emphasis, conspicuousness, and display, the percentage or maximum percentage of residual shrinkage remaining therein. The designations and provisions for the proper disclosure of residual shrinkage as specified in the trade practice rules relating to "Shrinkage of Woven Cotton Yard Goods," promulgated by the Federal Trade Commission June 30, 1938, shall be available to the members of the industry for their use and guidance in the application of this section. § 199.6 Loading or adulterating industry products.

The practice of adulterating or loading industry products being deceptive and harmful to purchasers and productive of unfair methods of competition, it is an unfair trade practice to adulterate or load any canvas cover or product of the industry by adding or applying to the fabric any substance or product which does not contribute or perform a useful service to the full extent applied, or by any other means to adulterate or load such canvas cover or product of the industry.

§ 199.7

Misrepresentation as to origin.

In the sale, offering for sale, or distribution of canvas covers, it is an unfair trade practice to use any marking, labeling, advertising, or other representation which has the capacity and tendency or effect of misleading or deceiving purchasers or prospective purchasers:

(a) Into the belief that such canvas covers, or any part thereof, were made or manufactured in the United States when such is not the fact; or

(b) Into the belief that such canvas covers, or any part thereof, were made or manufactured in a foreign country when such is not the fact; or

(c) Into any other erroneous belief as to origin of the product or any part thereof.

NOTE: Products of foreign manufacture when imported into the United States are required to be marked as showing the country of origin under provisions of U. S. C. A., Title 19, Sec. 1304, and nothing in §§ 199.1 to 199.24 shall be construed as relieving anyone from such requirements.

§ 199.8 Deception as to being new.

(a) It is an unfair trade practice to sell, offer for sale, or distribute canvas covers under circumstances or conditions which have the capacity and tendency or effect of misleading or deceiving the purchasing or consuming public into the erroneous belief that such canvas covers are

new and unused when in truth and in fact they are used, rebuilt, or secondhand, in whole or in part.

(b) It is also an unfair trade practice to fail or refuse to make full and nondeceptive disclosure of, and thereby to deceptively conceal, the fact that any canvas cover, or any part thereof, so offered for sale or sold or distributed, has been used, or has been rebuilt, or is second-hand, or is composed of used or reprocessed material, in whole or in part. § 199.9 Misrepresentation not specifically prohibited above.

(a) It is an unfair trade practice to sell, offer for sale, or distribute any canvas cover, part thereof, or other products of the industry, under any representation, circumstance, or condition having the capacity and tendency or effect of misleading or deceiving purchasers or prospective purchasers thereof in respect to the grade, quality, type, composition, treatment, durability, performance, size, weight, strength, construction, or origin of any such canvas cover part, or other product of the industry, or in respect to the manufacture, processing, or distribution thereof, or in a manner which is false, misleading, or deceptive in any other material respect.

(b) Under this section it is an unfair trade practice to misrepresent:

(1) The immunity or degree of resistance, durability, or efficiency of a canvas cover with respect to mildew, water, sun, heat, combustion, cold, ice, or other weather conditions; or

(2) The breaking strength of the warp or filling of the canvas material of a canvas cover; or

(3) The composition or type of treating material applied to or on the canvas material of a treated canvas cover; or

(4) The method or manner of the application of treating materials to or on the canvas material of a treated canvas cover; or

(5) The method or process used in effecting the coloring of the canvas material of a canvas cover; or

(6) The colorfastness properties or qualities of any colored canvas material of a canvas cover; or

(7) The fire or flame-resistant properties or treatment of the cover or fabrics; or

(8) The amount or type of stitching or sewing in effecting seams, hems, or reinforcements of any canvas cover; or

(9) The kind, size, strength, or rotresistance of thread or twine used in the sewing or stitching of any canvas cover;

or

(10) The thread count or weight of the canvas fabric or any canvas cover;

or

(11) The size, kind, or type of reinforcements for placement of grommets or eyelets in or upon any canvas cover;

or

(12) The number, and the size, type, composition, or strength, of grommets, eyelets, rods, pipes, pulleys, frames, rollers, stakes, poles, or other hardware used on or in connection with a canvas cover;

or

(13) The immunity or degree of resistance of grommets, eyelets, rods, pipes, pulleys, frames, stakes, poles, arms, rollers, gears, gear housings, or other hardware of any canvas cover respecting rust, corrosion, rot, or other deterioration; or

(14) The immunity or degree of resistance of the ropes of a canvas cover to rot or mildew deterioration; or

(15) The number, and the size, kind, composition, or strength, of any rope or ropes of a canvas cover; or

(16) In any manner to misrepresent, directly or indirectly, any canvas cover, canvas material, or treatment thereof. § 199.10 Deceptive guarantees, warranties, etc.

(a) It is an unfair trade practice to use, or cause to be used, a guarantee which is false, misleading, deceptive, or unfair to the purchasing or consuming public.

(b) Under this section guarantees of the following type or character shall not be used:

(1) Guarantees containing statements, representations, or assertions which have the capacity and tendency or effect of misleading or deceiving in any respect; or

(2) Guarantees which are so used, or are of such form, text, or character, as to import, imply, or represent that the guarantee is broader than is in fact true;

or

(3) Guarantees in which any condition, qualification, or contingency applied by the guarantor thereto is not fully and nondeceptively stated therein, or is stated in such manner or form as to be deceptively minimized, obscured, or concealed, wholly or in part; or

(4) Guarantees which are stated, phrased, or set forth in such manner

that although the statements contained therein are literally and technically true, the whole is misleading in that purchasers or users are not made sufficiently aware of certain contingencies or conditions applicable to such guarantee which materially lessen the value or protection thereof as a guarantee to purchasers or users; or

(5) Guarantees which purportedly extend for such an indefinite or unlimited period of time or for such long period of years as to have the capacity and tendency or effect of thereby misleading or deceiving purchasers or users into the belief that the product has or is definitely known to have a greater degree of serviceability or durability in actual use than is in fact true; or

(6) Guarantees which have the capacity and tendency or effect of otherwise misrepresenting the serviceability, durability, or lasting qualities of the product, such as, for example, a guarantee extending for a certain number of years or other long period of time when the ability of the product to last, endure, or remain serviceable for such period of time has not been established by actual experience or by competent and adequate tests definitely showing in either case that the product has such lasting qualities under the conditions encountered or to be encountered in the respective locality where the product is sold and used under the guarantee; or

(7) Purported guarantees in the form of documents, promises, representations, or other form which are represented or held out to be guarantees when such is not the fact, or when they involve any deceptive or misleading use of the word "Guarantee" or terms of similar import; or

(8) Guarantees issued, or directly or indirectly caused to be used, by any member of the industry when or under which the guarantor fails or refuses to scrupulously observe his obligation thereunder or fails or refuses to make good on claims coming reasonably within the terms of the guarantee; or

(9) Guarantees which in themselves or in the manner of their use are otherwise false, misleading, or deceptive.

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

Withholding from or inserting in an invoice or billing any statement or information by reason of which omission or insertion a false record is made, wholly or in part, of the transaction which such invoice or billing purports to represent, with the effect of thereby misleading or deceiving the purchasing or consuming public, is an unfair trade practice. § 199.14 Use of lottery schemes.

The offering or giving of prizes, premiums, or gifts in connection with the sale of industry products, or as an inducement thereto, by any method which involves lottery or scheme of chance, is an unfair trade practice.

§ 199.15 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 quality, grade, origin, use, construction, design, performance, properties, manufacture, or distribution of the products of competitors, or of their business methods, selling prices, values, credit terms, policies, or services, is an unfair trade practice.

§ 199.16 Procurement of competitors' 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 in such manner as to injure said competitor in his business or to suppress competition or unreasonably restrain trade.

§ 199.17 Unfair threats of infringement suits.

The circulation of threats of suits for infringement of patents or trade-marks among customers or prospective customers of competitors, not made in good faith but for the purpose or with the effect of thereby harassing or intimidating such customers or prospective customers or of unduly hampering, injuring, or prejudicing competitors in their business, is an unfair trade practice.

§ 199.18 Inducing breach of contract.

Inducing or attempting to induce the breach of existing lawful contracts between competitors and their customers or their suppliers by any false or deceptive means whatsoever, or interfering with or obstructing the performance of any such contractual duties or services by any such means, with the purpose and effect of unduly hampering, injuring, or prejudicing competitors in their business, is an unfair trade practice.

§ 199.19 Commercial bribery.

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

The practice of coercing the purchase of one or more products as a prerequisite to the purchase of one or more other products where the effect may be to substantially lessen competition, tend to

create a monopoly, or to unreasonably restrain trade, is an unfair trade practice. § 199.21 Selling below cost.

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 may be, to injure, suppress, or stifle competition or tend to create a monopoly in the production or sale of such products, is an unfair trade practice. 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.

§ 199.22

Prohibited discrimination.

(a) Prohibited discriminatory prices, or rebates, refunds, discounts, credits, etc., which effect unlawful price discrimination. In the marketing in commerce of products of the industry of like grade and quality for use, consumption, or resale within the jurisdiction of the United States, and subject to subparagraphs (1), (2), (3), and (4) of this paragraph, it is an unfair trade practice for any member of the industry engaged therein to discriminate in price between different purchasers 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 such industry member or with any person who knowingly receives the benefit of such discrimination or with their customers.

(1) The inhibitions against such discrimination in price shall be applicable irrespective of whether the discrimination in the price itself is effected in the form, or through the means, of rebates, refunds, discounts, credits, allowances, or other form of price differential.

(2) Nothing, however, contained in this paragraph shall prevent differentials which make only due allowance for differences in the cost of manufacture,

'As used throughout this section, the word "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."

sale, or delivery resulting from the differing methods or quantities in which the products are sold or delivered to said purchasers.

(3) Nor shall anything contained in this paragraph prevent persons engaged in selling products in commerce from selecting their own customers in bona fide transactions and not in restraint of trade.

(4) Nor shall anything contained in this paragraph prevent price changes from time to time where made in response to changing conditions affecting the market for or the marketability of the products 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 products concerned.

(b) Prohibited brokerage or commissions. In the selling of industry products in commerce, it is an unfair trade practice for any member of the industry engaged therein to pay or grant, or to receive or accept, any commission, brokerage, or other compensation, or any allowance or discount in lieu thereof, except for services rendered in connection with the sale or purchase of such products, either to the other party to such transaction or to an agent, representative, or other intermediary therein, where such agent, representative, or other 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.

(c) Prohibited advertising or promotional allowances, etc. In the selling of industry products in commerce by any member of the industry, and in the course thereof, it is an unfair trade practice for such member to pay or contract for the payment of anything of value to or for the benefit of his customer as compensation or in consideration for certain services or facilities furnished by or through such customer, unless such payment or consideration is available on proportionally equal terms to all other customers of such member competing in the distribution of such products.

(1) As used in this paragraph, the certain services or facilities referred to are such as are furnished by or through the customer in connection with the process

ing, handling, sale, or offering for sale, of such industry member's products.

(d) Prohibited discrimination in services or facilities. In the sale of industry products bought for resale, with or without processing, 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 by furnishing certain services or facilities upon terms not accorded to all competing purchasers on proportionally equal terms.

(1) Said services or facilities referred to in this paragraph are such as are connected with the processing, handling, sale, or offering for sale, of the products purchased, and the term "furnishing" as used in this paragraph shall be construed as including contracting to furnish, and contributing to the furnishing of, the services or facilities.

(e) Inducing or receiving an illegal discrimination in price. It is an unfair trade practice for any member of the industry, in the course of commerce in which he is engaged, knowingly to induce or receive a discrimination in price which is prohibited by the foregoing provisions of this section.

(f) Exemptions. The inhibitions of this section shall not 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.

NOTE: In complaint proceedings charging discrimination in price or services or facilities furnished, and upon proof having been made of such discrimination, the burden of rebutting the prima facie case thus made by showing justification shall be upon the person charged; 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. (See sec. 2 (b), Clayton Act.) § 199.23

Discriminatory returns.

It is an unfair trade practice for any member of the industry engaged in commerce to discriminate in favor of one customer-purchaser against another customer-purchaser of industry prod

See footnote to 199.22.

ucts, bought from such member of the industry for resale, by contracting to furnish, or furnishing in connection therewith, upon terms not accorded to all competing customer-purchasers on proportionally equal terms, the service or facility whereby such favored purchaser is accorded the privilege of returning industry products so purchased and receiving therefor credit or refund of purchase price: Provided however, That nothing in any of the sections in Group I shall prohibit or be used to prevent the return of merchandise by purchaser, for credit or refund of purchase price, when and because such merchandise has not been properly labeled by the seller in accordance with these rules, or has been otherwise falsely or deceptively labeled or represented, or when and because such merchandise is defective in material, workmanship, or in any other respect is contrary to war- 11 ranty or purchase contract.

§ 199.24 Aiding or abetting use of unfair trade practices.

It is an unfair trade practice for any person, firm, 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 these rules or any other unfair method of competition or unfair or deceptive act or practice.

§ 199.101

identity.

GROUP II

Disclosure of manufacturer's

In order to avoid and prevent deception as to the identity of manufacturers of canvas covers and to aid in fixing responsibility for misrepresentation and deceptive concealment of the true facts concerning such canvas covers, it is the judgment of the industry that every manufacturer should indelibly and legibly stamp or mark on the canvas covers made by it, or on a durable tag or label securely attached to such canvas covers, the name or mark of identification of such manufacturer.

§ 199.102 Return of merchandise.

The practice, by members of the industry, of selling merchandise and later permitting the purchaser to return it for credit or refund of purchase price, without just cause, creates waste and loss, increases the cost of doing business, operates both to the detriment of the industry and the public, and is condemned by the industry.