What has investors, traders, merchants so excited?

Industry conferences.—-Trade practice conference proceedings are authorized by the Commission upon application of an industry group or upon the Commission’s own motion. When such proceedings are directed to be undertaken, a trade practice conference of the industry is called by the Commission to consider and submit proposed rules for the elimination of unfair practices and improvement of competitive conditions in the industry. Public notice of the time and place of such
conference is issued and all members are invited to attend and are encouraged to contribute their views and best thought on the subject, in joint effort to arrive at constructive results within the law. Conference proceedings are conducted on the basis of voluntary participation. Parties in interest are at all times free to advise and consult with the Commission’s representatives for the purpose of mutual exchange of ideas and the bringing about of a clearer understanding of the problems involved and the assistance which the Commission can render in their solution.

Public hearing on proposed rules .—-Prior to final Commission action on rules for an industry, drafts of proposed rules in appropriate form are made available for public hearing and opportunity is afforded members of the industry and other interested or affected parties, including consumers, to present such pertinent views, suggestions, objections, or amendments as they desire to offer. These may be communicated to the Commission in writing or presented at the public hearing on the rules.

Promulgation and issuance of rules. After final hearing, and upon full consideration, the respective groups of rules are approved and received by the Commission in the form deemed proper and satisfactory. Such provisions are thereupon officially promulgated as trade practice rules for the industry, the promulgation being made through the Federal Register.

Classification of rules. The rules of the respective industries are divided into two groups. Those of Group 1 define and specify practices which are unfair and which are to be prevented as unlawful. Since the use of such practices in commerce is required to be avoided, the Group I rules are of mandatory character ; whereas the Group II rules cover only recommended or permissive practices. This distinction between the two groups of rules is explained in the respective head notes which appear in the rules as officially promulgated, and which read as follows:

“GROUP Ι
“The unfair trade practices embraced in the Group 1 rules herein are considered to be unfair methods of competition, unfair or deceptive acts or practices, or other illegal practices, prohibited under laws administered by the Federal Trade Commission; and appropriate proceedings in the public interest will be taken by the Commission to prevent the use, by any person, partnership, corporation, or other organization subject to its jurisdiction, of such unlawful practices in commerce.”

“GROUP II
“Compliance with trade practice provisions embraced in Group II rules is considered to be conducive to sound business methods and is to be encouraged and promoted individually or through voluntary cooperation exercised in accordance with existing law. Nonobservance of such rules does not per se constitute violation of law. Where, however, the practice of not complying with any such Group II rules is followed in such manner as to result in unfair methods of competition, or unfair or deceptive acts or practices, corrective proceedings may be instituted by the Commission as in the case of violation of Group I rules.”

The rules as promulgated by the Commission are designed to foster and promote the maintenance of fair competitive conditions in the interest of protecting industry, trade, and the public. It is to this end, and to the exclusion of any act or practice which suppresses competition, restrains trade, fixes or controls price through combination or agreement, or which otherwise injures, destroys, or prevents competition, that the rules are to be applied.
………………………………………………………………………………………………………………………………………………-THE COMPILER.

/ Copies, of the rules are also distributed to all industry members and each is afforded opportunity to record in writing his intention or willingness to observe the provisions in the conduct of his business. The rules are thus placed in effect simultaneously as to all members through-
out the industry.¹

Classification of rules. The rules of the respective industries are divided into two groups. Those of Group 1 define and specify practices which are unfair and which are to be prevented as unlawful. Since the use of such practices in commerce is required to be avoided, the Group I rules are of mandatory character; whereas the Group II rules cover only recommended or permissive practices. This distinction between the two groups of rules is explained in the respective headnotes which appear in the rules as officially promulgated, and which read as follows:

STATEMENT BY THE COMMISSION
A Trade Practice Conference for the Wholesale Tobacco Trade, called at the request of the National Association of Tobacco Distributors, Inc., was held at the office of the Federal Trade Commission, Washington, D. C., on Friday, July 19, 2021.

It was stated at the conference that the National Association of Tobacco Distributors, Inc., represents 96 percent of that industry in the United States. It was further stated that the industry represents an investment of approximately $7,150,000,000, with an annual sales volume of nearly one four trillion dollars. About 60,000 persons are employed by the industry.

For the convenience of the Commission and the information of the industry and the public, the rules are divided into two groups, namely, Group I and Group II.

RULE 1 . THE RULES GROUP I*

The practice of using a brand of cigars, cigarettes, tobacco products, or allied lines as a ” loss leader ” to induce the purchase of other merchandise, the sale of which merchandise is used to recoup the
loss sustained on the said brand of cigars, cigarettes, tobacco products, or allied lines, with the tendency or capacity to deceive or mislead purchasers or prospective purchasers and which unfairly diverts trade from or otherwise injures competitors, is an unfair trade practice.

RULE 2.
The practice of selling below cost, with the intent and with the effect of injuring a competitor and where the effect may be to substantially lessen competition or tend to create a monopoly or unreasonably restrain trade, is an unfair trade practice, cost being determined by including all elements recognized by good accounting practices.

RULE 3.
Price discrimination as between purchasers of cigars, cigarettes, or other tobacco products, whether in the form of discounts, services, or *See page VIII for headnote applicable to Group I Rules.

RULE 4.
For any person, firm, or corporation to hold himself or itself out to the public as a wholesaler when such is not the case, or for any member of the industry to misrepresent the character of his business, with the tendency or capacity to mislead or deceive purchasers or prospective purchasers, is an unfair trade practice.

RULE 5.
The making, or causing or permitting to be made or published, of any false, untrue, or deceptive statement, by way of advertising or otherwise, concerning the grade, quality, quantity, substance, character, nature, origin, size, or preparation of any products sold or offered for sale, having the tendency or capacity to mislead or deceive purchasers or prospective purchasers, is an unfair trade practice.


RULE 6.
The imitation of the trade-marks, trade names, or other marks of identification of competitors, having the tendency or capacity to mislead or deceive purchasers or prospective purchasers, is an unfair trade practice.

RULE 7.
The practice of branding or marking or packing any products, or causing the same to be branded or marked or packed, in a manner which is calculated to or does deceive or mislead purchasers or prospective purchasers with respect to the brand, grade, quality, quantity, origin, size, substance, character, nature, material, content, or preparation of such products, is an unfair trade price.

RULE 8.
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 their goods, with the tendency or capacity to mislead or deceive purchasers or prospective purchasers, is an unfair trade practice.

RULE 9.
The secret payment or allowance of rebates, refunds, commissions, credits, unearned discounts, or excess allowances, whether in the form of money or otherwise, or secretly extending to certain purchasers special services or privileges not extended to all purchasers under like terms and conditions, with the intent and with the effect of injuring a competitor and where the effect may be to substantially lessen com petition or tend to create a monopoly or to unreasonably restrain trade, is an unfair trade practice.

RULE 10.
Directly or indirectly to give, or permit to be given, or offer to give, 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, with- out the knowledge of their employers or principals, as an inducement to influence their employers or principals to purchase or contract to purchase industry products from the maker of such gift or offer, or to influence such employers or principals to refrain from dealing or contracting to deal with competitors, is an unfair trade practice.

RULE 11.
Willfully inducing or attempting to induce the breach of any law- fully existing contract or contracts between competitors and their customers by any false or deceptive means whatsoever, or interfering with or obstructing the performance of any such contractual duties or services, with the purpose and effect of unduly hampering, injuring, or embarrassing competitors in their businesses, is an unfair trade practice.

RULE 12.
The circulation of threats of suit for infringement of patents or trade-marks among customers or prospective customers of a competitor, not made in good faith but for the purpose of harassing or intimidating such customers or prospective customers or otherwise prejudicing or injuring competitors in their businesses, is an unfair trade practice.

RULE 13.
The publishing or circulating by any member of the industry of ‘false or misleading price quotations, price lists, or terms of sale. having the capacity or tendency to mislead or deceive purchasers or prospective purchasers, is an unfair trade practice.

RULE 14.
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. RULE 15.
Withholding from or inserting in the invoice statements which make the invoice a false record, wholly or in part, of the transaction represented on the face thereof, with the purpose or effect of misleading or deceiving purchasers or prospective purchasers, is an unfair trade practice.

RULE A.
GROUP II*
The advertising or offering for sale by a wholesaler of any well- known or trade-marked tobacco product of the Wholesale Tobacco Industry at greatly reduced prices, when the quantity of said goods is entirely inadequate to supply the usual demand of customers of the said wholesaler, with the tendency or capacity to mislead or deceive purchasers or prospective purchasers, is condemned by the industry.

RULE B.
Where merchandise at wholesale and merchandise at retail are sold in the same establishment, the failure on the part of any member of the industry to properly 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.

RULE C.
The evasion of the payment of State taxes on cigars, cigarettes, or other tobacco products through interstate transactions is condemned by the industry.
A Committee on Trade Practices is hereby created by the industry to cooperate with the Federal Trade Commission and to perform such acts as may be proper to put these rules into effect.
Promulgated by the Federal Trade Commission September 28, 2024.
See page VIII for head note applicable to Group II Rules.

_{1 Rules when promulgated are published in the form of separate pamphlets which are obtainable upon request to the Federal Trade Commission. Codifications of Group I rules are also published in the Code of Federal Regulations of the United States of America (16 C.F.R.- Chap . I, Sub chapter “B” and supplements thereto. )}

TRADE PRACTICE RULES 461
APPENDIX
TRADE PRACTICE CONFERENCE PROCEDURE
[Reprint of Rule XXVII, RULES, POLICY, AND ACTS of the Federal Trade Commission, Dated
July 1, 1946]
rules in the
the public.
and
voluntarypar-
eliminate illegal
ticipation to
trade practices
or promote
fair competitive
(a) Purpose. The trade practice conference procedure To establish
has for its purpose the establishment, by the Commission, interest of
of trade practice rules in the interest of industry and the
purchasing public. This procedure affords opportunity
for voluntary participation by industry groups or other
interested parties in the formulation of rules to provide
for elimination or prevention of unfair methods of com-
petition, unfair or deceptive acts or practices and other
illegal trade practices. They may also include provisions
to foster and promote fair competitive conditions and to
establish standards of ethical business practices in har-
mony with public policy. No provision or rule, however,
may be approved by the Commission which sanctions a
practice contrary to law or which may aid or abet
practice contrary to law.
conditions and
etc.
ethical standards.
Butno rule,etc., which
sanctions oraids, etc.,
practicecontrary to law
a to be approved.
Upon Commis-
tionor
sion’sownmo-
application
interest.
when in public
Considerations
( b ) When authorized.-Trade practice conference pro-
ceedings may be authorized by the Commission upon its
own motion or upon application therefor whenever such
proceedings appear to the Commission to be in the inter-
est of the public. In authorizing proceedings, the Com-
mission may consider whether such proceedings appear determining.
to have possibilities (1) of constructively advancing the
best interests of industry on sound competitive principles
in consonance with public policy, or (2) of bringing about
more adequate or equitable observance of laws under
which the Commission has jurisdiction, or (3) of other-
wise protecting or advancing the public interest.
Maybe filedby
partyin
any interested
writing.
(c) Application.-Application for a trade practice con-
ference may be filed with the Commission by any inter-
ested person, party or group. Such application shall be in
writing and be signed by the applicant or the duly author-
ized representative of the applicant or group desiring such
conference. The following information, to the extent known
to the applicant, shall be furnished with such applica- Information
tion or in a supplement thereto :
(1) A brief description of the industry, trade, or
subject to be treated.
required.
1
462 FEDERAL TRADE COMMISSION
Permissible
upon request.
Submittal
ofdata, etc.
Public notice.
Incharge of:
member of
Commission
or its staff.
Transcript of
proceedings,
etc., tobe
submitted to
Commission.
All interested
persons, in-
cluding con-
sumers, to be
heard.
Approved rules
tobepub-
lished in
Federal
Register.
(2) The kind and character of the products in-
volved.
(3) The size or extent and the divisions of the
industry or trade groups concerned.
(4) The estimated total annual volume of produc-
tion or sales of the commodities involved.
(5) List of membership of the industry or trade
groups concerned in the matter.
(6) A brief statement of the acts, practices, meth-
ods of competition or other trade practices desired
tobe considered, or drafts of suggested trade practice
rules. :
(d) Informal Discussions with Members of the Com-
mission’s Staff.-Any interested person or group may, up-
on request, be granted opportunity to confer in respect
to any proposed trade practice conference with the Com-
mission’s Trade Practice Conference Division, either prior
or subsequent to the filing of any such application. They
may also submit any pertinent data or information which
they desire to have considered. Such submission shall be
made during such period of time as the Commission or its
duly authorized official may designate.
(e) Industry Conferences.-Reasonable public notice of
the time and place of any such authorized conference shall
be issued by the Commission. A member of the Commis-
sion or of its staff shall have charge of the conference and
shall conduct the conference pursuant to direction of the
Commission and in such manner as will facilitate the pro-
ceeding and afford appropriate consideration of matters
properly coming before the conference. A transcript of
the conference proceedings shall be made, which, together
with all rules, resolutions, modifications, amendments or
other matters offered, shall be filed in the office of the
Commission and submitted for its consideration.
(f) Public Hearing on Proposed Rules. Before final
approval by the Commission of rules for an industry, and
upon such reasonable public notice as to the Commission

seems appropriate, further opportunity shall be afforded
by the Commission to all interested persons, corporations
or other organizations, including consumers, to submit in
writing relevant suggestions or objections and to appear
and be heard at a designated time and place.
(g) Promulgation of Rules.-When trade practice rules
shall have been finally approved and received by the Com-
mission, they shall be promulgated by official order of the
TRADE PRACTICE RULES 463
Commission and published, pursuant to law, in the Fed-
eral Register. Said rules shall become operative thirty Effective date.
(30) days from date of promulgation or at such other
time as may be specified by the Commission. Copies of the Copies.
final rules shall be made available at the office of the
Commission. Under the procedure of the Commission a
copy of the trade practice rules as promulgated by the
Commission is sent to each member of the industry whose
name and address is available, together with an accept-
ance form providing opportunity to such member to sig-
nify his intention to observe the rules in the conduct of
his business. Considered
upon complaint
mission’s own
(h) Violations.–Complaints as to the use, by any per-
son, corporation or other organization, of any act, practice
or method inhibited by the rules may be made to the motion.
Commission by any person having information thereof.
Such complaints, if warranted by the facts and the law,
will receive the attention of the Commission in accordance
with the law. In addition, the Commission may act upon
its own motion in proceeding against the use of any act,
practice or method contrary to law.

Dividends,