[Federal Register Volume 59, Number 87 (Friday, May 6, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-10950]


[[Page Unknown]]

[Federal Register: May 6, 1994]


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FEDERAL TRADE COMMISSION
[File No. 922 3162]

 

Oak Hill Industries Corp., et al.; 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 New York manufacturer of plastic 
tableware from misrepresenting that any product or package is capable 
of being recycled, or the extent to which recycling collection programs 
are available for such products, and from making any unsubstantiated 
representation that any product or package it markets offers any 
environmental benefit.

DATES: Comments must be received on or before July 5, 1994.

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

FOR FURTHER INFORMATION CONTACT:
Michael Dershowitz, FTC/S-4002, Washington, DC 20580. (202) 326-3158.

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 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: Oak Hill Industries Corp., a corporation, and 
Malcolm Foster, individually and as an officer of said corporation.

    The Federal Trade Commission having initiated an investigation of 
certain acts and practices of Oak Hill Industries Corp., a corporation, 
and Malcolm Foster, individually and as an officer of said corporation 
(``proposed respondents''), and it now appearing that proposed 
respondents are willing to enter into an agreement containing an order 
to cease and desist from the acts and practices being investigated,
    It is hereby agreed by and between Oak Hill Industries Corp., by 
its duly authorized officer, and counsel for the Federal Trade 
Commission that:
    1. Proposed respondent Oak Hill Industries Corp. is a corporation 
organized, existing and doing business under and by virtue of the laws 
of the State of New York, with its principal office or place of 
business at 330 East 59th Street, New York, NY 10022.
    Proposed respondent Malcolm Foster is an officer of said 
corporation. He formulates, directs, and controls the acts and 
practices of said corporation. His address is the same as that of said 
corporation.
    2. Proposed respondents admit all the jurisdictional facts set 
forth in the draft of complaint here attached.
    3. Proposed respondents waive:
    (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 a 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 the complaint contemplated hereby, 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 proposed 
respondents, 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 respondents that the law has been 
violated as alleged in the attached draft complaint or that the facts 
as alleged in the attached draft complaint, other than the 
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 
respondents, (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 decision containing the agreed-to order to proposed 
respondents' address as stated in this agreement shall constitute 
service. Proposed respondents waive any right they might 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 in the agreement may be 
used to vary or contradict the terms of the order.
    7. Proposed respondents have read the complaint and the order 
contemplated hereby. They understand that once the order has been 
issued, they will be required to file one or more compliance reports 
showing they have fully complied with the order. Proposed respondents 
further understand that they may be liable for civil penalties in the 
amount provided by law for each violation of the order after it becomes 
final.

Order

Definitions

    For purposes of this Order, the following definitions shall apply:
    The term product or package means any product or package that is 
offered for sale, sold or distributed to the public by respondents, 
their successors and assigns, under the Oak Hill brand name or any 
other brand name of respondents, their successors and assigns; and also 
means any product or package sold or distributed to the public by third 
parties under private labeling agreements with respondents, their 
successors and assigns.
    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.
I
    A. It is ordered that respondents, Oak Hill Industries Corp., a 
corporation, its successors and assigns, and its officers, and Malcolm 
Foster, individually and as an officer of said corporation, and 
respondents' 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 product or package in or affecting 
commerce, as ``commerce'' is defined in the Federal Trade Commission 
Act, do forthwith cease and desist from misrepresenting, in any manner, 
directly or by implication, the extent to which:
    (1) Any such product or package is capable of being recycled; or,
    (2) Recycling collection programs for such product or package are 
available.
    B. Provided, however, respondents will not be in violation of part 
I(A)(2) of this Order, in connection with the advertising, labeling, 
offering for sale, sale, or distribution of any non-foam polystyrene, 
polypropylene film, or low-density polyethylene film product or 
package, if they truthfully represent that such product or package is 
recyclable, provided that:
    (1) Respondents disclose clearly, prominently, and in close 
proximity to such representation:
    (a) In regard to any non-foam polystyrene product or package, that 
such product or package is recyclable in the few communities with 
recycling collection programs for non-foam polystyrene; in regard to 
any polypropylene film product or package, that such product or package 
is recyclable in the few communities with recycling collection programs 
for polypropylene film; and in regard to any low-density polyethylene 
film product or package, that such product or package is recyclable in 
the few communities with recycling collection programs for low-density 
polyethylene film; or
    (b) The approximate number of U.S. communities with recycling 
collection programs for such product or package; or
    (c) The approximate percentage of U.S. communities or the U.S. 
population to which recycling collection programs for such product or 
package are available; and
    (2) In addition, such product or package itself bears a clear 
identification of the specific plastic resin(s) from which it is made.
    For purposes of this provision, a disclosure elsewhere on the 
product package shall be deemed to be ``in close proximity'' to such 
representation if there is a clear and conspicuous cross-reference to 
the disclosure. The use of an asterisk or other symbol shall not 
constitute a clear and conspicuous cross-reference. A cross-reference 
shall be deemed clear and conspicuous if it is of sufficient prominence 
to be readily noticeable and readable by the prospective purchaser when 
examining the part of the package on which the representation appears.
II
    It is further ordered that respondents, Oak Hill Industries Corp., 
a corporation, its successors and assigns, and its officers, and 
Malcolm Foster, individually and as an officer of said corporation, and 
respondents' 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 product or package in or affecting 
commerce, as ``commerce'' is defined in the Federal Trade Commission 
Act, do forthwith cease and desist from representing, in any manner, 
directly or by implication, that any such product or package offers any 
environmental benefit, unless at the time of making such 
representation, respondents possess and rely upon competent and 
reliable evidence, which when appropriate must be competent and 
reliable scientific evidence, that substantiates such representation.
III
    It is further ordered that for five (5) years after the last date 
of dissemination of any representation covered by this Order, 
respondents, or their 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 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.
IV
    It is further ordered that the corporate respondents 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, products, labels or other such sales materials covered by 
this Order.
V
    It is further ordered that the individual respondent shall notify 
the Commission in the event of the discontinuance of his present 
business or employment and of each affiliation with a new business or 
employment. In addition, for a period of five (5) years from the date 
of service of this Order, he shall promptly notify the Commission of 
each affiliation with a new business or employment whose activities 
include the sale, distribution, and/or manufacturing of any plastic 
product or package or of his affiliation with a new business or 
employment in which his own duties and responsibilities involve the 
sale, distribution, and/or manufacturing of any plastic product or 
package. Each such notice shall include the individual respondent's new 
business address and a statement of the nature of the business or 
employment in which such respondent is newly engaged, as well as a 
description of such respondent's duties and responsibilities in 
connection with the business or employment. The expiration of the 
notice provision of this paragraph shall not affect any other 
obligation arising under this order.
VI
    It is further ordered that respondents shall notify the Commission 
at least thirty (30) days prior to any proposed change in the 
corporation such as a 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 respondents shall, within sixty (6) days 
after service of this Order upon them, and at such other times as the 
Commission may require, file with the Commission a report, in writing, 
setting forth in detail the manner and form in which they have complied 
with this Order.

Analysis of Consent Order To Aid Public Comment

    The Federal Trade Commission has accepted an agreement, subject to 
final approval, to a proposed consent order from respondents Oak Hill 
Industries Corp., a New York corporation, and Malcolm Foster, 
individually and as an officer of the corporate respondent.
    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 and take other appropriate action, or make 
final the agreement's proposed order.
    This matter concerns the labeling and advertising of Oak Hill brand 
plastic plates, bowls and utensils. The Commission's complaint in this 
matter alleges that Oak Hill brand plastic plates, bowls and utensils 
are made from non-foam polystyrene; that they are packaged in thin 
plastic packaging which is sometimes made from polypropylene film and 
at other times from low-density polyethylene film; and that such 
plastic products and packaging do not identify the type(s) of plastic 
resin from which they are made. The complaint charges that Oak Hill 
falsely represented that the plastic plates, bowls and utensils and the 
plastic film packaging are recyclable. In fact, the complaint alleges, 
the plastic products and packaging are not recyclable, because there 
are only a few collection facilities nationwide that will accept non-
foam polystyrene plates, bowls or utensils or the polypropylene film or 
low-density polyethylene film plastic packaging for recycling.
    The proposed consent order contains provisions designed to remedy 
the violations charged and to prevent the respondents from engaging in 
similar acts and practices in the future.
    Part I of the proposed order requires that respondents cease and 
desist from misrepresenting, in any manner, directly or by implication, 
with respect to any product or package the extent to which it is 
capable of being recycled or to which recycling collection programs are 
available. Part I also contains a proviso that allows the respondents 
to advertise non-foam polystyrene, polypropylene film or low-density 
polyethylene film products or packages as recyclable without violating 
Part I of the order. The respondents may do so if they truthfully 
represent that such products or packages are capable of being recycled; 
disclose clearly, prominently and in close proximity to such claim: (a) 
That such product or package is recyclable in the few communities with 
recycling collection programs for non-foam polystyrene, polypropylene 
film or low-density polyethylene film; or (b) the approximate number of 
U.S. communities with recycling collection programs for such product or 
package; or (c) the approximate percentage U.S. communities or the U.S. 
population to which recycling collection programs for such product or 
package are available; and in addition, such product or package itself 
bears a clear identification of the specific plastic resin(s) from 
which it is made.
    Part II of the proposed order provides that if the respondents 
represent in advertising or labeling that any product or package offers 
any environmental benefit, they must have a reasonable basis consisting 
of competent and reliable evidence, which when appropriate must be 
competent and reliable scientific evidence, that substantiates the 
claims.
    The proposed order also requires respondents to maintain materials 
relied upon to substantiate the claims covered by the order, to 
distribute copies of the order to certain company officials, to notify 
the Commission of any changes in corporate structure that might affect 
compliance with the order, and to file one or more reports detailing 
compliance with the order.
    The purpose of this analysis is to facilitate public comment on the 
proposed order. It is not intended to constitute an official 
interpretation of the agreement and proposed order or to modify in any 
way their terms.
Donald S. Clark,
Secretary.
[FR Doc. 94-10950 Filed 5-5-94; 8:45 am]
BILLING CODE 6750-01-M