution and obtaining his consent thereto prior to making shipment or delivery; or

(b) Falsely representing the reason for making substitutions. [Rule 3]

§ 66.4 Misleading price lists.

It is an unfair trade practice for any industry member, in the course of or in connection with the offering for sale, sale, or distribution of industry products, to publish or circulate price lists which have the capacity and tendency or effect of misleading or deceiving purchasers or prospective purchasers in any material respect. [Rule 4]

§ 66.5 Misuse of terms "close-outs," "over-runs," "discontinued lines,"

etc.

It is an unfair trade practice to offer for sale, sell, advertise, describe, or otherwise represent industry products as "close-outs," "over-runs," or "discontinued lines," by use of such terms, or by words or representations of similar import, when such either is false, or has the capacity and tendency or effect of leading the purchasing or consuming public to believe such products

are being offered for sale or sold at specially reduced prices, when such is not the fact. [Rule 5]

§ 66.6 Deceptive invoicing, etc.

Withholding from or inserting in invoices any statement or information by reason of which omission or insertion a false, inaccurate, or incomplete record is made which has the capacity and tendency or effect of deceiving purchasers, prospective purchasers, or the consuming public in any material respect, is an unfair trade practice. [Rule

6]

§ 66.7

Prohibited discrimination.

(a) Prohibited discriminatory prices, rebates, discounts, etc. 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;

NOTE: Purchases by U.S. Government: In an opinion submitted to the Secretary of War under date of December 26, 1936, the U.S. Attorney General advised that the RobinsonPatman Antidiscrimination Act "is not applicable to Government contracts for supplies." (38 Opinions, Attorney General 539.)

(2) That nothing contained in this paragraph (a) 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: Cost justification under subparagraph (2) of this paragraph depends upon net savings in cost based on all facts relevant to the transactions under the terms of such subparagraph. 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.

(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 (a) 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: 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 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."

(b) Examples of prohibited price differential practices. The following are examples of price differential practices

to be considered as subject to the prohibitions of paragraph (a) of this section when involving goods of like grade and quality which are sold for use, consumption, or resale within any place under the jurisdiction of the United States, and which 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 when:

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

(2) 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 receiving the benefit of the price differential, or with customers of either of them; and

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

(4) 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

(5) 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. An industry member pays freight on shipments to a distributor or pays freight on shipments from a distributor to the distributor's customer (beyond freight) or pays freight on shipments from the industry member to the distributor's customer and does not pay such freight for all distributors, thereby effecting a difference in price between distributors.

Example 2. At the end of a given period an industry member grants a discount to a customer (whether classified as a "super distributor" or otherwise) equivalent to a fixed percentage of the total of such customer's purchases during the period and fails to grant a discount of the same percentage to other customers on their purchases during such period.

Example 3. An industry member sells goods to one or more of his customers at a higher price than he charges other customers for like merchandise. It is immaterial whether or not such discrimination is accomplished by misrepresentation as to the grade and quality of the products sold.