[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