[Federal Register Volume 60, Number 128 (Wednesday, July 5, 1995)]
[Notices]
[Pages 35027-35029]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-16446]



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FEDERAL TRADE COMMISSION
[File No. 932-3144]


Good News Products, 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 Hamilton, Michigan company from 
misrepresenting the nutrient content of eggs or products containing egg 
yolks, and from making health claims about such products without 
scientific evidence to substantiate the claims.

DATES: Comments must be received on or before September 5, 1995.

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:
Phoebe Morse, Boston Regional Office, Federal Trade Commission, 101 
Merrimac Street, Suite 810, Boston, Massachusetts 02114-4719. (617) 
424-5960.

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

    The Federal Trade Commission having initiated an investigation of 
certain acts and practices of Good News Products, Inc., a corporation, 
and it now appearing that Good News Products, 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 Good News Products, Inc., by its 
duly authorized officer, and counsel for the Federal Trade Commission 
that:
    1. Proposed respondent Good News Products, Inc. is a corporation 
organized, existing and doing business under and by virtue of the laws 
of the State of Michigan with its office and principal place of 
business located at East Washington & M-40, Hamilton, Michigan 49419.
    2. Proposed respondent admits all the jurisdictional facts set 
forth in the draft complaint.
    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.
    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 Section 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 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.
Order

I.

    It is ordered that respondent Good News Products, Inc., a 
corporation, its successors and assigns, and its officers; and 
respondent's 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 

[[Page 35028]]
descriptive terms or any other means, the absolute or comparative 
amount of total fat, saturated fat or any other nutrient or ingredient 
in such food.

II.

    It is further ordered that respondent Good News Products, Inc., a 
corporation, its successors and assigns, and its officers; and 
respondent's 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:
    A. About the absolute or comparative effect on such food on heart 
disease or heart disease risk factors;
    B. About the absolute or comparative effect of such food on serum 
cholesterol; and
    C. About the absolute or comparative health benefits of such food, 
unless at the time of making such representation, respondent possesses 
and relies upon competent and reliable scientific evidence 
substantiating the representation. 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.

    Nothing in this Order shall prohibit respondent from making any 
representation that is specifically permitted in labeling for eggs or 
any food containing egg yolk by regulations promulgated by the Food and 
Drug Administration pursuant to the Nutrition Labeling and Education 
Act of 1900.

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 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.

V.

    It is further ordered that respondent shall, within thirty (30) 
days after service upon it of this Order, distribute a copy of the 
Order to each of the respondent's operating divisions, to each of its 
licensees, 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.

VI.

    It is further ordered that respondent, or its successors and 
assigns, shall promptly terminate its licensing agreement with any 
licensee if respondent has actual knowledge or knowledge fairly implied 
on the basis of objective circumstances that such licensee is engaging 
in acts or practices that respondent is prohibited from engaging in 
under Parts I and II of this Order, unless such licensee immediately 
ceases engaging in such acts or practices.

VII.

    It is further ordered that respondent, its successors and assigns, 
shall notify the Commission at least thirty (30) days prior to any 
proposed change in the corporate respondent, 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.

VIII.

    It is further ordered that respondent shall, within sixty (60) days 
after service of this Order, and at such other items 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, subject to 
final approval, to a proposed consent order from respondent Good News 
Products, Inc. (``Good News Products'').
    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 claims made by Good News Products in its 
advertising and promotional materials for eggs.
    The Commission's complaint alleges that Good News Products engaged 
in unfair or deceptive practices in connection with the advertising of 
its eggs. According to the complaint, Good News Product falsely 
represented that its eggs are significantly lower in both saturated fat 
and total fat than ordinary eggs.
    The complaint also alleges that Good News Products falsely 
represented that it had a reasonable basis for claims that the omega-3 
fatty acids in Good News Eggs will have a positive effect on risk 
factors for heart disease, such as atherosclerosis, high blood 
cholesterol levels and high blood pressure, and on rheumatoid 
arthritis, and that they may decrease blood cholesterol.
    Finally, the complaint alleges that Good News Products falsely 
represented that it had a reasonable basis for its claim that, because 
Good News Eggs are lower in saturated fat than ordinary eggs, they will 
increase blood cholesterol levels less than ordinary eggs.
    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 
prohibits Good News Products from misrepresenting the absolute or 
comparative amount of total fat, saturated fat or any other nutrient or 
ingredient in eggs or any food containing egg yolk.
    Part II of the proposed order prohibits respondent from making any 
claims about the health benefits, including the absolute or comparative 
effect on heart disease or heart disease risk factors, of eggs or foods 
containing egg yolk unless, prior to making such claim, Good News 
Products has competent and reliable 

[[Page 35029]]
scientific evidence to substantiate the claims.
    Part III of the proposed order specifically allows respondent to 
make any representation permitted in labeling by the Food and Drug 
Administration for food under the Nutrition Labeling and Education Act 
of 1990.
    Part IV of the proposed order requires Good News Products to 
maintain copies of all materials relied upon in making any 
representations covered by the order.
    Part V of the proposed order requires respondent to distribute 
copies of the order to its licensees and to various officers, agents 
and representatives.
    Part VI of the proposed order requires Good News Products to 
terminate its licensing agreement with any licensee that it has reason 
to know is engaged in practices that respondent is prohibited from 
engaging in under parts I and II of the order.
    Part VII of the proposed order requires respondent to notify the 
Commission of any changes in corporate structure that might affect 
compliance with the order.
    Part VIII of the proposed order requires respondent 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 consent 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. 95-16446 Filed 7-3-95; 8:45 am]
BILLING CODE 6750-01-M