[Federal Register Volume 59, Number 36 (Wednesday, February 23, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-4044]


[[Page Unknown]]

[Federal Register: February 23, 1994]


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FEDERAL TRADE COMMISSION
[File No. 932 3000]

 

Eggland's Best, Inc.; 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 Pennsylvania company from 
misrepresenting the amount of nutrients or other ingredients in its 
eggs or foods containing egg yolks, and would require the respondent to 
have competent and reliable scientific evidence to substantiate future 
health-benefit claims for such foods and, for one year, to label 
certain egg packages with a corrective notice stating that no studies 
show Eggland's eggs are different from other eggs in their effect on 
serum cholesterol.

DATES: Comments must be received on or before April 25, 1994.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary, 
room 159, 6th Street and Pennsylvania Avenue NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT:
C. Lee Peeler, FTC/S-4002, Washington, DC 20580, (202) 326-3090.

Agreement Containing Consent Order To Cease and Desist

    The Federal Trade Commission having initiated an investigation of 
certain acts and practices of Eggland's Best, Inc., a corporation, and 
it now appearing that Eggland's Best, Inc., 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 Eggland's Best, Inc., by its 
duly authorized officer and attorney, and counsel for the Federal Trade 
Commission that:
    1. Proposed respondent Eggland's Best, Inc. is a corporation 
organized, existing and doing business under and by virtue of the laws 
of the State of Pennsylvania with its office and principal place of 
business located at 842 First Street, King of Prussia, Pennsylvania 
19406.
    2. Proposed respondent admits all the jurisdictional facts set 
forth in the draft complaint attached hereto.
    3. Proposed respondent waives:
    (a) Any 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) Any claim 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 
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 of facts, other than 
jurisdictional facts, or of violations of law as alleged in the draft 
complaint here attached.
    6. The 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 complaint attached hereto 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 rights 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. It 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.

Definition

    For purposes of this Order, the phrase ``food containing egg yolk'' 
shall not include ``medical foods'' by 21 U.S.C. 360ee(b)(3) as 
currently in effect as of the date of this Order.

I

    It is ordered, That respondent Eggland's Best, Inc., 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 labeling, advertising, 
promotion, offering for sale, sale, or distribution of eggs or any food 
containing egg yolk in or affecting commerce, as ``food'' and 
``commerce'' are defined in the Federal Trade Commission Act, do 
forthwith cease and desist from misrepresenting, in any manner, 
directly or by implication, through numerical or descriptive terms or 
any other means, the absolute or comparative amount of cholesterol, 
total fat, saturated fat or any other nutrient or ingredient in such 
food.

II

    It is further ordered, That respondent Eggland's Best, Inc., 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 labeling, 
advertising, promotion, offering for sale, sale, or distribution of 
eggs or any food containing egg yolk in or affecting commerce, as 
``food'' and ``commerce'' are defined in the Federal Trade Commission 
Act, do forthwith cease and desist from making any representation, in 
any manner, directly or by implication, about the absolute or 
comparative effect of such food and serum cholesterol, whether or not 
such food is consumed as part of an unrestricted diet or as part of any 
specific dietary regimen, unless at the time of making the 
representation, respondent possesses and relies upon competent and 
reliable scientific evidence substantiating such representation; 
Provided, however, That any such representation that is specifically 
permitted in labeling for such food by regulation promulgated by the 
Food and Drug Administration pursuant to the Nutrition Labeling and 
Education Act of 1990 will be deemed to be substantiated as required by 
this paragraph. For purposes of this Order, ``competent 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 an 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 respondent Eggland's Best, Inc., 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 labeling, 
advertising, promotion, offering for sale, sale, or distribution of 
eggs or any food containing egg yolk in or affecting commerce, as 
``food'' and ``commerce'' are defined in the Federal Trade Commission 
Act, do forthwith cease and desist from making any representation, in 
any manner, directly or by implication, about the absolute or 
comparative health benefits of such food, including but not limited to 
its effect on heart disease, unless at the time of making the 
representation, respondent possesses and relies upon competent and 
reliable scientific evidence substantiating such representation; 
Provided, however, That any such representation that is specifically 
permitted in labeling for such food by regulations promulgated by the 
Food and Drug Administration pursuant to the Nutrition Labeling and 
Education Act of 1990 will be deemed to be substantiated as required by 
this paragraph.

IV

    It is further ordered, That respondent Eggland's Best, Inc., 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 labeling, 
advertising, promotion, offering for sale, sale, or distribution of any 
food in or affecting commerce, as ``food'' and ``commerce'' are defined 
in the Federal Trade Commission Act, do forthwith cease and desist from 
misrepresenting, in any manner, directly or by implication, the 
existence, contents, validity, results, conclusions or interpretations 
of any test or study.

V

    It is further ordered, That respondent Eggland's Best, Inc., 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 labeling, 
advertising, promotion, offering for sale, sale, or distribution of 
eggs or any food containing egg yolk in or affecting commerce, as 
``food'' and ``commerce'' are defined in the Federal Trade Commission 
Act, do forthwith cease and desist from:
    A. Failing to disclose clearly and prominently in any advertisement 
or promotional material that refers, directly or by implication, to the 
absolute or comparative amount of cholesterol, fat or saturated fat in 
such food, the average cholesterol content of such food expressed in 
the following terms:
    1. The number of milligrams; and
    2. The percentage of ``Maximum Daily Value.''
    The statements required by subparagraphs A.1 and A.2 of this Part 
shall appear in close proximity. For purposes of this Part, the term 
``Maximum Daily Value'' shall mean: (1) The daily reference value or 
other daily intake limit for cholesterol established in an effective 
final regulation of the Food and Drug Administration; or (2) in the 
absence of such a regulation, the daily intake limit of cholesterol 
advised by any one of the following three organizations: the National 
Academy of Sciences, the Surgeon General of the Public Health Service, 
or the American Heart Association. In the event that the Food and Drug 
Administration does not have a final effective regulation and none of 
the three named organizations advises that daily cholesterol intake be 
limited to a specific maximum amount, subparagraph A.2 of this Part 
shall not apply. Provided, however, That this Part will not be deemed 
to apply to any representation that is specifically permitted in 
labeling for such food product by regulations promulgated by the Food 
and Drug Administration pursuant to the Nutrition Labeling and 
Education Act of 1990.
    B. For a time period of one year, beginning no later than forty-
five (45) days from the date this Order becomes final, offering for 
sale, selling, or distributing eggs unless the package label for such 
eggs clearly and prominently states, in the exact language that 
follows, that: ``There are no studies showing that these eggs are 
different from other eggs in their effect on serum cholesterol.'' 
Provided, however, That this requirement shall apply only in those 
geographic areas where respondent has disseminated or caused to be 
disseminated advertising or promotional materials containing any 
representation, directly or by implication, about the effect of 
Eggland's Best eggs or other eggs on serum cholesterol over a period of 
12 weeks or more, or at any time between January 1, 1993 and the date 
of the acceptance of this Order by the Commission for public comment, 
including but not limited to those geographic areas listed in 
Attachment A to this Order.
    For purposes of this Order, ``clearly and prominently'' shall mean 
as follows:
    1. In a television or videotape advertisement, the disclosure shall 
be presented simultaneously in both the audio and video portions of the 
advertisement. The audio disclosure shall be delivered in a volume and 
cadence and for a duration sufficient for an ordinary consumer to hear 
and comprehended it. The video disclosure shall be of a size and shade, 
and shall appear on the screen for a duration, sufficient for a 
ordinary consumer to read and comprehend it;
    2. In a print advertisement, the disclosure shall be in type size 
which is at least the same size as that in which the principal portion 
of the text of the advertisement appears, shall be located in close 
proximity to the statement or other reference requiring the disclosure 
and shall be of a color or shade that readily contrasts with the 
background of the advertisement;
    3. In a radio advertisement, the disclosure shall be delivered in a 
volume and cadence and for a duration sufficient for an ordinary 
consumer to hear and comprehend it;
    4. On a package label, the disclosure shall be in a conspicuous and 
prominent place on the package, in a conspicuous format, and in 
conspicuous and legible type in contrast by typography, layout, or 
color with all other printed material on the package. Provided, 
however, That if the disclosure is displayed on the top or front panel 
of a standard twelve-egg carton or on the top, front or side panel of a 
standard six-egg carton, is in at least ten (10) point type and is 
either on a separate label or enclosed within a border, and both the 
type and the border are of a color or shade that readily contrasts with 
the background of the carton, the disclosure shall be deemed to have 
been made clearly and prominently for purposes of this Order.

VI

    It is further ordered, That for five (5) years after the last date 
of dissemination of any representation covered by this Order, 
respondent Eggland's Best, Inc., 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 test, reports, studies, surveys, demonstrations or other 
evidence in their possession or control that contradict, qualify or 
call into question such representation, or the basis relied upon for 
such representation, including complaints from consumers and complaints 
or inquiries from governmental organizations.

VII

    It is further ordered, That respondent Eggland's Best, Inc. shall, 
within thirty (30) days after service upon it of this Order, distribute 
a copy of the Order to each of its operating divisions, to each of its 
franchisees, to each of its managerial employees, and to each of its 
officers, agents, representatives or employees engaged in the 
preparation or placement of advertising or other materials covered by 
this Order and shall secure from each such person a signed statement 
acknowledging receipt of this Order.

VIII

    It is further ordered, That respondent Eggland's Best, Inc. shall, 
notify the Commission at least thirty (30) days prior to any proposed 
change in its corporate structure, including but not limited to 
dissolution, assignment or sale resulting in the emergence of a 
successor corporation, the creation or dissolution of subsidiaries or 
affiliates, or any other corporate change that may affect compliance 
obligations arising out of this Order.

IX

    It is further ordered, That respondent Eggland's Best, Inc. 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.

Attachment A.--Geographic Areas With Cholesterol-Related Advertising or 
Promotion Pursuant to Paragraph V.B of Agreement Containing Consent 
Order

1. Iowa
2. Maine
3. Rhode Island
4. Western and Central Pennsylvania
5. Virginia
6. Maryland
7. Washington, DC
8. Georgia
9. South Carolina
10. Alabama
11. Mississippi
12. Louisiana
13. Arkansas
14. California
15. Nevada
16. Idaho
17. Michigan
18. Colorado
19. South Dakota
20. Washington
21. Montana
22. Alaska
23. Wyoming
24. Missouri
25. Oklahoma
26. Salt Lake City, Utah
27. Raleigh-Durham, North Carolina
28. Southern Illinois (St. Louis Market)

Analysis of Proposed Consent Order To Aid Public Comment

    The Federal Trade Commission has accepted an agreement to a 
proposed consent order from Eggland's Best, Inc. (``Eggland's'').
    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 Eggland's in its advertising 
and promotional materials for eggs.
    The Commission's complaint in this matter charges Eggland's with 
engaging in unfair or deceptive practices in connection with the 
advertising of its eggs. According to the complaint, Eggland's falsely 
represented that it had a reasonable basis for claims that eating its 
eggs will not increase serum cholesterol in an absolute sense and that 
eating its eggs will not increase serum cholesterol as much as eating 
ordinary eggs.
    The complaint also alleges that Eggland's falsely represented that 
clinical studies have proven that adding twelve Eggland's eggs per week 
to a low-fat diet does not cause an increase in serum cholesterol.
    Finally, the complaint alleges that Eggland's falsely represented 
that its eggs are both low in saturated fat in an absolute sense, and 
are lower in saturated fat than ordinary eggs.
    The consent order contains provisions designed to remedy the 
violations charged and to prevent Eggland's from engaging in similar 
deceptive and unfair acts and practices in the future.
    Part I of the order prohibits Eggland's from misrepresenting the 
absolute or comparative amount of cholesterol, total fat, saturated fat 
or any other nutrient or ingredient in eggs or in any food containing 
egg yolk.
    Part II of the order prohibits Eggland's from making any claims 
about the absolute or comparative effect on serum cholesterol of eggs 
or any food containing egg yolk unless, prior to making such claims. 
Eggland's has competent and reliable scientific evidence to 
substantiate the claims. This requirement applies to claims about the 
effect of such foods on serum cholesterol when consumed either as part 
of a regular, unrestricted diet or as part of a specific dietary 
regimen, for instance, a low-fat diet. Part II of the order also 
provides that representations that would be specifically permitted in 
food labeling, under regulations issued by the Food and Drug 
Administration (``FDA'') pursuant to the Nutrition and Labeling 
Education Act of 1990 (``NLEA''), will be deemed to be adequately 
substantiated.
    Part III of the order prohibits Eggland's from making any claims 
about the health benefits, including the effect on heart disease, of 
eggs or food containing egg yolk unless, prior to making such claims, 
England's has competent and reliable scientific evidence to 
substantiate the claims. This requirement applies to claims about both 
the absolute and comparative health benefits associated with consuming 
such foods. Like Part II, this Part provides that claims specifically 
permitted in food labeling, under regulations issued by FDA pursuant to 
the NLEA, will be deemed to be adequately substantiated.
    Part IV of the order prohibits Eggland's from misrepresenting the 
existence, contents, validity, results, conclusions or interpretations 
of any test or study.
    Part V.A of the order requires a clear and prominent disclosure of 
the cholesterol content of eggs or any food containing egg yolk, in any 
advertisement or promotional material that references the absolute or 
comparative amount of cholesterol, fat or saturated fat in such food. 
This disclosure of cholesterol content must be expressed both in terms 
of the number of milligrams and as a percentage of the ``Maximum Daily 
Value'' for cholesterol intake as established by FDA or other specified 
organizations. Part V.A exempts from this disclosure requirement any 
representation that is specifically permitted in food labeling under 
regulations issued by FDA pursuant to the NLEA.
    Part V.B of the Order requires Eggland's to include a clear and 
prominent notice on the package label for its eggs that ``There are no 
studies showing that these eggs are different from other eggs in their 
effect on serum cholesterol.'' This corrective notice requirement 
applies for a period of one year beginning forty-five (45) days from 
the date the order becomes final in those geographic areas where 
Eggland's disseminated advertising or promotional materials discussing 
the effect of its eggs on serum cholesterol either for a period of 
twelve (12) weeks or more, or at any time between January 1, 1993 and 
to the date of the acceptance of this order by the Commission for 
public comment.
    Part V also includes various specific provisions as to what 
constitutes a clear and prominent disclosure and corrective notice for 
purposes of this order.
    Part VI of the order requires Eggland's to maintain copies of all 
materials relied upon in making any representations covered by the 
order.
    Part VII or the order requires Eggland's to distribute copies of 
the order to its franchisees and to various officers, agents and 
representatives of Eggland's.
    Part VIII of the order requires Eggland's to notify the Commission 
of any changes in corporate structure that might affect compliance with 
the order.
    Part IX of the order requires Eggland's 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.

Separate Statement of Commissioner Mary L. Azcuenaga, Concurring in 
Part and Dissenting in Part, in Eggland's Best, Inc., File No. 932-3000

    The Commission today accepts for public comment a consent agreement 
settling charges that Eggland's Best made deceptive advertising claims 
about its eggs. I agree that there is reason to believe that these 
claims were deceptive and join in approving the order except for V.B. 
I do not agree that the corrective advertising provision contained in 
V.B. is warranted, and I dissent from the order to that extent.
    In imposing a corrective advertising remedy, the Commission must 
consider whether an advertisement has played a substantial role in 
creating in the public's mind a false belief about a product that will 
linger on after the false advertisement ceases. Warner-Lambert Co. v. 
FTC, 562 F.2d 749, 762 (D.C. Cir. 1977), cert. denied, 435 U.S. 950 
(1978). Corrective advertising is intended to dissipate the lingering 
effects of a deceptive advertisement so that future advertisements do 
not become part of a continuing deception of the public. Id. at 769.
    Here, there is no direct evidence, such as the consumer surveys and 
expert testimony in Warner Lambert Co., that Eggland's Best's 
advertisements created a lingering false impression about the effects 
on serum cholesterol of its eggs. Given the relatively short period of 
time during which Eggland's Best's advertisements were run, it seems 
unlikely that any such lingering false impression has been created. 
Without a stronger showing of the need for corrective advertising under 
the Warner-Lambert test, I cannot support including a corrective 
advertising provision in the proposed order.

Statement of Commissioner Deborah K. Owen, Concurring in Part and 
Dissenting in Part, in Eggland's Best Inc., File No. 932-3000

    I concur in the Commission's decision to issue a complaint, and to 
provisionally accept a consent agreement in this matter, except as to 
section V.B. of the Order. With respect to that Section, which requires 
corrective advertising, I dissent.
    The seminal case on corrective advertising is the Listerine case, 
Warner-Lambert Company, 86 F.T.C. 1398 (1975), where the Commission 
opined:

    [I]f a deceptive advertisement has played a substantial role in 
creating or reinforcing in the public's mind a false and material 
belief which lives on after the false advertising ceases, there is 
clear and continuing injury to competition and to the consuming 
public as consumers continue to make purchasing decisions based on 
the false belief. Since this injury cannot be avoided by merely 
requiring respondent to cease disseminating the advertisement, we 
may appropriately order respondent to take affirmative action 
designed to terminate the otherwise continuing ill effects of the 
advertisement.

86 F.T.C. at 1499-1500.
    As the complaint alleges, Eggland's ads, in my judgment, certainly 
create a false impression that its eggs will not increase serum 
cholesterol, or, comparatively, increase cholesterol as much as 
ordinary eggs. However, we must also find that the beliefs created by 
the challenged ads are likely to linger after the deceptive advertising 
ceases. As to that likelihood, it seems to me important to compare and 
contrast the facts in Warner-Lambert to the situation here.
    In Warner-Lambert, decided in 1975, the Commission noted that the 
challenged advertising claims had been made directly to the consuming 
public since 1921, and involved expenditures of large sums in print and 
television media. 86 F.T.C. at 1501. The Commission cited to the ALJ's 
Findings of Fact, which noted that Listerine had made the contested 
representations since the product went on the market almost a century 
before; that cold and sore throat claims had been made continuously on 
its labelling since prior to 1938; and that over the ten years 
preceding the decision, Listerine had spent several million dollars on 
its colds advertising, the vast majority occurring on network and spot 
television, covering all parts of the day and evening and particularly 
in network prime time. Id. at 1468 (IDFF 219-220); see also id. at 
1407-1408 (IDFF 5-8). The Commission pointed to record testimony 
indicating the high percentage of consumers taking such claims that 
would remain as long as five years after the ads ended. It concluded: 
``The record demonstrates that long after Listerine cold efficacy 
advertising ceased, a substantial proportion of the public would 
continue to believe in Listerine's efficacy for the treatment and 
prevention of colds and sore throats.'' Id. at 1503 (emphasis 
supplied).
    If we contrast the length in time, and the magnitude of Listerine's 
advertising to the instant case, Eggland's advertising would hardly 
appear to rise to even a two-digit percentage thereof. We have no 
evidence that Eggland's campaign was so similarly saturated and 
extended that long after it ceases, a substantial portion of the public 
will continue to believe the challenged claims in the absence of the 
corrective advertising that the Commission has provisionally accepted. 
Moreover, one significant factor is in evidence here that was not 
present in the Listerine case: the barrage of contrary information to 
which the public is exposed.
    While the public received little, if any, information from sources 
other than the advertiser about the true effect of Listerine on colds 
and sore throats, the vast majority of information available to 
consumers challenges the Eggland claims, and links egg consumption with 
increased serum cholesterol. Articles in the popular press, television 
and radio programs, and many cookbooks recommend that consumers lower 
their consumption of eggs. Doctors and the American Heart Association 
advise people to limit their egg consumption for health reasons. The 
general ambient information and perception is that eggs are unhealthy, 
and this climate is highly relevant in determining whether the false 
beliefs created by Eggland's Best advertisements will likely linger. 
Eggland's Best advertisements attempted to counteract the common 
wisdom, but ran for only a short time. Because the information that 
eating eggs is likely to increase serum cholesterol will continue to be 
widely disseminated to consumers through media sources, it is unlikely 
that the false beliefs regarding the effects of Eggland's Best eggs on 
serum cholesterol, or their comparative benefits to other eggs, will be 
maintained. In sum, the half-life of Eggland's advertising campaign is 
probably very short.
    This is not to suggest, however, that corrective advertising is 
only appropriate where the ad campaign is decades-old and swamps the 
public. A classic opportunity for appropriately imposing the remedy was 
the Sun Company case two years ago. File No. 902-3268. There, the 
Commission challenged claims linking octane and automobile engine 
performance made by a company that was previously under a Commission 
order for earlier false performance and uniqueness claims for its 
gasoline. Sun Oil Co., 84 F.T.C. 247 (1974). Nonetheless, the 
Commission agreed to merely a cease-and-desist order, despite the fact 
that the challenged claims took advantage of, and further contributed 
to, widespread consumer misperception about the relationship between 
octane and performance. The contrast between the Commission's decision 
there, and here, suggests that the Commission's current posture on 
corrective advertising may be more a function of respondents' 
willingness to agree to the remedy, rather than of a well defined and 
implemented policy.
    Finally, a comment on the remedy itself. The corrective advertising 
is ordered to be placed on Eggland's Best carton label. Due to other 
legal limitations, Eggland's Best has not made serum cholesterol or 
heart health claims on the carton. Thus, while the attempt to limit the 
breadth of the remedy may be well-intentioned, I find it highly ironic 
that corrective advertising has been mandated in a medium where the 
original deceptive claims were never made.

Statement of Roscoe B. Starek, III, in Eggland's Best, Matter No. 932-
3000

    After very careful deliberation, I have decided to support the 
corrective advertising provision in this order. I arrived at this 
decision somewhat reluctantly, since I think this remedy should be used 
sparingly. The appeals court decision in Warner-Lambert accords the 
Commission substantial discretion in applying such a remedy.\1\ The 
Commission must take great care, however, to exercise such broad 
discretion judiciously. Thus, the question I had to answer was whether 
corrective advertising is appropriate in the absence of an extended 
period of deceptive advertising or extrinsic evidence demonstrating 
that the false impressions will persist in consumers' minds after the 
ads cease.\2\
---------------------------------------------------------------------------

    \1\Warner-Lambert Co. v.  F.T.C., 562 F.2d 749 (D.C. Cir. 1977). 
The court suggested that the purpose of advertising is to create 
enduring beliefs in consumers' minds, such that the FTC might well 
presume in some cases that the standard for imposing corrective 
advertising had been met. It stated that it need not rely upon such 
a presumption in Warner-Lambert, however, because the record 
contained evidence that the Listerine ads had created, in the minds 
of consumers exposed to the advertising, false beliefs that would 
persist after the ads ended. Id., 562 F.2d at 762-63; see, 86 F.T.C. 
1398 (1975), at 1471 n.23 (data relied upon was survey of 
``consumers who have seen or heard a lot of advertising for 
Listerine'').
    \2\It is certainly unrealistic to think that we will have this 
data when the respondents enter into a consent agreement before a 
complaint is filed.
---------------------------------------------------------------------------

    I have determined that a limited corrective advertising requirement 
is an appropriate remedy here. First, I have reason to believe that the 
Eggland's ads have created in consumers' minds enduring false 
impressions about these eggs. Because Eggland's is able to charge for 
its eggs about 200% of the typical price per dozen, we have strong 
evidence that the company's ads have been successful in creating in the 
minds of their consumers a belief that their eggs are meaningfully 
superior to other eggs. Second, the superiority touted by Eggland's 
ads--ads disseminated as recently as two months ago--pertains to their 
effect on serum cholesterol. Common sense tells me that this belief is 
not going to disappear overnight, simply because advertising making 
that claim ceases. Third, consumers who continued to believe that 
Eggland's had a demonstrated superiority over typical eggs would suffer 
an identifiable injury, again due to the price differential. Corrective 
advertising placed on the egg package would enable consumers to avoid 
further injury.
    Finally, I am persuaded by the careful crafting of the corrective 
remedy. In my view, corrective advertising should educate, not punish. 
The instant notice is designed to reach the Eggland's target (those who 
are preparing to purchase the product) rather than the population at 
large. It has a limited dissemination schedule and will not be 
unreasonably costly. Moreover, the notice itself is a statement of fact 
that is neither derogatory of Eggland's eggs nor implies criticism of 
other companies' products.
    Although I support the very narrow corrective advertising provision 
in this case, I am not an advocate of this type of remedy.

Statement of Commissioner Dennis A. Yao, in Eggland's Best, Inc.

    I voted to accept the proposed consent agreement for public 
comment. Although I support the terms of the consent agreement, I would 
have preferred that the complaint include an implied heart disease 
allegation.
    The Commission alleges in its complaint that, among other things, 
Eggland's Best falsely represented that it had a reasonable basis for 
claims that eating its eggs will not increase serum cholesterol in an 
absolute sense and that eating its eggs will not increase serum 
cholesterol as much as eating ordinary eggs. I believe that reasonable 
consumers would interpret the express claim that Eggland's eggs will 
not increase serum cholesterol to imply that those eggs would therefore 
not increase the risk of heart disease--especially when the express 
claim was made for eggs, a product notoriously well known for its 
negative impact on heart health. Although the proposed order does 
include a requirement that health claims, including claims about heart 
disease, be substantiated by competent and reliable scientific 
evidence, I believe that industry and the public would best be served 
if the Commission communicated its belief that an implied health claim 
has been made here.\3\
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    \3\I would note that the complaint also alleges that Eggland's 
Best falsely represented that its eggs are low in saturated fat in 
an absolute sense, and are lower in saturated fat than ordinary 
eggs. Although I agree that the implied saturated fat claims 
challenged in the complaint were made, in my view this claim is 
further down the spectrum of implied claims towards those needing 
extrinsic evidence than the implied heart disease claim I discuss 
here. I thus can discern no reason for excluding the implied heart 
disease claim from the proposed complaint while including the 
saturated fat claims.
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[FR Doc. 94-4044 Filed 2-22-94; 8:45 am]
BILLING CODE 6750-01-M