Approved Code No. 201 — Supplement No. 7 Registry No. 1327—3—03 NATIONAL RECOVERY ADMINISTRATION SUPPLEMENTARY CODE OF FAIR COMPETITION FOR THE RADIO WHOLESALING TRADE (A Division of the Wholesaling or Distributing Trade) AS APPROVED ON APRIL 21, 1934 WE DO OUR PART UNITED STATES GOVERNMENT PRINTING OFFICE WASHINGTON: 1934 For sale by the Superintendent of Documents, Washington, D.C. -------- Price 5 cents This publication is for sale by the Superintendent of Documents, Government Printing Office, Washington, D.C., and by district offices of the Bureau of Foreign and Domestic Commerce. DISTRICT OFFICES OF THE DEPARTMENT OF COMMERCE Atlanta, Ga. : .",04 Post Office Building. Birmingham, Ala. : 257 Federal Building. Boston, Mass. : 1801 Customhouse. Buffalo, N.Y. : Chamber of Commerce Building. Charleston, S.C. : Chamber of Commerce Building. Chicago, 111. : Suite 1706, 201 North Wells Street. Cleveland, Ohio : Chamber of Commerce. Dallas, Tex. : Chamber of Commerce Building. 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Approved Code No. 201 — Supplement No. 7 SUPPLEMENTARY CODE OF FAIR COMPETITION FOR THE RADIO WHOLESALING TRADE As Approved on April 21, 1934 ORDER Supplementary Code of Fair Competition for the Radio Whole- saling Trade a division of the wholesaling or distributing trade An application having been duly made pursuant to and in full compliance with the provisions of Title I of the National Industrial Recovery Act, approved June 16, 1933, for approval of a Supple- mental Code of Fair Competition for the Radio Wholesaling Trade to the Code of Fair Competition for the Wholesaling or Distributing Trade, and hearings having been duly held thereon and the annexed report on said Supplemental Code, containing findings with respect thereto, having been made and directed to the President : NOW, THEREFORE, on behalf of the President of the United States, I, Hugh S. Johnson, Administrator for Industrial Recovery, pursuant to authority vested in me by Executive Orders of the President, including Executive Order No. 6543-A, dated December 30, 1933, and otherwise; do hereby incorporate by reference said annexed report and do find that said Supplemental Code complies in all respects with the pertinent provisions and will promote the policy and purposes of said Title of said Act; and do hereby order that said Supplemental Code of Fair Competition be and it is hereby approved. Hugh S. Johnson, Administrator for Industrial Recovery. Approval recommended : H. O. King, Division Administrator. Washington, D.C., April 21, 1934. 54395° 482—140 34 (1) REPORT TO THE PRESIDENT The President, The White House. Sir : This is a report of the Hearing on the Supplemental Code of the Radio Wholesaling Trade to the Code of Fair Competition for the Wholesaling or Distributing Trade conducted in Room 2062-66, Commerce Building, on February 24, 1934. The Supplemental Code which is attached was presented by duly qualified and authorized representatives of the Trade, complying with the statutory require- ments, said to represent 56 percent in number and 76 percent in volume of the Trade which could be included in this Code. THE TRADE Available census figures do not specifically classify the Radio Wholesale business as such. According to statistics furnished by members of the Trade, there are approximately 500 concerns en- gaged in it. Their total annual sales in 1929 amounted to approx- imately four hundred and twent}'-five million dollars, and in 1933 to seventy-five million dollars. The Trade employs about 4500 persons. PROVISIONS OF THE CODE Since this Code is supplemental to the General Code of Fair Com- J)etition for the Wholesaling or Distributing Trade, it contains no abor provisions. The provisions containing supplemental definitions are inclusive and accurate. The supplement to the administrative provisions, establishes a Divisional Code Authority for this Trade, which is fairly and ade- quately representative of the different elements in the Trade. Ac- cording to the most accurate available statistics, the Radio Whole- salers Association contains among its membership or is authorized to represent in the administration of the Code, 56 percent of the total number of concerns in the Trade. Its members sell approxi- mately 76 percent of the total volume. The selection of nine repre- sentatives of the Code Authority by the Association and three repre- sentatives by non-members of the Association, therefore, seems to be fair. The Trade Practice rules contained in the Supplemental Code are not in any respect objectionable and are designed to promote fair dealing in the Trade. FINDINGS The Deputy Administrator in his final report to me on said Code having found as herein set forth and on the basis of all the proceed- ings in this matter; (2) I 3 I find that : (a) Said Code is well designed to promote the policies and pur- poses of Title I of the National Industrial Recovery Act, including removal of obstructions to the free flow of interstate and foreign commerce which tend to diminish the amount thereof and will pro- vide for the general welfare by promoting the organization of indus- try for the purpose of cooperative action among the trade groups, by inducing and maintaining united action of labor and management under adequate governmental sanctions and supervision, by elimi- nating unfair competitive practice, by promoting the fullest possible utilization of the present productive capacity of industries, by avoid- ing undue restriction of production (except as may be temporarily required), by increasing the consumption of industrial and agricul- tural products through increasing purchasing power, by reducing and relieving unemployment, by improving standards of labor, and by otherwise rehabilitating industry. (b) Said Trade normally employs not more than 50,000 employees; and is not classified by me as a major industry. (c) The Code as approved complies in all respects with the pertinent provisions of said Title of said Act, including without limitation Subsection (a) of Section 3, Subsection (a) of Section 7, and Subsection (b) of Section 10 thereof; and that the applicant group is a trade group truly representative of the aforesaid Trade ; and that said group imposes no inequitable restrictions on admission to membership therein. (d) The Code is not designed to and will not permit monopolies or monopolistic practices. (e) The Code is not designed to and will not eliminate or oppress small enterprises and will not operate to discriminate against them. (f) Those engaged in other steps of the economic process have not been deprived of the right to be heard prior to approval of said Code. For these reasons, the Supplemental Code has been approved. Respectfully, Hugh S. Johnson, A dministraior. April 21, 1934. SUPPLEMENTARY CODE OF FAIR COMPETITION FOR THE RADIO WHOLESALING TRADE A DIVISION OF THE WHOLESALING OR DISTRIBUTING TRADE Article I — Purposes To further effectuate the policies of Title I of the National In- dustrial Recovery Act, the following provisions are established as a Supplemental Code of Fair Competition for the Radio Wholesaling Trade to the Code of Fair Competition for the Wholesaling or Dis- tributing Trade, as provided by Article VI, Section 1 (c) thereof, and such supplemental Code shall be considered as a part of and in connection with said Code for the Wholesaling or Distributing Trade; and both Codes shall be binding upon every member of such Radio Wholesaling Trade. Article II — Definitions Supplementing Article II of the General Code. (a) The term "Radio Apparatus' 1 , as used herein, refers to Radio Receiving Sets, Television Receivers, Radio Phonograph Combinations, Phonographs employing Vacuum Tubes, Vacuum Tubes, and accessories and parts used independently or integrally with all types of such Receivers and Combinations. (b) The term "wholesaler" or "distributor", as used herein, is defined but without limitation, as an individual, association, part- nership, corporation or other firm, or a definitely organized division thereof, definitely organized to render and rendering a general wholesale distribution service and maintaining and operating a wholesale warehouse service, who is engaged in the business of sell- ing Radio Apparatus through salesmen, advertising and/or sales promotion devices at wholesale, principally to dealers for resale to ultimate consumers; but does not sell in significant amounts to ultimate consumers. (c) The term " the Trade ", as used herein, is defined to mean the business engaged in by wholesalers or distributors as above defined. (d) The term " dealer ", as used herein is defined, but without limitation, as an individual, association, partnership, corporation, or other firm, or a definitely organized division thereof, operating as a retailer of Radio Apparatus selling direct to the ultimate consumer. (e) The " Radio Wholesalers Association, Inc.", hereinafter called the R.W.A., is defined to be the National Association of Radio Dis- tributors which is sponsoring this Supplemental Code. (f ) The term " District Agency ", as used herein, is a body author- ized by the Divisional Code Authority to represent it in the various geographic districts in the manner provided in Article III. (4) (g) The term " Divisional Code Authority ", as used herein, shall mean the Divisional Code Authority for the Radio Wholesaling Trade, a division of the Wholesaling or Distributing Trade. (h) The term "General Code", as used herein, shall mean the Code of Fair Competition for the Wholesaling or Distributing Trade. Article III — Administration Supplementing Article VI, Section 2 (e) of the General Code. Section 1. Divisional Code Authority Membership. — (a) The Divisional Code Authority shall consist of twelve members of the Trade: one (1) to be the President of the R.W.A. ; one (1) to be the Executive Vice President of the R.W.A. ; seven (7) to be chosen by the Board of Directors of the R.W.A. to represent its members in various geographical sections of the country; and three (3) mem- bers to be chosen from members of the Trade who are not members of the R.W.A., in a manner to be approved by the Administrator. (b) The Membership of the Divisional Code Authority may be increased or contracted, with the approval of the Administrator, upon the recommendation of the Divisional Code Authority that the geographical subdivision of the country requires such readjustment. (c) The Administrator, or the Board of Directors of the R.W.A. with the approval of the Administrator, may remove and replace for non-feasance, malfeasance, or misfeasance in office such members of the Divisional Code Authority whom it previously chose and appointed. Section 2. Powers and Duties. — The Divisional Code Authority shall have the following duties and powers in addition to those stated in the General Code : (a) To elect officers and to assign to them such duties as it may consider advisable ; to appoint subcommittees ; to provide rules for its own procedure; to organize District Agencies which shall be repre- sentative of members of the Trade in such geographical sections of the country as it may designate, and, with the approval of the Administrator, delegate thereto such powers and duties as it deems necessary for the proper administration of this Code, provided that nothing in this subsection (a) shall be construed to relieve the Divisional Code Authority of any of its duties and responsibilities as such. (b) To cooperate with the Administrator in regulating the use of the National Recovery Administration Code Insignia solely by those members of the Trade who are complying with this Supplemental Code. (c) To initiate, consider and make recommendations for the mod- ification or amendment of this Supplemental Code. (d) To appoint a Trade Practice Committee which shall meet with the Trade Practice Committees appointed under such other Codes as may be related to the Trade, except other Supplemental Codes governing the several divisions of the Wholesaling or Distributing Trade, for the purpose of formulating fair trade practices to govern the relationships between production and distribution employers under this Supplemental Code and under such others to the end that such fair trade practices may be proposed to the Administrator as amendments to this Supplemental Code and such other Codes. Section 3. Administrative Review. — If the Administrator shall determine that any action of the Divisional Code Authority or any agency thereof may be unfair or unjust or contrary to the public interest, the Administrator may require that such action be sus- pended to afford an opportunity for investigation of the merits of such action and further consideration by such Divisional Code Authority or agency, pending final action, which final action shall not be effective unless the Administrator approves or unless he shall fail to disapprove after thirty days' notice to him of intention to pro- ceed with such action in its original or modified form. Section 4. Liability of Divisional Code Authority. — Nothing contained in this Code shall constitute the members of the Divisional Code Authority partners for any purpose. Nor shall any member of the Divisional Code Authority be liable in any manner to anyone for any act of any other member, officer, agent, or employee of the Divisional Code Authority exercising reasonable diligence in the conduct of his duties hereunder nor be liable to anyone for any action or omission to act under the Code, except for his own willful mis- feasance or nonfeasance. Section 5. District Agencies. — (a) District Agencies shall con- sist of not less than three members of the Trade operating within each trading area involved. The same proportion of members of the Trade not members of the R.W.A. shall be selected to membership in each District Agency as are on the Divisional Code Authority, provided that at least one non-member of the R.W.A. shall be selected to membership in each such Agency and provided, further, that this provision shall not prevent adjusting the selection of a District Agency in such a manner that it shall be representative of the mem- bers of the Trade in a particular district where a representative number of such members of the Trade may not be members of the Radio Wholesalers Association. (b) In any instance where a member of a District Agency is the object of investigation or complaint, the other agency members shall choose a substitute to act in his stead. Article IV — Trade Practices Supplementing Article VII of the General Code. Section 1. Subterfuge. — It shall be an unfair trade practice for any member of the Trade to employ subterfuge, directly or indi- rectly, to avoid or attempt to avoid the provisions of this Code or the purposes and intent of the National Industrial Recovery Act, which are to increase employment, provide better wages, promote fair competitive methods, better business conditions, and promote the public welfare. Section 2. Protection to Dealers. — Members of the Trade shall not discriminate, directly or indirectly, between dealers in services rendered or in discounts or net prices extended ; provided that noth- ing herein shall prohibit quantity discounts. Section 3. Cost and Price Provisions — (a) Selling Below Cost. — It is considered an unfair method of competition and inimical to best public interest for any member of the Trade to sell any item below cost except as permitted in para- graph (b) of this Section. Cost, for the purposes of this Section, shall be the net invoice purchase price, plus transportation charges to the wholesaler's warehouse, and, when ascertained by the Admin- istrator, upon the recommendation of the Divisional Code Authority, to include a reasonable amount for direct labor costs entailed in the sale and delivery of the merchandise and the collection of accounts by the member of the Trade. (b) Dropped Lines. — Dropped lines or surplus stocks, sometimes designated as " closeouts ", held by any member of the Trade, or in- ventories which must be converted into cash to meet immediate needs, may be sold at such prices as are necessary to move these stocks into buyers' hands. However, all such stocks must first be reported to the District Agency at least two weeks prior to the offer of sale, listing the descriptions, quantities, and minimum acceptable prices of such stocks and reasons for such sale. The member shall certify that he is acting in good faith. The District Agency shall act upon such report within one week after its receipt and shall approve the sale unless it finds that the same will not conform to any one of the conditions of this paragraph, in which event it may recommend disapproval of such sale to the Divisional Code Authority. If the Divisional Code Authority shall disapprove the finding of such Dis- trict Agency, it shall at once notify the member of the Trade and the District Agency that such sale may be made; if the Divisional Code Authority approves the finding of the District Agency it shall recommend the disapproval of the sale to the Administrator. The Administrator, acting upon such recommendation, may order the sale prohibited. If the proposed sale is not prohibited by the Ad- ministrator before the date scheduled for the sale, the member of the Trade shall have the right to proceed to sell such stocks in accordance with the terms of the report originally filed. Such stocks when sold shall be plainly and completely described in the invoice and /or advertising as to its " closeout " character. (c) Terms and Cash Discounts. — Terms of sale shall not be more favorable than 2% as a cash discount (except when anticipated), or net 30 days from the date of each invoice. The date of each invoice shall be the shipment date. The cash discount period shall be fixed by each District Agency for its District and filed with the Divisional Code Authority, which may, with the approval of the Administrator, upon review, secure revision of any period so fixed. No cash dis- count shall be granted after the time so fixed shall have expired or where payment is made by any instrument that does not mature within the cash discount period. Nor shall any added discounts greater than 6% per annum be allowed for anticipation of pay- ment, nor where the customer owes an unpaid balance unless the whole of such balance be disputed in good faith. Where settlement is made in the form of notes or their equivalent, interest shall be charged at the rate of 6% per annum from the net due date. Pro- vided, however, that in both the above cases if the legal rate of inter- est in the State governing the contract be less, such rate shall apply. (d) Filing of Price Schedules. — Should any District Agency find that a two-thirds majority of all the members of the Trade in its district desire to file their Price Schedules, the District Agency shall require all of the members of the Trade operating in its district to file with it their Schedules of prices, discounts, terms, and all allow- 8 ances, setting forth a specific date for such filing. Such schedules shall become effective upon the date of filing fixed by the District Agency which shall immediately make such schedules available to all members of the Trade in that District and to such other inter- ested parties in that district as may request them and pay the cost thereof. Any member of the Trade may revise his schedules by filing such revision with the District Agency in writing, whereupon such revision shall become effective immediately and notice thereof given to all members of the Trade in that District and to such other interested parties as may request them and pay the cost thereof. It shall be an unfair trade practice for any member of the Trade to sell or offer for sale goods at prices lower than those which he then has on file. (e) Rebates or Subsidies. — A member of the Trade shall not directly or indirectly, offer to pay premiums, bonuses, or subsidies, nor pay any of the operating expenses of a dealer's business; nor pay the salaries, wages, and/or commissions of a dealer's employees ; nor pay any bonuses or compensation to a dealer's salesmen for the purpose of having the dealer or dealer's salesmen favor or push the sale of any specific products over those of a competitor ; nor furnish the services of its own employees for the purpose of relieving the dealer of the expense of similar employees as a subterfuge or rebate ; nor pay for local dealer advertising and/or sales promotion plans beyond the amount set forth under Sections 4 and 5 of this Article. Section 4. Sales Promotion Plans. — Any member of the Trade may carry out any legitimate sales promotion plan involving prizes (other than money) to his dealers' sales organizations provided that the plan is available on equal terms to all of his dealers and dealers' employees, in an area within a particular district; provided, however, that the amount so expended by the member of the Trade for such sales promotion plan shall not exceed 1% of his total net sales to his dealers on radio apparatus within the current fiscal year of the member of the Trade. Section 5. Cooperative Advertising. — Subject to the limitations herein provided, members of the Trade may cooperate with dealers in the use of local advertising: (a) Allowances. — A distributor shall not contribute to the cost of cooperative manufacturer-distributor-dealer advertising in an amount in excess of the amount contributed by the dealer or the manufac- turer, nor shall the contribution by the distributor in such arrange- ments be more than one-fourth the total cost of such advertising, regardless of the amount of the manufacturer's contribution, pro- vided that nothing in this paragraph shall be construed to prevent cooperative advertising arrangements between distributors and dealers, but the amount so expended by the distributor shall not be greater than one-half of the dealer's cost of such advertising; pro- vided, further, that not more than a total of 2y 2 % of a distribu- tor's total net sales of radio apparatus to his dealers for his current fiscal year shall be expended for both types of such cooperative advertising. Members of the Trade shall require of all dealers taking advantage of the cooperative advertising plans, a proper written statement cer- tifying to the correctness of the dealer's advertising rates as being the fair current contract rate. Allowances paid by the member of the Trade for such cooperative advertising shall be based only on certi- fied statements covering actual cost of broadcasting, or of the actual space used in newspapers, publications, billboards, placards, theatre screens, or other customary public media. The cost of any mechani- cal set-up and art work as well as cuts, make-ready, or other similar items, other than standard advertising mats or cuts supplied by the manufacturer, shall not be paid for by the member of the Trade. (b) Filing. — Each District Agency may require the members of the Trade operating in its district to file their current cooperative advertising agreements with dealers, and any changes shall be filed prior to effecting such modifications. Copies shall be available to other members of the Trade upon request. (c) Approvals. — Every member of the Trade shall have the right to supervise all advertising done under his cooperative advertising agreements as to media, layout and copy. (d) Cooperative Anticipations. — Where a dealer anticipates his cooperative advertising accruals, the member of the Trade shall not accept the liability beyond the actual accruals against genuine pur- chases shipped and invoiced within a period of time previously agreed upon, but not to exceed the immediately following six con- secutive months. Over-expenditures by the dealer beyond the actual amount available in the specific plan the member of the Trade is following, shall not be paid by the member of the Trade. (e) Rules of Fair Advertising. — It shall be an unfair trade prac- tice for any member of the Trade to contribute in any manner to cooperative advertising of his products which does not conform with the following rules : (1) Tubes being an essential accessory to a Radio Receiver, all such advertisements of Radio Sets shall specify that the price, if quoted, includes a complete set of tubes. The brand of such tubes, where they are other than the tubes originally supplied with the receiver by the manufacturer, shall be named. The word " complete " used in connection with a receiving set advertised at a specific price must mean that all tubes and other accessories necessary for the operation of the set are included, except outside aerial or the installa- tion thereof. (2) Where an advertisement contains an illustration, the illustra- tion shall correctly portray the model advertised, and the price (if quoted) and the description of such model shall be correctly set forth, and by their prominence and location shall clearly apply to the appropriate illustration. (3) No materially inaccurate misleading statements, or ambiguous statements regarding radio performance claims, amount of trade-in allowances, down payments or terms, or false reference to " no interest charges " on installment sales shall be used in any advertisements. (4) These Rules of Fair Advertising shall apply to, but without limitation, newspaper and periodical advertising, window signs and displays, banners, circular matter, posters, broadcasting, and any other type of advertising. Section 6. Consumer and Dealer Service. — No member of the Trade shall render any service which should ordinarily be rendered by the dealer without charging the dealer a reasonable price therefor. 10 On new merchandise which is found to be defective or where error has been made in design or manufacture, the distributor shall give the dealer the benefit of the manufacturer's standard warranty, and, in addition thereto, whatever provisions the manufacturer makes for additional compensation and/or expenses covering the replacement of such defective parts or apparatus. Section 7. Vacvm Tube Sales. — The Divisional Code Authority within 90 days from the effective date of this Supplemental Code shall make recommendations pertaining to the regulations governing the distribution and sale of tubes by members of the Trade, which the Administrator may approve after such notice and hearing as he shall specify. Article V — Effective Date This Supplemental Code shall become effective on the tenth day after its approval by the Administrator. Approved Code No. 201 — Supplement No. 7 Registry No. 1327-3-03 O UNIVERSITY OF FLORIDA 3 1262 08853 8573