[Federal Register Volume 59, Number 197 (Thursday, October 13, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-25333]
[[Page Unknown]]
[Federal Register: October 13, 1994]
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FEDERAL TRADE COMMISSION
[File No. 932-3368]
The American Tobacco Company; Proposed Consent Agreement With
Analysis To Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement.
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SUMMARY: In settlement of alleged violations of federal law prohibiting
unfair acts and practices and unfair methods of competition, this
consent agreement, accepted subject to final Commission approval, would
prohibit, among other things, a Stamford, Connecticut based company
from disseminating ads for Carlton or any other cigarettes that
represent that consumers will get less tar or nicotine by smoking any
number of cigarettes of any of its brands than by smoking one or more
cigarettes of any other brand, unless such representations are both
true and substantiated by competent and reliable scientific evidence.
DATES: Comments must be received on or before December 12, 1994.
ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,
Room 159, 6th Street and Pennsylvania Avenue NW., Washington, D.C.
20580.
FOR FURTHER INFORMATION CONTACT:
C. Lee Peeler or Shira D. Modell, FTC/601 Bldg.--Rm. 4002, Washington,
D.C. 20580. (202) 326-3090 or (202) 326-3116.
SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Sec. 2.34 of the
Commission's Rules of Practice (16 CFR 2.34), notice is hereby given
that the following consent agreement containing a consent order to
cease and desist, having been filed with and accepted, subject to final
approval, by the Commission, has been placed on the public record for a
period of sixty (60) days. Public comment is invited. Such comments or
views will be considered by the Commission and will be available for
inspection and copying at its principal office in accordance with
Sec. 4.9(b)(6)(ii) of the Commission's Rules of Practice (16 CFR
4.9(b)(6)(ii)).
Agreement Containing Consent Order To Cease and Desist
In the matter of: The American Tobacco Company, a corporation.
The Federal Trade Commission having initiated an investigation of
certain acts and practices of The American Tobacco Company, a
corporation, and it now appearing that The American Tobacco Company, a
corporation (hereinafter sometimes referred to as ``proposed
respondent''), is willing to enter into an agreement containing an
order to cease and desist from the use of the acts and practices being
investigated,
It is hereby agreed by and between The American Tobacco Company, by
its duly authorized officer, and counsel for the Federal Trade
Commission that:
1. Proposed respondent The American Tobacco Company is a
corporation organized, existing and doing business under and by virtue
of the laws of the State of Delaware, with its office and principal
place of business located at 281 Tresser Boulevard, in the City of
Stamford, State of Connecticut.
2. Proposed respondent admits all the jurisdictional facts set
forth in the draft of complaint here attached.
3. Proposed respondent waives:
a. Any further procedural steps;
b. The requirement that the Commission's decision contain a
statement of findings of fact and conclusions of law;
c. All rights to seek judicial review or otherwise to challenge or
contest the validity of the order entered pursuant to this agreement;
and
d. All claims under the Equal Access to Justice Act.
4. This agreement shall not become part of the public record of the
proceeding unless and until it is accepted by the Commission. If this
agreement is accepted by the Commission, it, together with the draft of
complaint contemplated thereby, will be placed on the public record for
a period of sixty (60) days and information in respect thereto publicly
released. The Commission thereafter may either withdraw its acceptance
of this agreement and so notify the proposed respondent, in which event
it will take such action as it may consider appropriate, or issue and
serve its complaint (in such form as the circumstances may require) and
decision, in disposition of the proceeding.
5. This agreement is for settlement purposes only and does not
constitute an admission by proposed respondent that the law has been
violated as alleged in the draft of complaint here attached, or that
the facts as alleged in the draft complaint, other than jurisdictional
facts, are true.
6. This agreement contemplates that, if it is accepted by the
Commission, and if such acceptance is not subsequently withdrawn by the
Commission pursuant to the provisions of Sec. 2.34 of the Commission's
Rules, the Commission may, without further notice to proposed
respondent, (1) issue its complaint corresponding in form and substance
with the draft of complaint here attached and its decision containing
the following order to cease and desist in disposition of the
proceeding and (2) make information public in respect thereto. When so
entered, the order to cease and desist shall have the same force and
effect and may be altered, modified or set aside in the same manner and
within the same time provided by statute for other orders. The order
shall become final upon service. Delivery by the U.S. Postal Service of
the complaint and decision containing the agreed-to order to proposed
respondent's address as stated in this agreement shall constitute
service. Proposed respondent waives any right it may have to any other
manner of service. The complaint may be used in construing the terms of
the order, and no agreement, understanding, representation or
interpretation not contained in the order or the agreement may be used
to vary or contradict the terms of the order.
7. Proposed respondent has read the proposed complaint and order
contemplated hereby. Proposed respondent understands that once the
order has been issued, it will be required to file one or more
compliance reports showing that it has fully complied with the order.
Proposed respondent further understands that it may be liable for civil
penalties in the amount provided by law for each violation of the order
after it becomes final.
Order
I
It is ordered that respondent, The American Tobacco Company, a
corporation, its successors and assigns, and its officers, agents,
representatives and employees, directly or through any corporation,
subsidiary, division or other device, in connection with the
manufacturing, labelling, advertising, promotion, offering for sale,
sale or distribution of any cigarette in or affecting commerce, as
``commerce'' is defined in the Federal Trade Commission Act, do
forthwith cease and desist from representing, through the presentation
of the tar ratings of any of respondent's brands of cigarettes as a
numerical multiple, fraction or ratio of the tar of any other brand of
cigarettes, and/or the visual depiction of ten packs or a carton of any
of respondent's brands versus one pack of any other brand, directly or
by implication, that consumers will get less tar by smoking ten packs
of any cigarette rated as having 1 mg. of tar than by smoking a single
pack of any other brand of cigarettes that is rated as having more than
10 mg. of tar. For purposes of this Order, the term ``cigarette' shall
be as defined in Section 1332 (1) of Title 15 of the United States
Code.
II
It is further ordered that respondent, The American Tobacco
Company, a corporation, its successors and assigns, and its officers,
agents, representatives and employees, directly or through any
corporation, subsidiary, division or other device, in connection with
the manufacturing, labelling, advertising, promotion, offering for
sale, sale or distribution of any cigarette in or affecting commerce,
as ``commerce'' is defined in the Federal Trade Commission Act, do
forthwith cease and desist from representing, through the presentation
of the tar or nicotine ratings of any of respondent's brands of
cigarettes as a numerical multiple, fraction or ratio of the tar or
nicotine ratings of any other brand of cigarettes, and/or the visual
depiction of more than one pack of any of respondent's brands versus
one pack of any other brand, directly or by implication, that consumers
will get less tar or nicotine by smoking any number of cigarettes (or
packs or cartons of cigarettes) of any of respondent's brands than by
smoking one or more cigarettes (or packs or cartons of cigarettes) of
any other brand, unless such representation is true and, at the time of
making such representation, respondent possesses and relies upon
component and reliable scientific evidence that substantiates the
representation. For purposes of this Order, ``component and reliable
scientific evidence'' shall mean tests, analyses, research, studies, or
other evidence based on the expertise of professionals in the relevant
area, that has been conducted and evaluated in any objective manner by
persons qualified to do so, using procedures generally accepted in the
profession to yield accurate and reliable results.
III
It is further ordered that presentation of the tar and/or nicotine
ratings of any of respondent's brands of cigarettes and the tar and/or
nicotine ratings of any other brand (with or without an express or
implied representation that respondent's brand is ``low,'' ``lower,''
or ``lowest'' in tar and/or nicotine) shall not be deemed to constitute
a numerical multiple, fraction or ratio and shall not, in and of
itself, be deemed to violate Paragraph I or II of this Order where no
more than a single cigarette or pack of respondent's brand is visually
depicted versus a single cigarette or pack of any other brand.
IV
It is further ordered that for five (5) years after the last date
of dissemination of any representation covered by this Order,
respondent or its successors and assigns, shall maintain and upon
request make available to the Federal Trade Commission for inspection
and copying:
A. All materials that were relied upon in disseminating such
representation; and
B. All tests, reports, studies, surveys, demonstrations or other
evidence in its possession or control that contradict, qualify, or call
into question such representation, or the basis relied upon for such
representation, including complaints from consumers.
V
It is further ordered that respondent shall distribute a copy of
this Order to each of its operating divisions and to each of its
officers, agents, representatives, or employees engaged in the
preparation and placement of advertisements, promotional materials,
product labels or other such sales materials covered by this Order.
VI
It is further ordered that respondent shall notify the Commission
at least thirty (30) days prior to any proposed change in the
corporation, such as dissolution, assignment, or sale resulting in the
emergence of a successor corporation, the creation or dissolution of
subsidiaries, or any other change in the corporation which may affect
compliance obligations under this Order.
VII
It is further ordered that respondent shall, within sixty (60) days
after service of this Order, and at such other times as the Federal
Trade Commission may require, file with the Commission a report, in
writing, setting forth in detail the manner and form in which it has
complied with this Order.
Analysis of Proposed Consent Order To Aid Public Comment
The Federal Trade Commission has accepted an agreement to a
proposed consent order from The American Tobacco Company (``American
Tobacco'').
The proposed consent order has been placed on the public record for
sixty (60) days for reception of comments by interested persons.
Comments received during this period will become part of the public
record. After sixty (60) days, the Commission will again review the
agreement and the comments received and will decide whether it should
withdraw from the agreement or make final the agreement's proposed
order.
This matter concerns claims made by American Tobacco in its
advertising for cigarettes.
The Commission's complaint in this matter charges American Tobacco
with engaging in unfair or deceptive practices in connection with the
advertising of its Carlton brand cigarettes. According to the
complaint, American Tobacco falsely represented, through the
presentation of the tar of its Carlton product as a numerical multiple,
fraction or ratio of the tar of other brands of cigarettes, and/or the
visual depiction of ten packs or a carton of Carlton cigarettes versus
one pack of the other brands: (1) That consumers will get less tar by
smoking ten packs of Carlton brand cigarettes than by smoking a single
pack of the other brands of cigarettes depicted in the ads, which are
rated as having more than 10 mg. of tar; and (2) that it had a
reasonable basis for claims that consumers will get less tar by smoking
ten packs of Carlton brand cigarettes than by smoking a single pack of
the other brands of cigarettes depicted in the ads.
The consent order contains provisions designed to remedy the
violations charged and to prevent American Tobacco from engaging in
similar deceptive and unfair acts and practices in the future.
Part I of the order prohibits American Tobacco from representing,
through certain means specified in the order, that consumers will get
less tar by smoking ten packs of any cigarette rated as having 1 mg. of
tar than by smoking a single pack of any other brand of cigarettes that
is rated as having more than 10 mg. of tar.
Part II of the order prohibits American Tobacco from representing,
through those same means, that consumers will get less tar or nicotine
by smoking any number of cigarettes (or packs or cartons of cigarettes)
of any of respondent's brands than by smoking one or more cigarettes
(or packs or cartons of cigarettes) of any other brand, unless, the
representation is true and, at the time it makes such claims, American
Tobacco has competent and reliable scientific evidence to substantiate
the claims.
Part III of the order provides a limited ``safe harbor'' for
advertising that complies with certain specific requirements in its use
of official tar and nicotine ratings. Specifically, presentation of the
tar and/or nicotine ratings of any of American Tobacco's brands of
cigarettes and the tar and/or nicotine ratings of any other brand shall
not, in and of itself, be deemed to violate Part I or Part II of the
order where no more than a single cigarette or pack or American
Tobacco's brand is visually depicted versus a single cigarette or pack
of any other brand.
Part IV of the order requires American Tobacco to maintain copies
of all materials relied upon in making any representations covered by
the order, as well as all materials that contradict or call into
question those representations.
Part V of the order requires American Tobacco to distribute copies
of the order to each of its operating divisions and to various
officers, agents, representatives or employees of American Tobacco.
Part VI of the order requires American Tobacco to notify the
Commission of any changes in corporate structure that might affect
compliance with the order.
Part VII of the order requires American Tobacco to file with the
Commission one or more reports detailing compliance with the order.
The purpose of this analysis is to facilitate public comment on the
proposed order, and it is not intended to constitute an official
interpretation of the agreement and proposed order, or to modify any of
their terms.
Donald S. Clark,
Secretary.
[FR Doc. 94-25333 Filed 10-12-94; 8:45 am]
BILLING CODE 6750-01-M
