of misleading or deceiving purchasers, prospective purchasers, or the consuming public, is an unfair trade practice. (d) The use or specification of an unreliable or inadequate test in any such designations, or the refusal to specify a test which is proper and applicable, when done for the purpose or with the capacity and tendency or effect or directly or indirectly misleading or deceiving purchasers, prospective purchasers, or the consuming public, is an unfair trade practice. (e) The following test is deemed to be an accepted and recognized test for determining shrinkage properties or residual shrinkage of woven cotton yard goods in the application of these rules and is recommended for use as a standard shrinkage test for this purpose: "Commercial Standard CS59-36" § 131.6 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 this part. PART 132-MACARONI AND NOODLE PRODUCTS INDUSTRY Sec. 132.0 132.1 132.2 132.3 132.4 132.5 132.6 132.7 132.8 132.9 Definitions. Concurrent jurisdiction of Food and Misrepresentation of protein, caloric Misrepresentation of semolina, du- Defamation of competitors or false disparagment of their products. Prohibited sales below cost. 132.10 Imitation of trade-marks, trade § 132.1 Concurrent jurisdiction of Food and Drug Administration over labeling. (a) Definitions and standards for macaroni and noodles products promulgated under the Federal Food, Drug and Cosmetic Act by the Food and Drug Administration will, when relevant, be taken into consideration in the administration of trade practice rules for the industry. (b) The Commission has jurisdiction over the advertising of industry products, and both it and the Food and Drug Administration have jurisdiction over the labeling of such products. In order to avoid unnecessary overlapping and possible conflict of effort, the two agencies have adopted a working arrangement under which the Commission regulates the advertising of such products and the Food and Drug Administration regulates the labeling thereof, with recognition that there may be unusual situations in which the Commission will exercise its concurrent jurisdiction over the labeling of such products. (c) Nothing in this part is to be construed as relieving anyone of the necessity of complying with the provisions of the Federal Food, Drug and Cosmetic Act with respect to the labeling of industry products, and with the definitions and standards for such products as established by the Food and Drug Administration. § 132.2 Deception (general). It is an unfair trade practice for any industry member to use or cause to be used any advertisement1 of industry products which contains any statement, representation, illustration, or depiction which directly, or by implication or through failure to disclose material information, has the capacity and tendency or effect of misleading or deceiving purchasers or prospective purchasers with respect to the grade, quality, quantity, substance, character, nature, origin, size, material, content, coloring, digestibility, nutritional properties, therapeutic value, effect on body weight, preparation, or manufacture of any industry products, or which has the capacity and tendency or effect of deceiving purchasers or prospective purchasers in any other material respect. § 132.3 Misrepresentation of protein, caloric and starch content of prod ucts. It is an unfair trade practice for a member of the industry to make any representation in any advertisement 1 which has the capacity and tendency or effect of deceiving purchasers or prospective purchasers as to: (a) The protein, caloric or starch content of any industry product, or (b) The protein, caloric or starch content of any industry product, or portion thereof when prepared for consumption in accordance with the member's directions or recommendations, or (c) The protein, caloric or starch content of any industry product compared to other industry products or to specific foods or to food generally. NOTE: Among practices to be considered as subject to the inhibitions of this section, are representations in any advertisement1 that an industry product is a high protein food, or is a food of low starch or caloric content. 1 The word "advertisement" as here used includes any written or verbal statement, notice, presentation, illustration, or depiction, other than labeling, which is directly or indirectly designed to effect the sale of any industry product, or to create an interest in the purchase of any such product, whether same appears in a newspaper, magazine, or other periodical, in a catalog, letter, or sales promotional literature, in a radio or television broadcast, or in any other media. § 132.4 Misuse of words "macaroni," "spaghetti," "vermicelli," "eggmacaroni" and "noodles," or "egg noodles," etc. It is an unfair trade practice for an industry member to represent in an advertisement' any product as being macaroni, spaghetti, vermicelli, eggmacaroni, noodles or egg noodles when such is not the fact, or to misrepresent the identity of any industry product. § 132.5 Misrepresentation of semolina, durum, or farina products. It is an unfair trade practice for an industry member to represent in any advertisement' an industry product as being a semolina, durum or farina product when such is not true in fact. NOTE: Nothing in this section is to be construed as inhibiting a representation that an industry product is: (a) A semolina product when the wheat content thereof is solely of semolina, or (b) A durum product or a durum wheat product when the wheat content thereof is solely of durum wheat, or (c) A farina product when the wheat content thereof is solely of farina. § 132.6 Misrepresentation as to the egg content of product. It is an unfair trade practice for an industry member to misrepresent in any advertisement1 the egg content of any industry product. NOTE: It is the consensus of the industry that any representation as to the egg content of an industry product should be on a moisture free basis. § 132.7 Deception as to ingredients of products. It is an unfair trade practice for an industry member to misrepresent in any advertisement1 the presence, absence, amount or proportion of any ingredient in any industry product. § 132.8 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, quality, or manufacture of the products of competitors, or of their business methods, selling prices, values, credit terms, policies, services, or conditions of employment, is an unfair trade practice. 1 See footnote to § 132.2. § 132.9 Prohibited sales 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 is, or where there is a reasonable probability that the effect will be, to substantially injure, suppress, or stifle competition or tend to create a monopoly, is an unfair trade practice. (b) 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 with the wrongful intent or purpose referred to and where the effect is, or where there is reasonable probability that the effect will be, to substantially injure, suppress, or stifle competition or to create a monopoly. Among the situations in which the requisite purpose or intent would ordinarily be lacking are cases in which such sales were (1) of seasonal goods near the conclusion of the season; (2) of perishable goods in respect to which deterioration is imminent; (3) of obsolescent goods; (4) made under judicial process; or (5) made in bona fide discontinuance of business in the goods concerned. (c) As used in paragraphs (a) and (b) of this section, the term "cost" means the respective seller's cost and not an average cost in the industry whether such average cost be determined by an industry cost survey or some other method. It consists of the total outlay or expenditure by the seller in the acquisition, production, and distribution of the products involved, and comprises all elements of cost such as labor, material, depreciation, taxes (except taxes on net income and such other taxes as are not properly applicable to cost), and general overhead expenses, incurred by the seller in the acquisition, manufacture, processing, preparation for marketing, sale, and delivery of the products. Not to be included are dividends or interest on borrowed or invested capital, or nonoperating losses, such as fire losses and losses from the sale or exchange of capital assets. Operating cost should not be reduced by items of nonoperating income, such as income from investments, and gain on the sale of capital assets. (d) Nothing in this section shall be construed as relieving an industry mem ber from compliance with any of the requirements of the Robinson-Patman Act. § 132.10 Imitation of trade-marks, trade names, etc. The imitation or simulation in advertising of the trade-marks, trade names, containers, brands, or labels of competitors, with the capacity and tendency or effect of misleading or deceiving purchasers or prospective purchasers, is an unfair trade practice. § 132.11 Fictitious prices, etc. The publishing or circulating by any member of the industry of false or misleading price quotations, terms or conditions of sale, or reports as to production or sales, with the capacity and tendency or effect of misleading or deceiving purchasers or prospective purchasers, 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. § 132.12 Deceptive invoicing, etc. It is an unfair trade practice for any member of the industry to issue invoices, billings or sales slips, which, by reason of misstatements therein or omissions therefrom, have the capacity and tendency or effect of deceiving purchasers or prospective purchasers in any material respect. 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." merce, 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, and 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. For 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 this subparagraph. example, if a seller regularly grants a dis.count 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 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. NOTE: See subsection (b) of section 2 of the Clayton Act as amended, which is set forth in the note following paragraph (g) of this section. (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. NOTE 1: Industry members giving advertising allowances to competing customers must exercise precaution and diligence in seeing that all of such allowances are used in accordance with the terms of their offers. NOTE 2: When an industry member gives allowances to competing customers for advertising in a newspaper or periodical, the fact that a lower advertising rate for equivalent space is available to one or more, but not all, such customers, is not to be regarded by the industry member as warranting the retention by such customer or customers of any portion of the allowance for his or their personal use or benefit. (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. NOTE: See subsection (b) of section 2 of the Clayton Act as amended, which is set forth in the note following paragraph (g) of this section. (e) Clarification of requirements for supplying of marketing services, facilities or allowances. The following is presented for the purpose of clarifying the requirements of paragraphs (c) and (d) of this section with respect to the supplying of marketing services, facilities or allowances by industry members to their customers, but it is not intended to imply by such presentation that other methods which assure of proportional equality of treatment of competing customers may not also be used: An industry member may simultaneously offer to each of his customers competing in the resale of his products the same kind of promotional service, facility or allowance of a cost value equal to a uniform percentage of the sales (or purchases) of the industry member's products by each customer during a specified and identical period of time: Provided, however, That when the service, facility or allowance offered is of a type which under reasonable terms and conditions is not usable or suitable to the facilities and business of all customers, and is offered to any one customer, the member offer each of those customers to whom the service, facility or allowance is not usable or suitable an alternate type of promotional service, facility or allowance which is of equivalent measurable cost, is usable by the customer, and is suitable to his facilities and business, and promptly inform all competing customers of the kind and amount of services, facilities or allowances which he has offered to each and the respective terms and conditions under which such services, facilities or allowances are to be furnished by the industry member: And provided further, That when the offer of any service, facility or allowance to any customer is. conditioned on such customer supplying. some reciprocal service, facility or payment, a reciprocal service, facility or payment be required in the offers to all other customers and there be an equality of ratio among all customers as to the measurable cost of that which is supplied by the industry member and the reciprocal service, facility or payment required of any customer. The industry member must take every reasonable precaution to see that services, facilities or allowances which he furnishes to customers are used in accord with the terms of his. offer; and upon failure of the customerto perform any obligation on his part the industry member must cease supplying the customer any further service, facility or allowance. (f) 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. NOTE: This paragraph is a restatement of section 2 (f) of the Clayton Act as amended. In a complaint proceeding under this section, in order to make out a prima facie violation, the Commission must show that the favored buyer induced or received the lower price knowing, or knowing facts from which he should have known, that such price was violative of section 2 (a) of said act and not. Justified under subparagraph (2), (4), or (5) of paragraph (a) of this section. When, in any such proceeding, the issue is limited to the question of whether the price differential involved made only due allowance for differences in cost of manufacture, sale, or delivery resulting from the differing methods. or quantities in which the goods were sold and delivered, the Commission may establish a prima facie case in a number of ways, including: (1) By showing that the buyer paying the lower price knew that the methods by, and quantities in, which the goods were sold and delivered to him by the seller were the same as in the case of the competing buyer or buyers paying the higher price or prices; or (2) By showing, when there is a difference in the methods or quantities in which the goods were sold and delivered by the seller to the buyer than in the case of the competing buyer or buyers paying the higherprice or prices, that the buyer paying the lower price or prices knew the nature and extent of such differences and knew or |