competitor's container with the effect of prejudicing such competitor in his business, is an unfair trade practice.

NOTE: Owing to the responsibility of the owners of containers involving compliance with Interstate Commerce Commission Specifications or requiring periodic testing of such containers, the industry recommends that containers which bear a competitor's identification marks should not be used without owner's permission evidenced by bill of sale, lease, or other instrument in writing, or duly recorded transfer of ownership on the records of I.C.C.

§ 164.5 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, quality, quantity, origin, efficacy, price, ingredients, safety, preparation, 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. § 164.6

Imitation of trade-marks, trade names, etc.

The practice of imitating or causing to be imitated, or directly or indirectly promoting the limitation of, the trademarks, trade names, or other exclusively owned symbols or marks of identification of competitors, having the capacity and tendency or effect of misleading or deceiving purchasers or prospective purchasers, is an unfair trade practice. § 164.7 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 the competitors.

§ 164.8 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. § 164.9 False invoicing.

It is an unfair trade practice to withhold from or insert 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 fact of such invoices, with the effect of thereby misleading or deceiving purchasers or prospective purchasers.

§ 164.10 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.

§ 164.11 Consignment distribution.

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 getting their products to consumers through regular channels of distribution, thereby injuring, destroying, or preventing competition or tending to create a monopoly or to unreasonably restrain trade. ing in this section shall be construed as restricting or preventing consignment shipping or marketing of industry products in good faith where suppression of competition, restraint of trade, or undue interference with competitors' use of the usual channels of distribution, is not effected.

Noth

The practice of selling industry products below the seller's cost with the intent and with the effect of injuring a competitor and where the effect may be substantially to lessen competition or tend to create a monopoly or unreasonably restrain trade is an unfair trade practice. All elements recognized by good accounting practice as proper elements of such cost shall be included in determining cost under this section. The costs, however, which are referred to in the 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. § 164.13 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 person, firm, partnership, corporation, or association,

(a) To use, directly or indirectly, any form of threat, intimidation, or coercion against any member of the industry 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 concert of action with one or more members of the industry, or with one or more persons, firms, partnerships, corporations, or associations, to unlawfully fix, maintain, or enhance prices, suppress competition, or restrain trade. § 164.14

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, so-called "heel" refund, or other refund, discount, credit, or other form of price differential, where such rebate, so-called "heel" refund, or other 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 commoditiy 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 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 RobinsonPatman Antidiscrimination Act, shall 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.

(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)

§ 164.15 Discrimination as to return of cylinders or containers, and discrimination in refunding of deposits on cylinders or containers.

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 products, bought from such member of the industry for resale, by contracting to furnish or furnishing in connection therewith:

(a) The service or facility whereby such favored purchaser is accorded the right or privilege of retaining refrigerant cylinders or containers on more favorable conditions, including longer periods of time, than those accorded other customer-purchasers and upon terms not accorded to all customer-purchasers on proportionally equal terms; or

(b) The service or facility whereby such favored purchaser is accorded the right or privilege of receiving the return of deposits or allowances upon terms not accorded to all customer-purchasers on proportionally equal terms.

(a) Recognizing that the rate of cylinder return affects the cost of marketing refrigerants, and desiring to give the best possible service at the lowest possible cost to the purchaser, the industry seeks to encourage prompt return of empty cylinders.

(b) Cylinders that do not circulate freely and are thus used for storage by purchasers of the refrigerant greatly increase the cost and difficulty of doing business. The industry recommends that such cylinders, if not returned after a reasonable period of time, may properly be considered the property of the purchasers of the refrigerant and believes a delay of more than 2 years in making such return an unreasonable length of time for this purpose.

§ 164.102 Unwarranted 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 to the detriment of both the industry and the public, and is condemned by the industry, subject, however, to the requirements and limitations set forth in the provisions of §§ 164.14 and 164.15 of Group I, herein, and subject also to the general limitation that members of the industry shall not engage in any combination or conspiracy in restraint of trade, or use any other illegal methods in the regulation, control, or prevention of the return of merchandise.

§ 164.103 Differentiating between wholesale and retail transactions. Where products of the industry are sold at wholesale and retail in the same establishment, the failure on the part of such concern correctly to differentiate between or identify the two types of transactions, where the result may be to create confusion and deception as to the character of the transaction in the minds of purchasers or prospective purchasers, is condemned by the industry.

§ 164.104 Dissemination of credit information.

The industry records its approval of the distribution among members of the industry of information converting delinquent and slow credit accounts insofar as such may be lawfully done.

Cooperation with doctors. Importance of personal fitting. 165.104 Minimizing importance of "fit" by exploitation of less important features.

165.105 Sharing of improved techniques.

AUTHORITY: The provisions of this Part 165 issued under secs. 6(g), 5, 87 Stat. 722, 719; 15 U.S.C. 46 (g), 45, unless otherwise noted.

SOURCE: The provisions of this Part 165 appear at 11 F.R. 4147, Apr. 16, 1946, unless otherwise noted.

GROUP I

§ 165.1 Deception (general).

(a) It is an unfair trade practice to sell, offer for sale, or distribute any industry product, or promote the sale or distribution thereof, by any method or under any circumstance or condition which has the capacity and tendency or effect of deceiving purchasers or prospective purchasers as to the construction, composition, design, model, origin, manufacture, value, quality, weight, absence of noise in operation, strength, durability, life expectancy, appearance, fit, comfort, alignment, utility, ease of operation, or safety to wearer, of such product, or in any other material respect; or to mislead purchasers or prospective purchasers with respect to the need for repair, maintenance, or replacement of parts, of such product

after its purchase and use, or with respect to any service offered concerning maintenance of product or training of purchaser in the use thereof.

(b) In this connection, under paragraph (a) of this section, it is an unfair trade practice to represent or infer, unless such be wholly true and nondeceptive, that the product:

(1) Will give use and satisfaction to wearer equivalent or nearly equivalent to that afforded by the human limb or other body member for which the product is proposed as a substitute; or that such product

(2) Has the appearance of, or cannot be detected from, the human limb or body member; or

(3) Is in compliance with any Government specifications or standard; or

(4) Has the latest improvements in construction composition, design, appearance, or utility; or

(5) Is immune from damage or impairment by water; or

(6) Has the approval of any doctor, hospital, or Government agency or official.

(c) The inhibitions of this section shall apply with respect to every species of advertisement or form of representation, whether in newspapers, periodical, telephone directory, sales catalog, sales promotional literature, on the radio, or otherwise, or whether by use of any word, design, sound, or combination thereof; and such inhibitions shall also apply with respect to labeling and to impressions created by reason of failure to reveal limitations or material facts.

It is an unfair trade practice for any member of the industry to fail to disclose to any purchaser of an industry product, prior to his or her purchase or making of contract for purpose thereof from such member:

(a) Any and all latent defects of which such member is aware, or has reason to believe exist, with respect to the product being offered for sale; and

(b) The fact that the degree of usefulness and benefit to be derived by the wearer will be dependent in substantial part upon the place and character of his or her amputation, the condition of his or her stump or body member to which the product is to be fitted and applied, his or her age, strength, agility,

and state of health, and his or her diligence and persistence in accustoming himself or herself to the use of such product, development of muscles, and acquiring skill in the manipulation and use thereof; and

(c) In the case of a recent amputation, or of the prospective purchaser's previous nonuse of a prosthetic device, the fact that shrinkage of his or her stump is likely to occur by reason whereof the product, though fitting properly at time of delivery, may not continue to be in proper fit after such shrinkage; such nondisclosure having the capacity and tendency or effect of deceiving purchasers or prospective purchasers as to the true efficacy or benefit to be derived from such product.

NOTE: Textile articles or accessories sold by members of the industry are to be labeled or marked with respect to their fiber content as required by applicable provisions of law or regulation. For example, stump socks containing or purporting to contain wool are subject to the requirements of the Wool Products Labeling Act and the regulations issued thereunder.

§ 165.3

Representation or promise that product will "fit."

It is an unfair trade practice for any member of the industry to represent, promise, or guarantee that any industry product will be made to fit any individual purchaser or prospective purchaser thereof, when such representation, promise, or guarantee is not made in good faith or the industry member is not possessed of the requisite skill, knowledge, and equipment to assure of his ability to fulfill such representation, promise, or guarantee.

NOTE 1: An industry prosthetic device shall not be considered as fitting unless properly shaped and sized for the stump or body member to which it is to be applied, is in proper alignment and conformity with the physique of the person to wear such product, and affords the optimum of comfort and use on the part of the wearer thereof without injury to stump or other body member. In cases where there is any likelihood of shrinkage of stump after fitting and delivery of the product, full explanation of such shrinkage should be made to the purchaser and the necessity of refitting by reason thereof should be clearly pointed out to him.

NOTE 2: It is the consensus of the industry that the term "perfect fit" should not be used by members, as perfection is not attainable.