§ 21.2

Misrepresentation in general.

It is an unfair trade practice to use, or cause or promote the use of, any false, untrue, or deceptive statement, representation, guarantee, warranty, testimonial, or endorsement, by way of advertising (through newspapers, magazines, circulars, booklets, or by radio, television, or any other medium), oral representation or otherwise, which has the capacity and tendency or effect of misleading or deceiving purchasers, prospective purchasers, or the consuming public with respect to the efficacy, curative or healthful properties, grade, quality, substance, weight, durability, serviceability, character, or manufacture of any product of the industry, or concerning the purported approval or endorsement of such product by State, Federal, medical, or other authority. § 21.3 Misrepresentation as to weightreducing properties.

It is an unfair trade practice, in connection with the distribution, sale, or offering for sale of an industry product, to use, or cause or promote the use of, any statement, directly or indirectly, oral or otherwise, which represents or implies that an industry product has weightreducing properties, when such is not the fact.

§ 21.4

§ 21.5

[Reserved]

Deception as to foreign origin.

(a) It is an unfair trade practice falsely to represent, directly or by implication, through any means or device, the origin of any industry product or component part.

(b) It is also an unfair trade practice to fail to disclose, adequately and conspicuously, the foreign origin of any industry product or component thereof, where the failure to make such disclosure has the capacity and tendency or effect of deceiving purchasers or prospective purchasers.

§ 21.6 Defamation of competitors or false disparagement of their prod

ucts.

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 goods of competitors, their credit terms, values, policies, services, the nature or

form of the business conducted, or in any other material respect, is an unfair trade practice.

§ 21.7 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 competitors. § 21.8 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.

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

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

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 com

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 such planned common course of action, or to become a party to any such understanding, agreement, combination, or conspiracy. § 21.10

Exclusive deals.

It is an unfair trade practice for any member of the industry to contract to sell or sell any industry product, or fix a price charged therefor, or discount from, or rebate upon, such price, on the condition, agreement, or understanding that the purchaser thereof shall not use or deal in the products of a competitor or competitors of such industry member, where the effect of such sale or contract for sale, or of such condition, agreement, or understanding, may be substantially to lessen competition or tend to create a monopoly in any line of commerce.

§ 21.11 Guarantees, etc.

(a) It is an unfair trade practice to use any guarantee respecting an industry product which does not make reasonable disclosure of the conditions or limitations of such guarantee, or which contains statements, representations, or assertions which have the capacity and tendency or effect of misleading or deceiving in any respect, or which are of such form, text, or character as to represent or imply that the guarantee is broader than is in fact true.

modity 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.

(b) It is an unfair trade practice for the guarantor to fail to observe scrupulously his obligation under the guarantee by him used or caused to be used.

(c) This section shall be applicable also to warranties or any writing purported to be a guarantee or warranty. § 21.12 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 or 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, but are to be considered as subject to the requirements and provisions of section 2 (a) of the Clayton Act.

§ 21.13 Discriminatory returns.

It is an unfair trade practice for any member of the industry 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, upon terms not accorded to all customer-purchasers on proportionally equal terms, the service or facility whereby such favored customer is accorded the privilege of returning industry products so purchased and receiving therefor credit or refund of purchase price: Provided, however, That nothing in the rules in this part shall prohibit or be used to prevent the return of merchandise by purchaser for credit or refund of purchase price, when and because such merchandise has not been properly labeled by the seller in accordance with these rules or has been otherwise falsely or deceptively labeled or represented, or when and because such merchandise is defective in material, workmanship, or in any other respect is contrary to warranty or purchase contract: And provided, further, That nothing in this section shall prohibit a purchaser from exchanging the current season's merchandise for different sizes of the same style number in order to balance purchaser's stock. (Nothing in this section is intended to modify or affect any of the requirements of § 21.1, entitled "Prohibited Discrimination.") § 21.14 Consignment distribution.

4

(a) It is an unfair trade practice for any member of the industry to employ the practice of shipping goods on consignment, pretended consignment, or for delivery "on memorandum":

(1) When such practice is so used, or the terms and conditions thereof so varied or arranged, as to effectuate a discrimination contrary to the provisions of § 21.1; or

(2) When such consignment, pretended consignment, or delivery "on memorandum," is used for the purpose and with the effect of artificially clogging trade outlets and unduly restricting competitors' use of said outlets in getting their products to purchasers or consumers through regular channels of distribution, and thereby injuring, destroying, or preventing competition, tending to create a monopoly, or unreasonably restraining trade.

It is the consensus of the industry that where a purchaser is entitled to return goods for any of the reasons hereinabove set forth, such return shall be made within fifteen (15) days after receipt of the goods.

(b) Nothing in this section shall be construed as restricting or preventing consignment shipping, or marketing "on memorandum," when carried out in good faith and without illegal discrimination, suppression of competition, or undue interference with competitors' use of the usual channels of distribution.

§ 21.15 Seconds, irregulars, or rejects.

(a) Industry products which are "seconds," "irregulars," or "rejects," or which are represented as being "seconds," "irregulars," or "rejects," shall be so marked, clearly and conspicuously, to the end that confusion, misunderstanding, or deception of the purchasing or consuming public may be avoided and prevented. "Seconds" may be marked or referred to by the manufacturer as "seconds," "irregulars," or "rejects" provided that such marking or reference clearly indicates that the product is not of first quality. Such disclosure of "seconds," "irregulars," or "rejects" shall also be made on invoices as well as on the garment itself, and on the immediate package, if any, in which it is sold to the consumer, and on display cards, advertisements, or other representations under which such "seconds," "irregulars," or "rejects" are offered for sale or advertised to the purchasing or consuming public.

(b) It is an unfair trade practice deceptively to conceal the fact that said industry products are "seconds,” “irregulars," or "rejects," or to fail or refuse to make such disclosure to the end specified in paragraph (a) of this section. § 21.16 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 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 repre

sented 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.

§ 21.17

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.

§ 21.18 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 these rules.

(a) Products of this industry consist of vegetables, fruits, juices, fish and shellfish, baked goods, and other miscellaneous prepared foods, which are packed, marketed, and delivered to the ultimate consumer in a frozen state. Not included as products of the industry are meats and poultry, and frozen dairy products including ice cream and sherbets.

(b) The term "member of the industry" means any person, firm, corporation, or organization engaged in the production and/or marketing of products of the industry.

§ 22.1

GROUP I

Prohibited discrimination.1

(a) Prohibited discriminatory prices, rebates, refunds, discounts, credits, etc., which effect unlawful price discrimination. It is an unfair trade practice for

As used in 22.1, 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."

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 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, and are not purchased by schools, colleges, universities, public libraries, churches, hospitals, or charitable institutions not operated for profit, as supplies for their own use;

(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: Cost justification under the above proviso depends upon net savings in cost based on all facts relevant to the transactions under the terms of subparagraph (2) of this paragraph. For example, if a seller regularly grants a discount based upon the purchase of a specified quantity by a single order for a single delivery, and this discount is justified by cost differences, it does not follow that the same discount can be cost Justified if granted to a purchaser of the same quantity by multiple orders or for multiple deliveries.

(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 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, actual or imminent deterioration of perishable goods, distress sales under court process, or sales in good faith in discontinuance of business in the goods concerned;

(5) That nothing contained in this section shall prevent the meeting in good faith of an equally low price of a competitor, or the services or facilities furnished by a competitor (see paragraphs (d) and (e) of this section).

NOTE: In complaint proceedings, justification of price differentials under subparagraphs (2), (4) and (5) of this paragraph is a matter of affirmative defense to be established by the person or concern charged with price discrimination.

(b) The following are examples of price differential practices to be considered as subject to the prohibitions of paragraph (a) of this section when involving goods of like grade and quality which are sold for use, consumption, or resale within any place under the jurisdiction of the United States, and which are not purchased by schools, colleges, universities, public libraries, churches, hospitals, or charitable institutions not operated for profit, as supplies for their own use, and when:

(1) The commerce requirements specified in paragraph (a) of this section are present; and

(2) The price differential has a reasonable probability of substantially lessening competition or tending to create a monopoly in any line of commerce, or of injuring, destroying, or preventing competition with the industry member or with the customer receiving the benefit of the price differential, or with customers of either of them; and

(3) The price differential is not justifiled by cost savings (see paragraph (a) (2) of this section); and

(4) The price differential is not made in response to changing conditions affecting the market for or the marketability of the goods concerned (see paragraph (a) (4) of this section); and

(5) The lower price was not made to meet in good faith an equally low price of a competitor (see paragraph (a) (5) of this section).

Example No. 1. At the end of a given period an industry member grants a discount to a customer equivalent to a fixed percentage of the total of the customer's purchases during such period and fails to grant such discount to other customers under like conditions.