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 products of competitors or of the source or origin of raw materials or component parts used in their products, or the false disparagement of the nature or form of business conducted by competitors, their credit terms, values, policies, or services, or other false disparagement, is an unfair trade practice.

§ 226.7 Commercial bribery.

It is an unfair trade practice for any 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 or contracting to deal with competitors.

§ 226.8 Imitation or simulation of trademarks, trade names, etc.

The imitation or simulation of the trade-marks, trade names, brands, or labels of competitors with the capacity and tendency or effect of misleading or deceiving purchasers, prospective purchasers, or the consuming public, is an unfair trade practice.

§ 226.9 Fictitious prices, price lists, etc. (a) The publishing or circulating by any member of the industry of false or misleading price quotations, price lists, terms or conditions of sale, or reports as to production or sales, with 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

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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 material 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.

§ 226.10 Combination or coercion to fix prices, suppress competition, or restrain trade.

It is an unfair trade practice for a member of the industry, or any other person:

(a) To use, directly or indirectly, any form of threat, intimidation, or coercion against any member of the industry or other person to unlawfully fix, maintain, or enhance prices, suppress competition, or restrain trade; or

(b) To enter into or take part in, directly or indirectly, any agreement, understanding, combination, conspiracy, or concerted action with one or more members of the industry, or with one or more other persons, to unlawfully fix, maintain, or enhance prices, suppress competition, or restrain trade. § 226.11

Prohibited discrimination.

(a) Prohibited discriminatory prices, or rebates, refunds, discounts, credits, etc., which effect unlawful price discrimination. In the marketing in commerce1

1 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

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 subparagraph (1), (i), (ii) and (iii) 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, or rebates, refunds, discounts, credits, allowances, or other form of price differential.

(i) Nothing, however, 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 the products are sold or delivered to said purchasers.

(ii) 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.

(iii) Nor shall anything contained in this paragraph prevent price changes from time to time where made in response to changing conditions affecting either (a) the market for the products concerned, or (b) the marketability of the products, 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 prod

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."

ucts 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 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 processing, 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 to discriminate in favor of one purchaser against another purchaser by furnishing certain services or facilities upon terms not accorded to all purchasers on proportionately 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 provisions in 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. § 226.12 Aiding or abetting use of unfair trade practices.

It is an unfair trade practice for any person to aid, abet, coerce, or induce another, directly or indirectly, to use or promote the use of any unfair trade practice specified in § 226.1 to § 226.17, inclusive.

§ 226.13 Enticing away employees of competitors.

It is an unfair trade practice for any member of the industry willfully to entice away employees of competitors with the purpose and effect of thereby unduly hampering or injuring competitors in their business and destroying or substantially lessening competition.

NOTE: Nothing in this section shall be construed as prohibiting employees or agents from seeking or obtaining 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.

§ 226.14 Marketing of products through lottery or game of chance.

(a) It is an unfair trade practice for any member of the industry to sell or promote the sale of any industry product by means of a game of chance, gift enterprise, or lottery scheme.

(b) The inhibitions of this section shall be understood as extending to the marketing of an industry product which is specially packaged or assembled so as to facilitate its resale or distribution by a customer of an industry member to the public by means of a game of chance or lottery scheme, and to the marketing or supplying of any lottery device by an industry member to his customer either separately or in conjunction with an industry product.

§ 226.15 False use of the terms "Iridium Tipped" and "Osmiridium Tipped." (a) It is an unfair trade practice to use the term "Iridium Tipped" as descriptive of a pen point when such

point has not in fact been tipped with iridium, such iridium being either in its pure state or in an alloy in which iridium is present in not less than 950 parts per 1,000 by weight.

(b) It is an unfair trade practice to use the term "Osmiridium Tipped" as descriptive of a pen point when such point has not in fact been tipped with osmium and iridium alloy, which alloy is either the natural or man-made alloy consisting of not less than 950 parts per 1,000 by weight of platinum group metals with osmium and iridium each present in substantial proportions and the two combined forming the predominating part of the alloy.

(c) Nothing in this section shall be construed as prohibiting use of the word "osmium" or "iridium" as descriptive of metal contained in an alloy provided the metal so named is present in the alloy in substantial proportions and either the respective percentage thereof is shown or the other metals contained in such alloy are also stated in such manner as to involve no deception in respect to the alloy or metal.

§ 226.16 Deception as to gold or purported gold content.

(a) Misrepresentation and deceptive concealment. (1) It is an unfair trade practice to cause any fountain pens or mechanical pencils to be marketed under circumstances or condition which have the capacity and tendency or effect, directly or indirectly, of misleading or deceiving the purchasing or consuming public in respect to the gold or purported gold content of such products or any parts thereof; the karat fineness of any gold alloy therein; the thickness, quantity, or character of the coating or plating of gold or gold alloy used thereon; or in any respect as to the true metal or material content of any parts of such products which are manufactured, coated, plated, dyed, or finished in simulation of gold or gold alloy.

(2) Such inhibition in subparagraph (1) of this paragraph shall apply to all forms and types of misrepresentation, misbranding, and deceptive concealment or nondisclosure which have the capacity and tendency or effect of misleading or deceiving the purchasing or consuming public in any of the respects mentioned.

(b) Use of the word "Gold" or its abbreviation. Use of the word “Gold,” or abbreviation of such word, as descriptive of fountain pens or mechanical

pencils, or parts thereof, under circumstances or conditions which have the capacity and tendency or effect of misleading or deceiving the purchasing or consuming public, is an unfair trade practice. Under this paragraph the word "Gold," or abbreviation thereof, should not be used as descriptive of any such product or part:

(1) Unless such part is composed throughout of gold of 24 karat fineness;

or

(2) Unless the part is composed throughout of gold alloy of not less than 10 karat fineness and the karat fineness thereof is shown in immediate conjunction with the word "Gold," as for example, "14K Gold;" or

(3) Unless the part is mechanically plated with gold, or gold alloy of not less than 10 karat fineness, and the fact that the part is plated and the proportional weight and karat fineness of the plate are shown in a clear and nondeceptive manner in immediate conjunction with such word "Gold" or its abbreviation, set forth in conformity with the provisions of Commercial Standard CS47-34 relative to the marking of gold filled and rolled gold plate articles other than watch cases, as for example, "1/20 14K Gold Filled," "1/20 14K G. F.," or "1/40 14K Rolled Gold Plate," or "1/40 14K R. G. P.;" or

(4) Unless where the part has a covering of gold or of gold alloy of not less than 10 karat fineness which has been applied by an electrolytic process or method and is of a minimum thickness throughout equivalent to seven-millionth (0.000007) of an inch thickness of pure gold and the fact that the part is electroplated is shown in a clear and nondeceptive manner in immediate conjunction with the word "Gold," or its abbreviation, as for example "Gold Electroplated." (Nothing in this section shall be construed as prohibiting use of the word "Gold" in the designation "Gold Washed" or "Gold Flashed" as descriptive of the products or parts which are electroplated with gold to a lesser thickness than the above-mentioned sevenmillionth (0.000007) of an inch).

(c) Deceptive use of other terms implying gold content. It is an unfair trade practice to use the terms "Duragold," "Dirigold," "Noble gold," "Goldine," "Gold-Appearing," "Gold Effect," "Miragold," or any term or designation of similar import, or any phrase or representation indicating the substance,

charm, quality, or beauty of gold or natural gold, as descriptive of any part or parts of a fountain pen or mechanical pencil, when the part or parts so described are not composed throughout of pure gold or of an alloy of gold of at least 10 karat fineness; or when, although composed of such an alloy, the karat fineness thereof is not clearly and conspicuously shown in immediate conjunction with the terms or representations, or when such terms or representations are otherwise used in a manner or form having the capacity and tendency or effect of deceiving purchasers or prospective purchasers.

§ 226.17 Push money.

It is an unfair trade practice for any industry member to pay or contract to pay anything of value to a salesperson employed by a customer of the industry member, as compensation for, or as an inducement to obtain, special or greater effort or service on the part of the salesperson in promoting the resale of products supplied by the industry member to the customer:

(a) When the agreement or understanding under which the payment or payments are made or are to be made is without the knowledge and consent of the salesperson's employer; or

(b) When the terms and conditions of the agreement or understanding are such that any benefit to the salesperson or customer is dependent on lottery or chance; or

(c) When any provision of the agreement or understanding requires or contemplates practices or a course of conduct unduly and intentionally hampering sales of products of competitors of an industry member; or

(d) When, because of the terms and conditions of the agreement or understanding, including its duration, or the attendant circumstances, the effect may be to substantially lessen competition or tend to create a monopoly; or

(e) When similar payments are not accorded to salespersons of competing customers on proportionally equal terms in compliance with section 2 (d) and (e) of the Clayton Act.

NOTE: Payments made by an industry member to a salesperson of a customer under any agreement or understanding that all or any part of such payments is to be transferred by the salesperson to the customer, or is to result in a corresponding decrease in the salesperson's salary, are not to be considered within the purview of this section,

(a) Members of the industry are the persons, firms, corporations (including manufacturers' sales branches and sales offices), and other organizations engaged in the wholesale distribution and sale of industy products to dealers and distributors for resale, or to other purchasers such as, but not limited to, plumbing, heating, sheet-metal, and piping contractors, commercial and industrial users, governmental bodies, and institutions purchasing for business uses.

(b) The term "industry products" includes plumbing and heating equipment and supplies; also, such air-conditioning equipment and supplies as are marketed for permanent installation.

GROUP I

§ 227.1 Misrepresentation and deception in general.

It is an unfair trade practice, in connection with the distribution, sale, or offering for sale of industry products, 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, or to fail to disclose any material fact, when such representation or failure to disclose has the capacity and tendency or effect of misleading or deceiving purchasers or prospective purchasers with respect to the type, quality, grade, substance, size, weight, capacity, quantity, manufacture, or distribution of any product of the industry, or in any other material respect.

It is an unfair trade practice for any member of the industry, in the course of or in connection with the distribution of industry products, to misrepresent, directly or indirectly, by means of advertising, letterheads, telephone listings, oral statements, or otherwise, the character, extent, or type of his business.

§ 227.3 Deception as to nature of sales transactions.

When an industry member sells industry products at both wholesale and at retail in the same establishment, it is an unfair trade practice for such industry member to sell any such products under circumstances having the capacity and tendency or effect of causing purchasers to believe that they are buying at wholesale prices when such is not the case.

§ 227.4 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.

NOTE: Illustrative of the type of misrepresentation inhibited by this section is the practice of an industry member advertising or otherwise claiming that a product has been approved by a governmental authority or private agency, such as the Underwriters' Laboratories or the American Gas Association (AGA), with respect to meeting certain specifications or standards when in fact the product has not been so approved.

§ 227.5 Substitution of products.

It is an unfair trade practice for a member of the industry to make an un