[Federal Register Volume 61, Number 59 (Tuesday, March 26, 1996)]
[Notices]
[Pages 13202-13205]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-7291]



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FEDERAL TRADE COMMISSION
[File No. 952-3099]


NW Ayer, Inc.; Consent Agreement With Analysis To Aid Public 
Comment

AGENCY: Federal Trade Commission.

ACTION: 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 the New York City-based advertising agency from 
misrepresenting the absolute or comparative amounts of cholesterol, 
total fat, saturated fat, or any other fatty acid in eggs or in any 
meat, dairy, or poultry product and from misrepresenting the existence 
or results of any test or study. The consent agreement settles 
allegations arising from Ayer's role in creating advertisements that 
conveyed allegedly deceptive claims regarding the effect of Eggland's 
Best eggs on blood cholesterol.

DATES: Comments must be received on or before May 28, 1996.

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:

C. Lee Peeler, Federal Trade Commission, S-4002, 6th and Pennsylvania 
Ave, NW., Washington, DC, 202-326-3090.
Justin Dingfelder, Federal Trade Commission, S-4302, 6th and 
Pennsylvania Ave., NW., Washington, DC, 202-326-3088.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Section 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

[[Page 13203]]
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 4.9(b)(6)(ii) of the Commission's Rules of Practice (16 CFR 
4.9(b)(6)(ii)).

Before Federal Trade Commission

[File No. 952 3099]
    In the Matter of N.W. Ayer & Son, Inc. d/b/a NW Ayer, Inc. a 
corporation; Agreement Containing Consent Order to Cease and Desist

    The Federal Trade Commission having initiated an investigation of 
certain acts and practices of N.W. Ayer & Son, Inc. d/b/a NW Ayer, 
Inc., a corporation, hereinafter sometimes referred to as 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 use of the acts and practices being investigated,
    It is hereby agreed by and between N.W. Ayer & Son, Inc. d/b/a NW 
Ayer, Inc., by its duly authorized officer and its attorney, and 
counsel for the Federal Trade Commission that:
    1. Proposed respondent N.W. Ayer & Son, Inc. d/b/a NW Ayer, Inc., 
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 825 Eighth Avenue, New York, New 
York 10019.
    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; and
    (c) All rights to seek judicial review or otherwise to challenge or 
contest the validity of the order entered pursuant to this agreement.
    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. 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 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. 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

Definition

    For purposes of this order, the phrase ``covered food product'' 
shall mean only eggs and any meat, dairy, or poultry product. For 
purposes of this definition, ``meat product'' shall include any food 
product for human consumption that is made in whole or in substantial 
part of the meat of cattle, sheep, swine, or goats; ``dairy product'' 
shall include any food product for human consumption that is made in 
whole or in substantial part from milk; and ``poultry product'' shall 
include any food product for human consumption that is made in whole or 
in substantial part of the meat of any fowl.

I

    It is ordered that respondent N.W. Ayer & Son, Inc. d/b/a NW Ayer, 
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 covered food product 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, through numerical or descriptive terms or 
any other means, the absolute or comparative amount of cholesterol, 
total fat, saturated fat or any other fatty acid in such covered food 
product. If any representation covered by this Part either directly or 
by implication conveys any nutrient content claim defined (for purposes 
of labeling) by any regulation promulgated by the Food and Drug 
Administration, or, if applicable, the United States Department of 
Agriculture, compliance with this Part shall be governed by the 
qualifying amount for such defined claim as set forth in such 
regulation.

II

    It is further ordered that respondent N.W. Ayer & Son, Inc. d/b/a 
NW Ayer, Inc., 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 
covered food product in or affecting commerce, as ``commerce'' is 
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 covered 
food product on serum cholesterol, whether or not such covered food 
product 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

[[Page 13204]]
evidence substantiating such 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

    It is further ordered that respondent N.W. Ayer & Son, Inc. d/b/a/ 
NW Ayer, Inc., 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 
covered food product in or affecting commerce, as ``commerce'' is 
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 
covered food product, 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.

IV

    It is further ordered that respondent N.W. Ayer & Son, Inc. d/b/a/ 
NW Ayer, Inc., 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 
covered food product 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 existence, contents, validity, results, conclusions or 
interpretations of any test or study.

V

    Nothing in this order shall prohibit respondent N.W. Ayer & Son, 
Inc. d/b/a/ NW Ayer, Inc., from making any representation that is 
specifically permitted in labeling for any product by regulations 
promulgated by the Food and Drug Administration pursuant to the 
Nutrition Labeling and Education Act of 1990, or by nutrition labeling 
regulations promulgated by the Department of Agriculture pursuant to 
the Federal Meat Inspection Act or the Poultry Products Inspection Act.

VI

    It is further ordered that for five (5) years after the last date 
of dissemination of any representation covered by this order, 
respondent N.W. Ayer & Son, Inc. d/b/a NW Ayer, 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 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.

VII

    It is further ordered that respondent N.W. Ayer & Son, Inc. d/b/a 
NW Ayer, 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, each of its managerial employees, and 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 N.W. Ayer & Son, Inc. d/b/a 
NW Ayer, 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 N.W. Ayer & Son, Inc. d/b/a 
NW Ayer, 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.

X

    This order will terminate twenty years from the date of its 
issuance, or twenty years from the most recent date that the United 
States or the Federal Trade Commission files a complaint (with or 
without an accompanying consent decree) in federal court alleging any 
violation of the order, whichever comes later; provided, however, that 
the filing of such a complaint will not affect the duration of:
    A. Any paragraph in this order that terminates in less than twenty 
years;
    B. This order's application to any respondent that is not named as 
a defendant in such complaint; and
    C. This order if such complaint if filed after the order has 
terminated pursuant to this paragraph.
    Provided, further, that if such complaint is dismissed or a federal 
court rules that the respondent did not violate any provision of the 
order, and the dismissal or ruling is either not appealed or upheld on 
appeal, then the order will terminate according to this paragraph as 
though the complaint was never filed, except that the order will not 
terminate between the date such complaint is filed and the later of the 
deadline for appealing such dismissal or ruling and the date such 
dismissal or ruling is upheld on appeal.

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 NW Ayer & Son, Inc. d/
b/a/ NW Ayer, Inc. (``Ayer'').
    The proposed consent order has been placed on the public record for 
sixty (60) days for the reception of comments by interested persons. 
Comments received during this period will become part of the public 
record. After sixty 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 advertising claims made by Ayer, an 
advertising agency, for eggs marketed by Eggland's Best, Inc. Eggland's 
Best, Inc. is subject to a Commission consent order (Docket No. C-
3520), issued on August 15, 1994. A separate consent decree with 
Eggland's Best regarding alleged violations of that consent order 
relating to the same advertisements will be filed in United States 
District Court.
    The Commission's complaint in this matter charges Ayer with 
engaging in unfair or deceptive practices in

[[Page 13205]]
connection with the advertising of Eggland's Best eggs. According to 
the complaint, Ayer represented, without adequate substantiation, that 
eating Eggland's Best eggs (1) will not increase serum cholesterol, and 
(2) will not increase serum cholesterol as much as eating ordinary 
eggs. The complaint also alleges that Ayer falsely represented that (1) 
clinical studies have proven that adding twelve Eggland's Best eggs per 
week to a low-fat diet does not increase serum cholesterol, (2) 
Eggland's Best eggs are low in saturated fat, and (3) Eggland's Best 
eggs are lower in saturated fat than ordinary eggs.
    Finally, the complaint alleges that Ayer knew or should have known 
that these claims were false and misleading.
    The consent order contains provisions designed to remedy the 
violations charged and to prevent Ayer from engaging in similar 
deceptive and unfair acts and practices in the future.
    Part I of the order prohibits Ayer from misrepresenting the 
absolute or comparative amount of cholesterol, total fat, saturated 
fat, or any other fatty acid in eggs, or any meat, dairy, or poultry 
product (``covered food product''). Part I also requires that any 
representation covered by that Part that conveys a nutrient content 
claim defined for labeling by any regulation of the Food and Drug 
Administration (``FDA'') or United States Department of Agriculture 
(``USDA'') must comply with the qualifying amount set forth in that 
regulation.
    Part II of the order prohibits Ayer from making any representation 
about the absolute or comparative effect of any covered food product or 
serum cholesterol unless it possesses and relies upon competent and 
reliable scientific evidence substantiating the representation at the 
time it is made.
    Part III of the order prohibits Ayer from making any representation 
about the absolute or comparative health benefits of the covered food 
product unless it possesses and relies upon competent and reliable 
scientific evidence substantiating the representation at the time it is 
made.
    Part IV of the order prohibits Ayer from misrepresenting the 
existence, contents, validity, results, conclusions or interpretations 
of any test or study.
    Part V of the order provides that representations that would be 
specifically permitted in food labeling, under certain regulations 
issued by the FDA or USDA are not prohibited.
    Part VI of the order requires Ayer to maintain copies of all 
materials relied upon in making any representation covered by the order 
for five years.
    Part VII of the order requires Ayer to distribute copies of the 
order to its operating divisions and to various officers, agents and 
representatives of Ayer.
    Part VIII of the order requires Ayer to notify the Commission of 
any changes in corporate structure that might affect compliance with 
the order.
    Part IX of the order requires Ayer to file with the Commission one 
or more reports detailing compliance with the order.
    Part X of the order is a ``sunset'' provision, stating that the 
order will terminate twenty years from the date it is issued unless a 
complaint is filed in federal court, by either the United States or the 
FTC, alleging any violation of 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. 96-7291 Filed 3-25-96; 8:45 am]
BILLING CODE 6750-01-M