nopoly 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;

(2) That nothing contained in this paragraph 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: This proviso shall not be construed as permitting an industry member to allow a price differential to a customer, whether in the form of a quantity price discount, rebate, or other form, through billing as a single order an aggregate of the amount of two or more orders of such customer on which the industry member makes separate deliveries, when the price differential allowed is not based on a net savings in cost of manufacture, sale, and delivery of the products to said customer resulting from the different method and quantity in which the products are sold and delivered to said customer, or is more than due allowance for such net savings; nor is this proviso to be construed as permitting an industry member to allow a price differential to a customer, whether in the form of a quantity price discount, rebate, or other form, when, pursuant to agreement or understanding by the industry member and the customer, delivery of the products purchased is to be delayed or made in installments so as to involve storage cost to the industry member, and when as a result of such cost or otherwise, the price differential allowed is not based on a net savings in cost of manufacture, sale, and delivery of the products to said customer resulting from the different method and quantity in which the products are sold and delivered to said customer, or is more than due allowance for such net savings.

(3) That nothing contained in this paragraph 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 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.

(b) Prohibited brokerage and commissions. It is an unfair trade practice for any member of the industry engaged in commerce, in the course of such commerce, to pay or grant, or to receive or accept, anything of value as a 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 goods, wares, or merchandise, either to the other party to such transaction or to an agent, representative, or other intermediary therein where such 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. It is an unfair trade practice for any member of the industry engaged in commerce to pay or contract for the payment of advertising or promotional allowances or any other thing of value to or for the benefit of a customer of such member in the course of such commerce as compensation or in consideration for any services or facilities 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 available on proportionally equal terms to all other customers competing in the distribution of such products or commodities.

(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, including storage, 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.

(e) Inducing or receiving an illegal discrimination in price. It is an unfair trade practice for any member of the in

dustry engaged in commerce, in the course of such commerce, knowingly to induce or receive a discrimination in price which is prohibited by the provisions of paragraphs (a) to (d) 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 contained in this section 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 section 2-b, Clayton Act.

§ 213.5

Substitution of products.

The practice of shipping or delivering 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 the consent of the purchasers to such substitutions, or falsely representing the reason for making a substitution, with the capacity and tendency or effect of misleading or deceiving the purchasing or consuming public, is an unfair trade practice.

NOTE: Nothing in this section shall be construed as preventing the application of such tolerances as are agreed upon between buyer and seller or are otherwise deemed reasonable and proper and where no misrepresentation or deception of the purchasing public is practiced or promoted in relation to the product or its deviation from samples or specifications.

§ 213.6 False and misleading price quotations, etc.

The publishing or circulating to purchasers or prospective purchasers by any member of the industry of false or misleading price quotations, price lists, or terms or conditions of sale, with the capacity and tendency or effect of thereby misleading or deceiving purchasers or

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§ 213.8

Inducing breach of contract.

(a) Knowingly inducing or attempting to induce the breach of existing lawful contracts between competitors and their customers or 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 present or potential 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 the customers of either of them, or from customers of any other industry member.

sentatives 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.

§ 213.11 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.

2 The inhibitions of this section are subject to Public Law 542, approved July 14, 1952, 66 Stat. 632 (the McGuire Act) which provides that with respect to a commodity which bears, or the label or container of which bears, the trade-mark, 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.

dustry, or with any other person or persons, to fix or maintain the price of any goods or 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 § 213.13 False invoicing.

(a) Withholding from or inserting in invoices any statements or information by reason of which omission or insertion a false or misleading record is made, wholly or in part, of the transactions represented on the face of such invoices, with the capacity and tendency or effect of thereby misleading or deceiving purchasers, prospective purchasers, or the consuming public, is an unfair trade practice.

(b) The practice of delivering products in a number less than called for on the delivery record or invoice (so-called "short count"), with the capacity and tendency or effect of thereby misleading or deceiving the purchasing or consuming public, is an unfair trade practice. [24 F.R. 4327, May 29, 1959]

§ 213.14 Selling below cost.

(a) The practice of selling products of the industry at a price less than the cost thereof to the seller, with the intent or purpose, 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.

(b) 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. All elements recognized by good accounting practice as proper elements of such cost shall be included in determining cost under this section. The costs referred to in this section are actual costs of the respective seller and not some other figure or average costs in the industry determined by an industry cost survey or otherwise.

(c) 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 may be to injure, destroy, or prevent competition, or tend to create a monopoly.

§ 213.15 Enticing away employees of competitors.

Knowingly enticing away employees or sales representatives of competitors under any circumstance 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 competitors in good faith and not for the purpose of injuring, destroying, or preventing competition.

§ 213.16 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 this part.

COMMITTTEE ON TRADE PRACTICES § 213.201 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]

PART 214 HEARING AID INDUSTRY

Sec.

214.0

214.1

214.2

214.3

214.4

214.5

214.6

214.7

241.8

214.9

salesmen or agents.

Misrepresentation as to character of business, etc.

Deception as to benefit of services or advice of a physician, etc.

Deception as to visibility, construction, etc.

Deception as to availability of suitable batteries.

Deception respecting novelty of products.

214.10 Misrepresenting a commercial hearing aid establishment.

214.11 Deceptive advertising of hearing aid parts, accessories or components. 214.12 Misrepresenting installment sales contracts.

214.13 Deceptive endorsements, testimonials, etc.

214.14 Deception as to used or rebuilt products.

214.15 Deception respecting tests, acceptance, or approval.

214.16 Defamation of competitors or false disparagement of their products. 214.17 Deceptive use or imitation or simulation of trade or corporate names. trademarks, etc.

214.18 Procurement of competitor's confidential information.

214.19

214.20

214.21

214.22

Unfair threats of infringement suits.
Inducing breach of contract.

Commercial bribery.

Prohibited forms of trade restraints

(unlawful price fixing, etc.). 214.23 Arrangements to exclude sale of competitors' products.

214.24 Aiding or abetting use of unfair trade practices.

AUTHORITY: The provisions of this Part 214 issued under secs. 6, 5, 38 Stat. 721, 719; 15 U.S.C. 46, 45.

SOURCE: The provisions of this part 214 appear at 30 FR. 9056, July 20, 1965, unless otherwise noted.

(b) "Industry members" are persons, firms, corporations, and organizations engaged in the manufacture, distribution, or sale of any industry products as defined above. § 214.1

Misrepresentation in general.

It is an unfair trade practice for any industry member to use, or cause or promote the use of, any trade promotional literature, advertising matter, testimonial, guarantee, warranty, mark, insignia, depiction, brand, designation, or representation, however disseminated or published, which has the capacity and tendency or effect of misleading or deceiving purchasers or prospective purchasers, or of aiding, abetting, or causing sales agents, dealers, distributors, or other marketers to mislead or deceive the purchasing or consuming public.

(a) With respect to the grade, quality, quantity, origin, novelty, price, cost, terms of sale, use, construction, size, composition, dimensions, type, design, development, visibility, durability, performance, fit, appearance, efficacy, benefits, cost of operation, resistance to climatic conditions, or physiological benefits of any industry product, or the psychological well-being induced by an industry product; or

(b) With respect to any service or adjustment offered, promised, or to be supplied to purchasers of any industry product; or

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

(d) With respect to the scientific or technical knowledge, training, experience, or other qualifications of an industry member, or of any of his employees, relating to the selection, fitting, adjustment, maintenance, or repair of industry products; or

(e) In any other material respect.

NOTE: This section shall be construed as prohibiting the false advertisement of hearing aids or devices as the term "false advertisement" is defined in section 15 of the Federal Trade Commission Act.

[Rule 11

§ 214.2 Guarantees, warranties, etc.

(a) It is an unfair trade practice to represent in advertising or otherwise that a product is "guaranteed" without clear and conspicuous disclosure of:

(1) The nature and extent of the guarantee, and

(2) Any material conditions or limitations in the guarantee which are imposed by the guarantor, and

(3) The manner in which the guarantor will perform thereunder, and

(4) The identity of the guarantor. (The necessary disclosure requires that any guarantee made by the dealer or vendor, which is not backed up by the manufacturer, must make it clear that the guarantee is offered by the dealer or vendor only.)

(b) Representations that a product is "guaranteed for life" or has a "lifetime guarantee," in addition to meeting the above requirements, shall contain a conspicuous disclosure of the meaning of "life" or "lifetime" as used (whether that of the purchaser, the product or otherwise).

(c) Guarantees shall not be used which under normal conditions are impractical of fulfillment or which are for such a period of time or are otherwise of such nature as to have the capacity and tendency of misleading purchasers or prospective purchasers into the belief that the product so guaranteed has a greater degree of serviceability, durability, or performance capability in actual use than is true in fact.

(d) This section has application 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." [Rule 2]

§ 214.3 Bait advertising.

It is an unfair trade practice for an industry member to offer for sale any industry product when the cffer is not a bona fide effort to sell the product so offered as advertised and at the advertised price.

NOTE: In determining whether there has been a violation of this section, consideration will be given to acts or practices indicating that the offer was not made in good faith for the purpose of selling the advertised product, but was made for the purpose of contacting prospective purchasers and selling them a product or products other than the product offered. Among acts or practices which will be considered in making that determination are the following:

1. The creation, through the initial offer or advertisement, of a false impression of the product offered in any material respect;

2. The refusal to show, demonstrate, or sell the product offered in accordance with the terms of the offer;

3. The disparagement, by acts or words, of the product offered, or the disparagement