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) Purchases by schools, colleges, universities, public libraries, churches, hospitals, and charitable institutions not operated for profit. The foregoing provisions of this section relate to practices within the purview of the Robinson-Patman Antidiscrimination Act, which act and the application thereunder of this section are subject to the limitations expressed in the amendment to such Robinson-Patman Antidiscrimination Act, which amendment was approved May 26, 1938, and reads as follows:

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That nothing in the Act approved June 19, 1936 (Public, Numbered 692, Seventy-fourth Congress, second session), known as the Robinson-Patman Antidiscrimination Act, shall apply to pur chases of their supplies for their own use by schools, colleges, universities, public libraries, churches, hospitals, and charitable institutions not operated for profit.

(Sec. 2, 38 Stat. 730, as amended, secs. 2, 3, 4, 49 Stat. 1527, 1528, ch. 283, 52 Stat. 446; 15 U. S. C. 13, 13a, 13b, 13c, 21a)

§ 161.11 Imitation or simulation of trade-marks, 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 the purchasing or consuming public, is an unfair trade practice.

§ 161.12 Misrepresentation as to earnings of sales representatives.

It is an unfair trade practice for any member of the industry to make or publish, or cause to be made or published, directly or indirectly, any false, misleading, or deceptive statement or representation, by way of advertisement or otherwise, concerning:

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

(b) The chances or opportunities for such remuneration.

§ 161.13 Enticing away employees of competitors.

Willfully enticing away the employees of competitors with the purpose and ef

fect of unduly injuring or hampering competitors in their business and destroying or substantially lessening competition is an unfair trade practice.

§ 161.14 Passing off substandard or defective products as and for regular or first quality merchandise.

(a) It is an unfair trade practice to advertise, offer for sale, sell, or cause to be sold razors or razor blades which are "seconds", or which are substandard, defective, or of low quality as and for razors or blades of higher grade or quality or as and for razors or blades which are not substandard, defective, or "seconds."

(b) If and when razors or razor blades which are "seconds," substandard, or defective are placed on the market, they should be marked as such clearly and conspicuously on the outside of the sealed or closed wrapper in which they are sold to the purchasing or consuming public; and it is an unfair trade practice to conceal the fact that such razors or razor blades are "seconds", substandard, or defective, such concealment having the capacity and tendency or effect of misleading or deceiving the purchasing or consuming public.

NOTE 1. As used in this section the term "substandard" as applied to razor blades shall embrace razor blades which are "seconds" or which are defective for any reason, including steel razor blades which are defective and inferior by reason of:

(a) The steel of which the blade is manufactured not being of uniform well spheroidized cementite structure with carbide particles of uniform size and distribution; or not having proper carbon content (carbon content of not less than 1.15 percent or more than 1.35 percent is deemed generally desirable and proper); or

(b) The cutting edge or edges not having been properly hardened and tempered equal to a hardness of 90 to 92 on a Rockwell 15N Scale, Superficial Hardness Tester; or

(c) The flexible type blade not having been properly tempered so as to permit the blade to flex sufficiently without breaking in the razor for which it is intended or sold; or

(d) The blade not having been evenly or keenly sharpened; or

(e) The cutting edge or edges showing nicks with a dimension greater than .005 of an inch, or wire edges, when viewed microscopically at a magnification of 50 diameters;

(g) Not being free from rust, or not having been effectively protected against rust when placed on the market.

NOTE 2. As used in this rule the word "substandard" as applied to safety razors shall be construed to include the following:

Safety razors which are not of such construction and material as to assure an adequate and effective blade seating and blade exposure; or which are subject to warping to such an extent as to prevent an adequate and effective blade seating or blade exposure: or which have such rough edges, burrs, pin holes, or other imperfections or such flaws, defects, or susceptibility to rusting as to materially affect their usability adversely; or which are of such construction, material, or workmanship as not to permit of tight assembly without breaking or cracking; or which are "seconds" or not first quality products by reason of such defective or inferior material, construction, or workmanship.

§ 161.15

Razor blades for industrial use or for purposes other than human shaving.

To the end that confusion and deception may be avoided and prevented, razor blades placed on the market to be sold for industrial uses only or for uses other than human shaving shall be suitably marked to show such fact, as for example: "For Industrial Use Only." The selling of any such razor blades as or for razor blades manufactured or suitable for human shaving when such is not the fact, is an unfair trade practice.

§ 161.101

GROUP II

Repudiation of contracts.

Lawful contracts are business obligations which should be performed in letter and in spirit. The repudiation of contracts by sellers on a rising market or by buyers on a declining market is condemned by the industry.

§ 161.102 Arbitration.

The industry approves the practice of handling business disputes between members of the industry and their customers in a fair and reasonable manner, coupled with a spirit of moderation and good will, and every effort should be made by the disputants themselves to compose the differences. If unable to do so they should, if possible, submit these disputes to arbitration.

§ 161.103 Cost records.

It is the judgment of the industry that each member should independently keep proper and accurate records for determining his costs.

§ 161.104 Proper identification of origin of blades and suitable packaging.

In the interest of identification and the prevention of confusion and deception, all steel razor blades when placed on the market should be impressed or etched with the name or identifying trade-mark of the manufacturer or of the responsible distributor introducing such blade into the channels of trade. Each packet of razor blades should be marked to show the number of blades contained in the package. Each blade should also be suitably wrapped or packaged to afford security in handling and protection against damage or dulling contact with the cutting edge of the blade.

GROUP I § 162.1 Misrepresentation and misbranding.

It is an unfair trade practice to use, or cause or promote the use of, any advertising by radio, newspapers, magazines, or other media, or any trade promotional literature, label, brand, mark, imprint, designation, or representation, however, disseminated or published:

(a) Which has the capacity and tendency or effect of misleading or deceiving the purchasing or consuming public with respect to the lead hardness, brand, grade, origin, quality, quantity, durability, size, use, value, price, or terms of sale of any industry product, or with respect to the manufacture, distribution, or marketing of such product; or

(b) Which is false, misleading, or deceptive in any other respect.

§ 162.2 Deception as to origin of pencils made of fully fabricated imported lead or slats.

(a) In the sale or distribution in the domestic market of wood cased lead pencils assembled in the United States from fully fabricated imported lead or slats. (1) It is an unfair trade practice to conceal or fail to fully and nondeceptively disclose the foreign origin of such lead or slats or both, as the case may be, the concealment or nondisclosure having the capacity and tendency or effect of misleading or deceiving the purchasing or consuming public.

(2) The practice of imprinting the phrase "Made in U. S. A." upon such pencils or their containers, or the use thereof in advertisements or other representations pertaining to such pencils, is also an unfair trade practice when truthful disclosure is not clearly and conspicuously made, in immediate conjunction therewith, showing that such lead or slats or both, as the case may be, have been imported from or made in the country of their origin.

(b) Manner of disclosure. The following is prescribed as a proper manner of making said disclosure under this section of the foreign origin of such lead or slats or both, as the case may be:

(1) Unless the disclosure is made on the pencils themselves, the disclosure shall in all cases be made on the wrapper or immediate container of a dozen or smaller number of pencils, irrespective of whether or not the phrase "Made in U.S.A." is used; and

"Lead and "Lead im

," "Slats im" "Lead and " (in

slats imported from serting the applicable country of origin in such blanks).

(c) All the provisions of this section respecting the phrase "Made in U. S. A.” shall be equally applicable to expressions or representations of similar import or meaning such as, but not limited to, "U. S. A.," "Made in America," "American Made," "U. S. Product," etc.

(d) This section shall not be construed as prohibiting the imprinting upon such pencils, or the use in advertising or elsewhere, of the name of the city or State, or both, which constitute the address of the person or concern manufacturing or marketing such pencils: Provided, however, all other provisions of this section are complied with and no deception is involved.

(e) Nothing in this section shall be deemed to relieve anyone of the necessity of complying with the requirements of the customs law or regulations, or other applicable provisions of law or regulations, relating to the marking of imported articles.

§ 162.3 Misuse of word "free,” etc.

It is an unfair trade practice to use the term "free," or any other term of similar import or meaning, to describe, designate, or refer to any industry product which is not given to the recipient thereof without cost and unconditionally.

§ 162.4 Defamation of competitors or disparagement of their products.

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. § 162.5

Procurement of competitor's 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.

§ 162.6 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.

§ 162.7

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.

§ 162.8 Selling below cost.

The practice of selling industry products below the seller's cost, when pursued with wrongful intent of thereby injuring a competitor and where the effect of such practice is to unreasonably restrain trade, tend to create a monopoly, or substantially lessen competition, is an unfair trade practice.

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 as a monopolistic practice with the wrongful intent referred to and coupled with the effect of unreasonably restraining trade, tending to create a monopoly, or substantially lessening competition.

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.

§ 162.9 Use of "loss leaders."

The practice of selling any product of the industry below the seller's cost as a "loss leader" to induce the purchase of any other product of the industry, the sale of the latter being used to recoup the loss sustained on the "loss leader" product so sold, with the capacity and tendency or effect of misleading or deceiving purchasers, prospective purchasers, or the consuming public, is an unfair trade practice.

§ 162.10

Coercing purchase of one product as a prerequisite to the 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 or tend to create a monopoly or to unreasonably restrain trade, is an unfair trade practice. § 162.11 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 substitution, or with the capacity and tendency or effect of misleading or deceiving the purchasing or consuming public, is an unfair trade practice.

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.

§ 162.13 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 (whether in the form of so-called free goods or otherwise), 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 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 section 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;

(3) That nothing contained in this section 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 section shall prevent price changes from time to time where made, in response to changing conditions affecting either (i) the market for the goods concerned, or

(ii) the marketability of the goods, 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 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 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 purchasers on proportionally equal terms.

(e) Inducing or receiving an illegal discrimination in price. It is an unfair