nothing herein contained shall prevent a seller rebutting the prima facie case thus made by showing that his lower price or the furnishing of services or facilities to any purchaser or purchasers was made in good faith to meet an equally low price of a competitor, or the services or facilities furnished by a competitor."

NOTE No. 2: 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) Examples of prohibited price differential practices. 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, and 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 injury, 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 justified 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. An industry member sells goods to one or more of his customers at a higher price than he charges other customers for like merchandise. It is immaterial whether the goods sold at the lower price are classified by the industry member as "seconds," secondary line," "rejects," or are otherwise represented by the industry member as inferior, if the goods are in fact of like grade and quality as the goods sold at the higher price.

Example No. 2. Terms of 2%/10 net 60 are granted by an industry member to some customers on goods purchased by them from the industry member. Another customer or customers are, nevertheless, allowed to take a 5% instead of a 2% discount when making payment to the industry member within the time prescribed.

Example No. 3. An industry member sells goods to one or more of his customers at a lower price than he charges other customers therefor, basing his justification for the price difference solely on the fact that the goods sold at the lower price bear the private brand name of customers.

Example No. 4. An industry member invoices goods to all his customers at the same price but supplies additional quantities of such goods at no extra charge to one or more, but not to all, such customers; or supplies other goods or premiums to one or more, but not to all, such customers for which he makes no extra charge and which effects an actual price difference in favor of certain of his customers.

NOTE: As previously indicated, the foregoing are examples of practices to be considered violative of the prohibitions of paragraph (a) of this section.

(c) 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.

(d) 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 made known to and is available on proportionally equal terms to all other customers competing in the distribution of such products or commodities.

NOTE: No. 1: Industry members giving allowances for advertising or sales promotion must, in addition to according same to all competing customers on proportionally equal terms, exercise precaution and diligence in seeing that all such allowances are used by the customers for such purposes. Customers receiving such allowances must not use same for any other purpose.

When an allowance is made ostensibly for advertising or sales promotion of products and is not in fact used for that purpose the practice may constitute a price discrimination. In such case, the party giving the allowance may violate paragraph (a) of this section and the party receiving same may violate paragraph (f) of this section.

NOTE NO. 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 customers of any portion of the allowance for his or their personal use or benefit.

(e) 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 NO. 1: Subsection (b) of section 2 of the Clayton Act, as amended, which is set forth in the note concluding paragraph (a) of this section is applicable to paragraph (e) of this section.

NOTE NO. 2: Among the practices prohibited by paragraph (e) of this section is that of an industry member according to one or more customers the privilege of returning for credit or refund any or all of the goods purchased by them and failing to accord the same privilege to another or other competing customers on proportionally equal terms. In this connection see also Note No. 2 under costs justification proviso (paragraph (a) (2) of this section).

(f) Inducing or receiving an illegal discrimination in price, advertising or promotional allowances, or services or facili

ties. 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, advertising or promotional allowances, or services or facilities, prohibited by the foregoing provisions of this section. [Rule 18]

§ 35.19 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 prohibited in the foregoing part. [Rule 19]

PART 36-POULTRY HATCHING AND BREEDING INDUSTRY

Sec. 36.0

36.1 36.2

36.3

36.4

36.5

36.6

36.7

36.8

36.9

36.10 36.11

The industry and its products defined GROUP I

Misrepresentation of products.

Deceptive concealment of material facts.

Deceptive claims relating to National Poultry Improvement Plan or National Turkey Improvement Plan. Misrepresentation concerning a

breeder's name, trade name, strain or combination of strains, or other breeding combination, etc.

Deceptive claims respecting freedom or immunity from disease. Deceptive representations as to performance earnings, etc.

Misrepresentation as to yields of eggs, as to chicks from hens with purported high egg-laying records, as to chicks from high-egg-producing stock, etc.

Misrepresenting chicks as from highperformance stock.

Misrepresentation as to terms "cross

36.12 Deception as to transportation or c.o.d. charges.

36.13 Misrepresenting offer

36.14 36.15

etc.

Deceptive testimonials.

as

"special,"

Defamation of competitors or false disparagement of their products. 36.16 False or misleading price quotations, etc. 36.17 Deception by means of "bogus indedependents," "chick outlets," etc. 36.18 Misuse of words "hatchery," "chickery," "chick nursery," "farm." "poultry farm," "breeding farm," and related representations. 36.19 Guarantees, warranties, etc.

36.23

36.24

36.25

36.26 36.27

Prohibited sales below cost.
Prohibited forms of trade restraints
(unlawful price fixing, etc.).
Tie-in sales; coercing purchase of
one product as a prerequisite to
the purchase of other products.
Prohibited discrimination.
Aiding or abetting use of unfair
trade practices.
GROUP II

36.101 Shipping chicks to fictitious consignees, etc.

AUTHORITY: The provisions of this Part 36 issued under secs. 6, 5, 38 Stat. 721, 719; 15 U.S.C. 46, 45, unless otherwise noted.

SOURCE: The provisions of this Part 36 appear at 26 F.R. 1481, Feb. 22, 1961, unless otherwise noted.

§ 36.0 The industry and its products defined.

Members of the industry to which the rules have application are persons, firms, corporations, and organizations engaged in the marketing of any kind or kinds of live poultry for growing or breeding for egg or meat production, and of poultry eggs for hatching use. The live poultry mentioned includes, but is not limited to, chicks, poults, goslings, and ducklings.

NOTE: As used in these rules, the word "chicks" shall be construed to include all kinds of live poultry.

§ 36.1

GROUP I

Misrepresentation of products.

In the sale, offerings for sale, or distribution of industry products, it is an unfair trade practice for any member of the industry to make or publish, or cause to be made or published, any statement or representation (whether in the form of advertisement, trade promotional literature, mark, stamp, brand, label, depiction, photograph, illustration, radio or television broadcast, or otherwise) concerning:

(a) The grade, quality, quantity, breed, strain, cross, pedigree, type, sex, sexing, culling, quick maturity, uniform development, livability, vigor, strength, character, price, nature, origin, weight, color, size, egg-producing, meat-producing, disease-resisting, or other qualities of such products; or

(b) The production, sale, distribution, or delivery thereof, including the terms or conditions of sale; or

(c) The supervision, endorsement, or approval of any poultry breeding, hatching, or other operation by Federal, State, or other authority, or any official connection with such Federal, State, or other authority, including random sample, standard laying, or other test results; or

(d) Any other matter relating to the poultry hatching or breeding business or to any of its products-which, directly or by implication, is false, misleading, or deceptive in any respect.

NOTE: The inhibitions of this section are to be understood as applicable to representations or implications, such as "A,” “AA,” "AAA," etc., that any industry product conforms to the requirements of any grade or quality standard when (1) no such grade or quality standard exists, or (2) no disclosure of the identity of such standard, whether private, official, or otherwise, is made, or (3) when the member's product does not conform to such grade or quality standard. [Rule 11

§ 36.2 Deceptive concealment of material facts.

(a) In advertising, offering for sale, or selling industry products, it is an unfair trade practice for any member of the industry to fail to disclose any material facts relating to such products when such failure has the capacity and tendency or effect of misleading or deceiving purchasers or prospective purchasers of such products.

(b) Among the practices prohibited by this section are the following:

(1) Filling chick orders with chicks which are wholly or predominantly cockerels, or are of a different stock or quality than offered for sale, without having disclosed this fact to the purchaser prior to sale.

(2) Shipping chicks upon dates different from those specified or implied in the orders without disclosure or notice of such changes prior to shipment.

(3) Representing that the parent flocks of chicks contain certain desirable types of males or females without disclosure of the approximate percentage or proportion of the flocks accounted for by such types. [Rule 2]

§ 36.3 Deceptive claims relating to National Poultry Improvement Plan or National Turkey Improvement Plan. (a) In connection with the sale, offering for sale, or distribution of industry products, it is an unfair trade practice for any industry member to represent or

imply that he is a participant in the National Poultry Improvement Plan1 or the National Turkey Improvement Plan,1 when such is not the fact.

NOTE: In order to avoid deception of purchasers or prospective purchasers of industry products, all industry members discontinuing participation in the National Poultry Improvement Plan, or the National Turkey Improvement Plan, shall immediately remove and discontinue the use of all signs, promotional literature, labels, and other representations or indications that they are still participating in such Plan or Plans.

(b) In connection with the sale, offering for sale, or distribution of industry products, it is an unfair trade practice to use any of the terminology of the National Poultry Improvement Plan or the National Turkey Improvement Plan (such as "U.S. Approved," "U.S. Pullorum-Typhoid Clean," etc.), or any abbreviation or simulation of such terminology, as descriptive of industry products to which such terms are not fully applicable in accordance with the requirements therefor specified in such Plans. [Rule 3]

§ 36.4

Misrepresentation concerning a breeder's name, trade name, strain or combination of strains, or other breeding combination, etc.

(a) It is an unfair trade practice to make false or deceptive representations, directly or by implication, in advertising or otherwise, concerning a breeder's name, trade name, strain or combination of strains or other breeding combination, or the progeny or stock of such breeding combination.

(b) It is also an unfair trade practice to represent, directly or by implication, through advertising or otherwise, chicks or hatching eggs as being of a particular breeder's pure strain, strain cross, breed cross, or other breeding combination, unless such chicks or hatching eggs are from flocks composed of birds hatched from eggs produced under the direct supervision of the breeder or a multiplier designated by the breeder.

NOTE: (1) The term "Strain" as used in this section means poultry bearing a given name produced through at least five generations of closed flock breeding.

(2) The term "Stock" is used in this section to identify the progeny of a specific

1 These Plans have been promulgated by the United States Department of Agriculture and are contained in the Code of Federal Regulations, 9 CFR, Parts 145, 146, and 147.

breeding combination of chickens or turkeys. These breeding combinations may include pure strains, strain crosses, breed crosses, or other breeding combinations. [Rule 4]

§ 36.5 Deceptive claims respecting freedom or immunity from disease.

(a) In the sale, offering for sale, or distribution of industry products, it is an unfair trade practice for any industry member to advertise, describe, or otherwise represent or imply, that chicks or hatching eggs are free from any or all diseases when such is not the fact.

NOTE: At present there exist no tests, inoculations, vaccinations, etc., which poultry pathologists consider adequate to assure that chicks or hatching eggs are completely and absolutely free from any or all poultry diseases. Accordingly, such claims as "disease free," "pollorum free," or "100 percent pullorum free," must not be made by industry members.

Requirements applicable to claims and representations respecting tests, inoculations, vaccinations, and treatments for poultry disease are set forth in paragraphs (b) and (c) of this section.

(b) In the sale, offering for sale, or distribution of industry products, it is an unfair trade practice for any industry member to advertise, describe, or otherwise represent or imply, that chicks or hatching eggs come from birds or flocks which have been tested for pullorum, typhoid, and/or other disease or diseases, when:

(1) Such birds or flocks have not been tested for the particular disease or diseases during the past 12 months; or

(2) The tests applied are not recognized by poultry pathologists as effective;

or

sons making the same, or other attendant circumstances, are not such as to assure their effectiveness. (See the first paragraph of the note following paragraph (a) of this section, and see also paragraph (b) of this section.) [Rule 5] $ 36.6

Deceptive representations as to performance, earnings, etc.

It is an unfair trade practice to make false or deceptive statements or representations, directly or by implication, in advertising or otherwise, regarding performance, opportunities for making money, or actual or probable earnings, income, profits, etc.

NOTE: In the interest of avoiding deception of purchasers or prospective purchasers, industry members desiring to make use, in advertising or otherwise, of any facts or figures published in the official reports concerning random sample, standard laying, or other tests shall state or otherwise employ such facts or figures only in a full, adequate and nondeceptive manner. [Rule 6]

§ 36.7 Misrepresentation as to yields of eggs, as to chicks from hens with purported high egg-laying records, as to chicks from high egg-producing stock, etc.

(a) Misrepresentation as to yields of eggs. It is an unfair trade practice to represent, directly or by implication, through advertising or otherwise, that high yields of eggs are received from all or any flocks of a particular seller or producer when such is not the fact.

(b) Misrepresentation as to chicks from hens with purported high egglaying records. It is an unfair trade practice to represent, directly or by implication, through advertising or otherwise, that chicks are produced by hens having certain purported high egglaying records when the records of such hens have not been adequately established and the period of time and the method used for computation are not clearly disclosed in the advertising.

(c). Misrepresenting chicks as from high egg-producing stock etc. It is an unfair trade practice to represent, directly or by implication, through advertising or otherwise, that chicks offered for sale are from high egg-producing stock or blood lines when such fact has not been established, or when such representation is otherwise false, misleading, or deceptive. [Rule 7]

(a) It is an unfair trade practice to make false or deceptive statements or representations, directly or by implication, in advertising or otherwise, relative to the breeding incident to the production of chicks or hatching eggs, or to use any term or designation as descriptive thereof which conveys or tends to convey an erroneous impression as to the kind or extent of the breeding employed.

(b) For the purpose of this section and in its application, the following terms are acceptance when used in accordance with their respective definitions:

(1) "Crossbred." The first generation poultry, chicks, or eggs produced by crossing two different breeds or varieties, first-generation combinations of breeds or varieties.

or

(2) "Inbred line." A group of inbred chicks resulting from breeding closely related poultry and in which the individuals in question have an average coefficient of inbreeding of 37.5 percent (equivalent to two generations of brother-sister matings).

(3) "In-crossbred." The first generation poultry, chicks, or eggs produced by crossing two inbred lines, first-generation combinations of inbred lines, or the crossing of an inbred line with a firstgeneration combination of inbred lines.

NOTE: To some purchasers and prospective purchasers of chicks and hatching eggs, the term "hybrid" implies application of genetic principles similar to those employed in the production of hybrid seed corn, and to others the application of a selective system of breeding dissimilar to that employed in the production of hybrid seed corn.

The term is generally regarded as denoting a superior quality and vigor resulting from systematic breeding and shall only be used to describe chicks and hatching eggs having such superior quality and vigor.

In the interest of avoiding deception of purchasers and prospective purchasers, industry members desiring to use the term "hybrid" as descriptive of such chicks and hatching eggs shall, in addition, confine the