[Federal Register Volume 59, Number 99 (Tuesday, May 24, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-126624]


[[Page Unknown]]

[Federal Register: May 24, 1994]


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FEDERAL TRADE COMMISSION
[File No. 922 3045]

 

Keyes Fibre 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 Connecticut-based company from 
representing that any of its paper products or packages are degradable, 
biodegradable, or photodegradable, or offers any environmental benefits 
when disposed of in a sanitary landfill, unless the respondent 
possesses competent and reliable scientific evidence to substantiate 
such representation. In addition, the consent agreement would prohibit 
the respondent from misrepresenting the extent to which any paper 
product or package is capable of being recycled or the extent to which 
recycling collection programs are available.

DATES: Comments must be received on or before July 25, 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 considered by the Commission and will be available for 
inspection and copying at its principal office in accordance with 
section 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 Keyes Fibre Company, a corporation.

    The Federal Trade Commission having initiated an investigation of 
certain acts and practices of Keyes Fibre Company, a corporation 
(``proposed respondent''), and it now appearing that proposed 
respondent is 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 Keyes Fibre Company, by its duly 
authorized officer, and its attorney, and counsel for the Federal Trade 
Commission that:
    1. Proposed respondent Keyes Fibre Company is a corporation 
organized, existing and doing business under and by virtue of the laws 
of the State of Delaware, with its principal office or place of 
business at 301 Merritt 7, Norwalk, Connecticut 06856.
    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 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 
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 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 
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 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 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 respondent has read the complaint and the order 
contemplated hereby. It understands that once the order has been 
issued, it will be required to file one or more compliance reports 
showing 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

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 respondent, 
its successors and assigns, under the Chinet brand name or 
any other band name of respondent, its successors and assigns; and also 
means any product or package sold or distributed to the public by third 
parties under private labeling agreements with respondent, its 
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 respondent Keyes Fibre 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, labeling, advertising, promotion, offering for sale, 
sale, or distribution of any paper 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:
    (1) That any such product or package is degradable, biodegradable, 
or photodegradable; or,
    (2) Through the use of such terms as degradable, biodegradable, or 
photodegradable, or any other similar term or expression, that any such 
product or package offers any environmental benefits when consumers 
dispose of it as trash that is buried in a sanitary landfill,

unless at the time of making such representation, respondent posses and 
relies upon competent and reliable scientific evidence that 
substantiates the representation.
    B. Provided, however, respondent will not be in violation of Part 
I(A) of this Order, in connection with the advertising, labeling, 
offering for sale, sale, or distribution of any paper product or 
package, if it truthfully represents that such product or package will 
degrade into usable compost (e.g., soil-conditioning material, mulch) 
in a safe and timely manner, when disposed of in home compost piles or 
devices or in municipal solid waste composting facilities, provided 
that respondent complies with Part II of this Order and discloses 
clearly, prominently, and in close proximity to such representation 
that such product or package is not designed to degrade in landfills.
    A. It Is Further Ordered that respondent, Keyes Fibre 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, labeling, advertising, promotion, offering for sale, 
sale, or distribution of any paper product or package in or affecting 
commerce, as ``commerce'' is defined in the Federal Trade Commission 
Act, do forthwith cease and desist form misrepresenting, in any manner, 
directly or by implication, the extent to which any such product or 
package can be composted by any means or the extent to which municipal 
solid waste composting facilities for such product or package are 
available.
    B. Provided, however, respondent will not be in violation of Part 
II(A) of this Order, in connection with the advertising, labeling, 
offering for sale, sale, or distribution of any paper product or 
package, if it truthfully represents that such product or package will 
compost or otherwise be converted into usable compost (e.g., soil-
conditioning material, mulch) in a safe and timely manner, when 
disposed of in home compost piles or devices or in municipal solid 
waste composting facilities, provided that respondent discloses 
clearly, prominently, and in close proximity to any representation 
referring or relating to municipal solid waste composting:
    (1) That such product or package is compostable where municipal 
solid waste composting facilities exist, and the current number of 
municipal solid waste composting facilities in the U.S.; or
    (2) That such product or package is compostable in the few 
communities with municipal solid waste composting facilities; or
    (3) the approximate percentage of U.S. communities or the U.S. 
population to which municipal solid waste composting facilities are 
available.
    For purposes of this Order, a disclosure elsewhere on the product 
package shall be deemed to be ``in close proximity'' to such terms 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.

III

    It Is Further Ordered that respondent, Keyes Fibre 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, labeling, advertising, promotion, offering for sale, 
sale, or distribution of any paper 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 any such product or 
package is capable of being recycled or the extent to which recycling 
collection programs for such product or package are available.

IV

    It Is Further Ordered that respondent, Keyes Fibre 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, labeling, advertising, promotion, offering for sale, 
sale, or distribution of any paper 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 product or package offers any 
environmental benefit, unless at the time of making such 
representation, respondent possesses and relies upon competent and 
reliable evidence, which when appropriate must be competent and 
reliable scientific evidence, that substantiates such representation.

V

    Nothing in this Order shall prevent respondent from using any of 
the terms cited in Parts I, II and III, or similar terms or 
expressions, if necessary to comply with any federal rule, regulation, 
or law governing the use of such terms in advertising or labeling.

VI

    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.

VII

    It Is Further Ordered that the 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 advertisement, promotional materials, 
product labels or other such sales materials covered by this Order.

VIII

    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 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.

IX

    It Is Further Ordered that respondent shall, within sixty (60) days 
after service of this Order upon it, 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 it has 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 respondent Keyes Fibre 
Company, a Delaware corporation.
    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 the 
respondent's Chinet disposable tableware. The Commission's 
complaint in this matter charges that the respondent represented 
without substantiation that Chinet disposable tableware will 
completely break down and return to nature--i.e., decompose into 
elements found in nature--within a reasonably short period of time 
after customary disposal; that Chinet disposable tableware 
offers a significant environmental benefit after customary disposal; 
that Chinet disposable tableware will completely break down 
and return to nature within a short enough period of time after 
customary disposal to significantly reduce the amount of garbage in 
landfills; and that Chinet disposable tableware will 
completely break down and return to nature significantly faster than 
other paper plates, or plastic or foam products, to provide a 
significant environmental benefit. The complaint further charges that 
the respondent falsely represented that Chinet disposable 
tableware is compostable through municipal solid waste composting. In 
fact, the complaint alleges, while Chinet disposable 
tableware is capable of be composted in municipal solid waste 
composting facilities, the vast majority of consumers cannot compost 
the product in this way because there are only a few municipal solid 
waste composting facilities nationwide. In addition, the complaint 
charges that Keyes falsely represented that Chinet disposable 
tableware is recyclable after ordinary use. In fact, the complaint 
alleges, while Chinet disposable tableware is capable of 
being recycled, the vast majority of consumers cannot recycle the 
product because there are virtually no collection facilities that 
accept used paper plates for recycling.
    The proposed consent order contains provisions designed to remedy 
the violations charged and to prevent the respondent from engaging in 
similar acts and practices in the future.
    Part I of the proposed order requires that the respondent cease and 
desist from representing in the future, in any manner, directly or by 
implication, that any of its paper products or packages are degradable, 
biodegradable, or photodegradable, or through the use of such terms or 
similar terms, that any such product or package offers any 
environmental benefits when consumers dispose of it as trash that is 
buried in a sanitary landfill, unless at the time of making such 
representation, the respondent possesses and relies upon competent and 
reliable scientific evidence that substantiates such representation. 
This provision includes claims of photodegradation as part of the 
prospective relief to be obtained, although respondent's advertising 
did not include the term ``photodegradable.'' Part I also contains a 
proviso that allows the respondent to advertise paper products or 
packages as degradable without violating Part I of the proposed order. 
The respondent may do so if it truthfully represents that such product 
or package will degrade into usable compost (e.g., soil-conditioning 
material, mulch) in a safe and timely manner, when disposed of in home 
compost piles or devices or in municipal solid waste composting 
facilities, provided that the respondent complies with Part II of the 
proposed order, discussed below, and in addition, the respondent 
discloses clearly, prominently, and in close proximity to the claim 
that such product or package is not designed to degrade in landfills.
    Part II of the proposed order requires that the respondent cease 
and desist from misrepresenting, in any manner, directly or by 
implication, with respect to any paper product or package the extent to 
which any such product or package is capable of being composted or the 
extent to which municipal solid waste composting facilities are 
available. Part II also contains a proviso that allows the respondent 
to advertise paper products or packages as compostable without 
violating Part II of the proposed order. The respondent may do so if it 
truthfully represents that such products or packages are capable of 
being composted or otherwise being converted into usable compost (e.g., 
soil-conditioning material, mulch) in a safe and timely manner, when 
disposed of in home compost piles or devices or in municipal solid 
waste composting facilities and discloses clearly, prominently, and in 
close proximity to any representation referring or relating to 
municipal solid waste composting: (1) That such product or package is 
compostable where municipal solid waste composting facilities exist, 
and the current number of municipal solid waste composting facilities 
in the U.S.; or (2) that such product or package is compostable in the 
few communities with municipal solid waste composting facilities; or 
(3) the approximate percentage of U.S. communities or the U.S. 
population to which municipal solid waste composting facilities are 
available.
    Part III of the proposed order requires that the respondent cease 
and desist from misrepresenting, in any manner, directly or by 
implication, with respect to any paper product or package the extent to 
which it is capable of being recycled or the extent to which recycling 
collection programs are available.
    Part IV of the proposed order provides that if the respondent 
represents in advertising or labeling that any product or package 
offers any environmental benefit, it 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.
    Part V of the proposed order allows the respondent to use the terms 
cited in parts I, II and III or similar terms, and not be in violation 
of the proposed order, if it is necessary for the respondent to comply 
with any federal rule, regulation, or law governing the use of such 
terms in advertising or labeling.
    The proposed order also requires the respondent 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. 94-126624 Filed 5-23-94; 8:45 am]
BILLING CODE 6750-01-M