It is an unfair trade practice for any member of the industry to require by coercion, or by any other means, the purchase of one or more products as a condition to the purchase of one or more other products, where the effect may be substantially to lessen competition, unreasonably restrain trade, or tend to create a monopoly.

§ 209.24 Prohibited use of lottery scheme.

It is an unfair trade practice for any member of the industry to sell or promote the sale of products by means of a game of chance, gift enterprise, or other lottery scheme, or to sell or distribute any punchboards, push cards, or other lottery devices which are to be used, or may be used, in the sale or distribution of merchandise to the public by means of a game of chance, gift enterprise, or other lottery scheme.

§ 209.25 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—

(a) 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, unlawfully to fix, maintain, or enhance the price of any goods, or otherwise unlawfully to restrain trade; or

(b) 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.

goods, for use, consumption or resale within any place under the jurisdiction of the United States, 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 deal in the goods of a competitor or competitors of the seller, where the effect of such sale or contract for sale, or such condition, agreement or understanding, may be to substantially lessen competition or tend to create a monopoly in any line of commerce.

SUBGROUP D

§ 209.27 Prohibited aiding or abetting use of unfair trade practices.

It is an unfair trade practice for any member of the industry, either directly or indirectly, knowingly to aid, abet, coerce, or induce another to use or promote the use of any unfair trade practice forbidden by the rules in this part.

COMMITTEE ON TRADE PRACTICES

§ 209.201 Industry committee.

The provisions of § 16.1 of this subchapter shall be applicable to an industry committee established under this part.

[21 F.R. 1174, Feb. 21, 1956]

SUBGROUP C

§ 209.26 Prohibited use of unfair exclusive deals.*

210.5

It is an unfair trade practice for any member of the industry engaged in commerce, in the course of such commerce, to make a sale or contract for sale of

This section is based on section 3 of the Clayton Act.

5 The term "commerce," as used in this section, is to be construed as it is defined in section 1 of the Clayton Act. This definition is quoted in § 209.2.

210.6

210.7

Deception as to rebuilt or secondhand products.

210.8

Misuse of terms "Close-Outs," "Dis

210.9 210.10

continued Lines," "Special Bargains," etc.

Substitution of products.

Deceptive use and imitation of trade or corporate names, trade-marks, etc.

(a) Industry members. Persons, firms, corporations and organizations engaged in the manufacture, sale or distribution of industry products as in this section.

(b) Industry products. Commercial and industrial power driven machines for wet or dry cleaning, polishing, resurfacing, or maintenance of floors, floor coverings and other surfaces, and parts, accessories, and attachments for such machines. Among the products included are commercial and industrial power driven floor polishers, sanders and scrubbers, rug shampoo machines, mopping machines, and vacuum cleaners, including vacuum cleaners designed for removing liquids and/or dirt from containers of all kinds.

§ 210.1 Misrepresentation and deception in general.

It is an unfair trade practice to use, or cause or promote the use of, any trade promotional literature, advertising mat

ter, guarantee, warranty, mark, brand, label, trade name, picture, design or device, designation, or other type of oral or written representation, however disseminated or published, which has the capacity and tendency or effect of misleading or deceiving purchasers or prospective purchasers:

(a) With respect to the type, kind, grade, quality, size, weight, capacity, durability, serviceability, construction, manufacture, or distribution of any industry products, or concerning any parts, accessories, or attachments for such products; or

(b) With respect to the terms or conditions of sale, rental, or distribution of such products and parts, accessories, and attachments therefor; or

(c) With respect to the types and kinds of cleaning and maintenance work that such products, and attachments and accessories, will perform, or the rate of speed at which they will perform such work; or

(d) With respect to the average or customary savings or reduction in time, labor, or money expenditures resulting from the use of such products, or the average or customary earnings or profits derived from the sale, distribution, or operation of such products; or

(e) Which in any other material respect has the capacity and tendency or effect of misleading or deceiving the purchasing or consuming public.

§ 210.2 Misrepresentation as to character of business.

It is an unfair trade practice for any member of the industry to represent, directly or indirectly, through the use of any word or term in his corporate or trade name, in his advertising or otherwise, that he is a manufacturer of industry products, or that he is the owner or operator of a factory manufacturing them, when such is not the fact, or in any other manner to misrepresent the character, extent, volume, or type of his business.

§ 210.3 Deception through failure to differentiate between wholesale and retail transactions.

Where industry products are sold at wholesale and at retail in the same establishment, it is an unfair trade practice to misrepresent, directly or indirectly, either type of business as being the other type of business.

§ 210.4 Misrepresentation as to installment sales contracts, their terms, conditions, etc.

It is an unfair trade practice to make or publish or cause to be made or published, directly or indirectly, through advertising or otherwise, any statement or representation concerning installment sales contracts to be used in the sale of industry products which has the capacity and tendency or effect of deceiving purchasers or prospective purchasers with respect to the terms or conditions of such contracts, the downpayment required, the number, amount and dates of installments to be paid, the rate of interest or the financing cost to be charged, or in any other material respect.

§ 210.5 Deceptive "Salesmen Wanted" advertisements.

In connection with the promotion of the sale of industry products, it is an unfair trade practice for any member of the industry to use, or cause to be used, any advertisement, offer, statement or other form of representation which directly or by implication, is false, misleading, or deceptive concerning:

(a) The salary, commission, income, earnings, or other remuneration which agents, canvassers, solicitors, or sale representatives receive or may receive; or

(b) Any conditions or contingencies affecting such remuneration or the opportunities therefor.

§ 210.6 Misrepresenting products as conforming to standard.

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 products conform to any standards recognized in or applicable to the industry when such is not the fact.

tice to fail to make full and nondeceptive disclosure, by a conspicuous tag or label firmly attached to the products, and in all advertising and promotional literature relating thereto, of the fact:

(1) That such products are secondhand, rebuilt, or contain rebuilt or second-hand parts, as the case may be; and

(2) That the rebuilding was done by other than the original manufacturer, when such is the case; when the failure to make such disclosure has the capacity and tendency or effect of misleading purchasers or prospective purchasers of such products.

§ 210.8 Misuse of terms "Close-Outs," "Discontinued Lines," "Special Bargains," etc.

It is an unfair trade practice to offer for sale, sell, advertise, describe, or otherwise represent regular lines of industry products as "Close-Outs," "Discontinued Lines," "Special Bargains," or by words or representations of similar import, when such are not true in fact; or to so offer for sale, sell, advertise, describe, or otherwise represent industry products where the capacity and tendency or effect thereof is to lead the purchasing or consuming public to believe such products are being offered for sale or sold at greatly reduced prices, or at so-called "bargain" prices, when such is not the fact.

§ 210.9

Substitution of products.

It is an unfair trade practice for any industry member, in the course of or in connection with the sale or distribution of industry products, to make an unauthorized substitution of products, where such substitution has the capacity and tendency or effect of misleading or deceiving purchasers or the 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.

§ 210.10 Deceptive use and imitation

of trade or corporate names, trademarks, etc.

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

(a) To imitate, or cause to be imitated, or directly or indirectly promote the imitation of, the trade-marks, trade names, or other exclusively owned symbols or marks of identification of competitors in a manner having the capacity and tendency or effect of misleading or deceiving purchasers, prospective purchasers, or the buying public; or

(b) 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 character, name, nature, or origin of any product of the industry, or of any material used therein, or which is false or misleading in any material respect. § 210.11

False invoicing.

It is an unfair trade practice for members of the industry to issue invoices, billings, or sales slips which by reason of, misstatements therein or omissions therefrom have the capacity and tendency or effect of deceiving purchasers or prospective purchasers in any material respect. § 210.12 Deceptive pricing.

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

(a) To represent or imply that the price at which he is offering to sell any such products is a special or bargain price therefor, or is a saving to the buyer when compared with the usual price of the product, when such is not the fact;

or

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, (3) reduces the quantity or size

or

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.

§ 210.14 Guarantees, warranties, etc.

(a) It is an unfair trade practice to represent, in advertising or otherwise, that any industry product is "guaranteed" unless the nature and extent of such guarantee is conjunctively disclosed and without deceptively minimizing the terms and conditions relating to the obligation of the guarantor.

(b) It is also an unfair trade practice to use, or cause to be used, any guarantee in which the obligations of the guarantor are impracticable of fulfillment, or in respect to which the guarantor fails or refuses to observe his liabilities there

(c) This section shall be applicable not only to guarantees but also to warranties, to purported guarantees and warranties, and to any promise or representation in the nature of a guarantee or warranty.

§ 210.15 Use of lottery schemes, etc.

It is an unfair trade practice to sell, distribute, or promote the sale or distribution of any industry product by means

66-034-72- -17

of a game of chance, gift enterprise, or lottery scheme.

§ 210.16 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) It is an unfair trade practice for any member of the industry to employ the practice of shipping industry products on consignment or pretended consignment for the purpose and with the effect of artificially clogging or closing trade outlets and restricting competitors' use of said trade outlets in getting their products to purchasers through regular channels of distribution, thereby injuring, destroying, or preventing competition or tending to create a monopoly or unreasonably to restrain trade.

(c) Nothing in this section shall be construed to authorize 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 with the intent or effect of lessening competition.

§ 210.17 Coercing purchase of one product as a prerequisite to the purchase of other products.

It is an unfair trade practice to require, by coercion or by any other means, the purchase of one or more products as a prerequisite to the purchase of one or more other products, where the effect may be substantially to lessen competition or tend to create a monopoly or unreasonably to restrain trade.

§ 210.18 Prohibited sales below cost.

(a) The practice of selling products of the industry at a price less than the cost thereof to the seller, with the purpose or intent, and where the effect is, or where there is a reasonable probability that the effect will be, to substantially injure, suppress, or stifle competition or tend to create a monopoly, is an unfair trade practice.

(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 with the wrongful intent or purpose referred

to and where the effect is, or where there is reasonable probability that the effect will be, to substantially injure, suppress. or stifle competition or to create a monopoly. Among the situations in which the requisite purpose or intent would ordinarily be lacking are cases in which such sales were: (1) Of obsolescent goods; (2) made under judicial process; or (3) made in bona fide discontinuance of business in the goods concerned.

(c) As used in paragraphs (a) and (b) of this section, the term "cost" means the respective seller's cost and not an average cost in the industry whether such average cost be determined by an industry cost survey or some other method. It consists of the total outlay or expenditure by the seller in the acquisition, production, and distribution of the products involved, and comprises all elements of cost such as labor, material, depreciation, taxes (except taxes on net income and such other taxes as are not properly applicable to cost), and general overhead expenses, incurred by the seller in the acquisition, manufacture, processing, preparation for marketing, cale, and delivery of the products. Not to be included are dividends or interest on borrowed or invested capital, or nonoperating losses, such as fire losses and losses from the sale or exchange of capital assets. Operating cost should not be reduced by items of nonoperating income, such as income from investments, and gain on the sale of capital assets.

(d) Nothing in this section shall be construed as relieving an industry member from compliance with any of the requirements of the Robinson-Patman

Act.

§ 210.19 Defamation of competitors or false disparagement of their prod

ucts.

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 or quality of the goods of competitors, their credit terms, values, policies, services, the nature or form of the business conducted, or in any other material respect, is an unfair trade practice.