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.

§ 224.14 Unfair threats of infringement suits.

The circulation of threats of suit 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. § 224.15 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 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.

(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.

(c) The costs referred to in this section are actual costs of the individual respective seller and not some other figure or average costs in the industry determined by an industry cost survey or otherwise.

(d) This section is not to be construed as prohibiting all sales below cost, but only such sales below the seller's cost in interstate commerce as are resorted to and pursued with the wrongful purpose or intent referred to in the first paragraph of this section and where the effect thereof may be to injure, destroy, or prevent competition, or tend to create a monopoly.

ful 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.

§ 224.17 Prohibited forms of trade restraints (unlawful price fixing, etc.)1

It is an unfair trade practice for any member of the industry, either directly 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 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

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.

such planned common course of action, or to become a party to any such understanding, agreement, combination, or conspiracy. § 224.18

Prohibited discrimination.'

(a) Prohibited discriminatory prices, or rebates, refunds, discounts, credits, etc., which effect unlawful price discrimination. 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 the 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

"As used in 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."

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 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 industry engaged in commerce, in the course of such commerce, 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 18 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

225.1

225.2

225.3

225.4

225.5

225.6

225.7

225.8

225.9

225.10

225.11 225.12

225.13

Definitions.

GROUP I

Misrepresentation and deception in general.

Misleading illustrations.

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

Deception as to origin.

Misrepresentation as to character of business.

Misuse of terms "close-outs," "discontinued lines," "special bargains," etc.

Fictitious prices, price lists, etc.
False invoicing.

Consignment distribution.

Guarantees, warranties, etc.
Use of lottery schemes.

Defamation of competitors or false disparagement of their products. Unfair threats of infringement suits.

Commercial bribery.

225.14

225.15

Prohibited forms of trade restraints

§ 225.1 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 matter, 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 with respect to the type, kind, grade, quality, size, finish, composition or components, durability, serviceability, smoking qualities, filtering effects, importation or origin, production, manufacture, distribution, or customary or regular price, of any industry product, or which has the capacity and tendency or effect of misleading or deceiving the purchasing or consuming public in any other material respect.

§ 225.2

Misleading illustrations.

It is an unfair trade practice, in connection with the offering for sale, sale, or distribution of any industry product, to use, as part of any packaging material, label, advertisement, or other sales promotion literature, any picture, illustration, map, diagram, or other depiction which, either alone or in conjunction with the words or phrases accompanying such depiction, has the capacity and tendency or effect of misleading or deceiving purchasers or prospective purchasers concerning the type, kind, grade, quality, size, finish, composition or components, durability, serviceability, smoking qualities, filtering effects, importation or origin, production, manufacture, distribution, or customary or regular price, of any industry product, or which has the capacity and tendency or effect of misleading or

deceiving the purchasing or consuming public in any other material respect. § 225.3 Deceptive use or 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 identity of the importer, manufacturer, distributor, or seller of any industry product or the source or origin of any industry product or of any material used therein. § 225.4 Deception as to origin.

(a) It is an unfair trade practice to represent that industry products manufactured or produced in a foreign country were manufactured or produced in the United States.

(b) It is an unfair trade practice to offer for sale, sell, or distribute industry products manufactured or produced in a foreign country without affirmatively and clearly disclosing thereon, or in immediate connection therewith, by a truthful and nondeceptive mark, stamp, brand, or label, the country of origin of such products.

NOTE: Firms selling imported industry products by mail order or other means whereby the purchaser has no opportunity of inspecting the goods before buying shall also disclose the country of origin of sald products in all catalogs or sales promotional literature directed to prospective purchasers and describing the products in question.

NOTE: In a formal proceeding charging violation of the requirements of this section, a cease and desist order will be predicated upon a finding from evidence in the record that the failure to disclose foreign origin as required by this section either has resulted in deception of buyers, or has the capacity and tendency of deceiving buyers or prospective buyers.

(c) It is an unfair trade practice to misrepresent the place of origin, production, or manufacture of industry products or their components.

(d) (1) It is an unfair trade practice to use the term "imported briar pipe" or "imported briar pipes" to designate, describe, or refer to industry products manufactured in the United States.

(2) It is likewise an unfair trade practice to use, in designating, describing, or referring to industry products manufactured in the United States, any other words, phrases, or representations (whether by use of distinctly foreign names or designations or other means) in a manner that imports or implies that the products were manufactured in a foreign country.

§ 225.5 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, in the stamping, labeling, or branding of industry products, or otherwise, that he is a producer, manufacturer, or importer of industry products, or that he owns or controls a factory making such products, or has connections abroad through which imports are secured, or maintains offices abroad, when such is not the fact, or in any other manner to misrepresent the character, extent, volume, or type of his business.

§ 225.6 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, industry products as "close-outs," "discontinued lines," or "special bargains" by use of such terms, or by words or representations of similar import, when such is 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.

§ 225.7 Fictitious prices, price lists, etc.

(a) The publishing or circulating by any member of the industry of false price quotations, price lists, terms or conditions of sale, or reports as to production or sales, when having the

capacity and tendency or effect of misleading or deceiving purchasers, prospective purchasers, or the consuming public, or the advertising, sale, or offering for sale of industry products at prices purporting to be reduced from what are in fact fictitious prices, or at purported reductions in prices when such purported reductions are in fact fictitious or are otherwise misleading or deceptive, is an unfair trade practice.

(b) It is an unfair trade practice, in connection with the sale, offering for sale, or distribution of industry products at prices that are in any manner represented as reduced from or lower than current, former, or regular prices, to use, or to furnish or supply for such use, price tags, labels, or advertising materials that set forth a false, fictitious, or exaggerated current, former, or regular price, or a false, fictitious, or exaggerated manufacturer's or distributor's suggested retail selling price, or that contain what purport to be bona fide price quotations which are in fact higher than the prices at which such products are regularly and customarily sold in bona fide retail transactions. It is likewise an unfair trade practice to distribute, sell, or offer for sale to the consuming public in such manner products bearing such false, fictitious, or exaggerated price tags or labels. § 225.8

False invoicing.

Withholding from or inserting in invoices any statements or information by reason of which omission or insertion a false record is made, wholly or in part, of the transactions represented on the face of such invoices, when having the capacity and tendency or effect of thereby misleading or deceiving purchasers, prospective purchasers, or the consuming public, is an unfair trade practice. [24 F.R. 4327, May 29, 1959]

§ 225.9 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 of the purchaser.

(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 unduly restricting competitors' use of said trade outlets in