General Motors Corporation

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IN THE MATTER OF GENERAL MOTORS CORPORATION CONSENT ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docket C-2564. Complaint, Oct. 7. 1974—Decision, Oct. 7, 1974 Consent order requiring a Detroit, Mich., automobile manufacturer, among other things to cease misrepresenting the superiority of the fuel economy of its automobile performance; disparaging competing products; and furnishing means and/or instrumentalities of misrepresentation or deception to its dealers. Appearances For the Commission: H. Robert Field and Carleton C. Eastlake. For the respondent: James P. Melican, Jr. Detroit, Mich. Complaint 84 F.T.C.

COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act, and by virtue of the authority vested in it by said Act, the Federal Trade Commission, having reason to believe that General Motors Corp., a corporation, hereinafter referred to as respondent, has violated the provisions of said Act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint stating its charges in that respect as follows: For the purposes of this complaint the following definitions shall apply:

1. “EPA test” shall mean the test of air pollution control, containing fuel economy data, conducted by the Environmental Protection Agency, the results of which were published in the Federal Register of Monday, Nov. 5, 1973.

2. “In Commerce” shall mean commerce as commerce is defined in the Federal Trade Commission Act.

3. “Advertisements” shall mean advertisements actually disseminated to the public as well as proposed advertisements or promotional materials.

4. “Data cars” shall mean the actual automobiles tested by the Enviromental Protection: Agency in the EPA test. PARAGRAPH 1. Respondent General Motors Corp., is a corporation, organized, existing and doing business under and by virtue of the laws of the State of Delaware, with its principal office and place of business located at 3044 W. Grand Boulevard, Detroit, Mich. Par. 2. Respondent is now, and for some time last past has been, engaged in the manufacture, distribution, sale, and advertising of various products including automobiles.

Par. 3. Respondent causes the said products, when sold, to be transported from its place of business in various States of the United States to purchasers located in various other States of the United States and in the District of Columbia. Respondent maintains, and at all times mentioned herein has maintained, a course of trade in said products in commerce. The volume of business in such commerce has been and is substantial. , Par. 4. In the course of its business respondent has furnished and caused to be furnished to its dealers located in various states certain advertisements including but not limited to the advertisements described below with the knowledge and expectation that these advertisements and/or advertisements based thereon and substantially similar 653 Complaint thereto would be disseminated directly or indirectly by at least some of said dealers to the general public.

Par. 5. Among the advertisements so disseminated by respondent to its dealers is the advertisement attached as Exhibit A. Par. 6. At least some of said dealers did in fact disseminate in commerce an advertisement substantially identical to the advertisement attached as Exhibit A.

Par. 7. Exhibit B is an example of an advertisement disseminated by one of said dealers, and is substantially similar to Exhibit A. Par. 8. Said Exhibits A and B and others substantially similar thereto contain one or more false, deceptive and misleading representations and fail to disclose facts which are material in light of the representations contained therein. Therefore, the representations contained in said advertisements were, and are, deceptive or unfair. Par. 9. Said Exhibits A and B and others substantially similar thereto (hereinafter referred to as said advertisements) represent inter _alia that the Environmental Protection Agency (hereinafter EPA) had conducted a test of gasoline economy (hereinafter EPA test) and in that test had found the Eldorado model of Cadillac to be superior in terms of gasoline mileage to the other automobile models listed in said advertisements.

Par. 10. In truth and in fact the Eldorado model of the Cadillac automobile was not shown in the EPA test to be superior in terms of gasoline mileage to all of the other models of automobiles listed in those advertisements. Therefore, the representations contained in the said advertisements were, and are, deceptive or unfair. Par. 11. Respondent failed to disclose in said advertisements that many of the other models of automobiles listed in said advertisements were represented by more than one data car in the EPA test and that in several cases one or more or even a majority of the data cars representing the models of automobiles listed were found to be superior in terms of gasoline mileage in the EPA tests to both data cars of the Cadillac Eldorado. For example, the American Motors Wagoneer, listed sixth on Exhibit A, was represented by three data cars, two of which were superior in terms of gasoline mileage to both data cars of the Cadillac Eldorado.

PAR. 12. Respondent failed to disclose in said advertisements that there were two Cadillac Eldorado data cars tested in the EPA test, and that in many cases, one of these two Eldorado data cars was inferior in terms of gasoline mileage to some or even to all of the data cars representing the other models of automobiles listed in those advertisements. For example, one of the two Eldorado data cars was inferior in Complaint 84 F.T.C.

terms of gasoline mileage to both of the data cars representing the Mercedes MB-116, listed third on Exhibit A. Par. 13. The facts set forth in Paragraphs Eleven through Twelve are each material in light of the representation contained in said advertisements and their omission makes these advertisements misleading in a material respect. Therefore, the said advertisements were, and are, deceptive or unfair.

Par. 14. The facts set forth in Paragraphs Nine through Twelve constitute, with regard to gasoline mileage, a false comparison by respondent of the Cadillac Eldorado with the other makes and models listed. Therefore, respondent has, through the use of the aforesaid acts and practices, disparaged other makes and models listed. Par. 15. Inthe course and conduct of its aforesaid business, and at all times mentioned herein, respondent General Motors Corporation has been and now is in substantial competition in commerce with corporations, firms and individuals engaged in the sale and distribution of automobiles of the same general kind and nature as that sold by respondent.

Par. 16. The use by respondent of the aforesaid unfair or deceptive statements, representations and practices has had, and now has, the capacity and tendency to mislead members of the consuming public into the purchase of substantial quantities of automobiles manufactured by General Motors. As a result thereof, substantial trade is being unfairly diverted to respondent from its competitors. Par. 17. The aforesaid acts and practices of respondent, as herein alleged, were and are all to the prejudice and injury of the public and of respondent’s competitors and constituted, and now constitute, unfair or deceptive acts or practices in commerce and unfair methods of competition in commerce in violation of Section 5 of the Federal Trade Commission Act.

653 Complaint EXHIBITA * ok * * * * * A CADILLAC ELDORADO BEAT THESE OTHER CARS IN THE EPA’S OFFICIAL MILEAGE TEST! 1. Toyo Kogyo Mazda RX4 Coupe 38. Chrysler 2. Oldsmobile Cutlass Salon 39. Ford Ranchero 3. Mercedes Benz MB-116 40. Oldsmobile Delta 88 Royal 4. Ford Torino Station Wagon 41. Pontiac GTO 5. Plymouth Intermediate ' . 42. Buick Regal 6. American Motors Wagoneer 43. Buick Century 350 7. Buick Century 44. Pontiac Grand Am 8. Chevrolet Impala Custom 45. Chevrolet C-10 Suburban 9. Ferrari Dino 246 GT 46. Chevrolet Caprice Station Wagon 10. American Motors Matador 47. Oldsmobile Vista Cruiser 11. Ford F-100 - 48. Pontiac Trans Am 12. Ford Galaxie; 49. Pontiac LeMans Safari 13. Buick LeSabre 50. Chevrolet G-10 Beauville 14, Chevrolet Impala Station Wagon 51. Pontiac Stageway Coach 15. Pontiac Ventura 52. Pontiac Grand Prix SJ 16. Ford Torino 53. Pontiae Grand Safari 17. Chevrolet Malibu Classic 54, Ford Torino Station Wagon 18. Pontiac LeMans 55. Buick Electra 225 19. Plymouth Full Size 56. Oldsmobile Toronado 20. Mercury Montego 57. Pontiac Catalina Safari 21. American Motors Universal _ - 58. Dodge Full Size 22. Jaguar E Type Series III 59. Dodge GE Full Size Station Wagon 23. Toyota Land Cruiser Station Wagon 60. Pontiac Grand Ville 24. Buick Century Station Wagon 61. Buick Estate Station Wagon 25. Ford E-200 62. Mereury 26. Dodge Station Wagon 63. Plymouth Full Size Station Wagon 27. Buick Estate Station Wagon 64. Mercury Station Wagon 28. Chevrolet Caprice 65. Lincoln 29. Oldsmobile Cutlass 66. Pontiac Bonneville 80. Ford Station Wagon 67. Chevrolet Laguna 81. Oldsmobile Cutlass Supreme 68. Oldsmobile Delta 88 32. Mercury Cougar 69. Lamborghini Jarama 400 GT 33. Buick Estate 70. Lamborghini Espada 411 GT 34. Plymouth Intermediate 71. Chevrolet C-20 Suburban 35. Pontiac LeMans Sport 72. Oldsmobile Delta 88 Station Wagon 36. Pontiac Catalina 73. Ferrari 365 GTB-4 37. Buick Gran Sport Hometown Cadillac, Inc. (Picture of Cadillac) (trademark symbol) * * * * bad: * Eg (Depiction of exhibit made in the interest of economy) Complaint Exhibit B * * * * * * * (PICTURE OF AUTOMOBILE) A CADILLAC ELDORADO (With Cadillac’s Largest Engine) BEAT THESE OTHER CARS IN THE ENVIRONMENTAL PROTECTION AGENCY OFFICIAL MILEAGE TEST! . Toyo Kogyo Mazda RX 4 Coupe . Oldsmobile Cutlass . Mercedes Benz MB-116 . Ford Torino Station Wagon . Plymouth Intermediate . American Motors Wagoneer . Buick Century . Chevrolet Impala Custom 9. Ferrari Dino 246 GT 10. American Motors Matador 11. Ford F-100 12. Ford Galaxie 13. Buck LeSabre 14. Chevrolet Impala Station Wagon 15. Pontiac Ventura 16. Ford Torino 17. Chevrolet Malibu Classic 18. Pontiac LeMans 19. Plymouth Full Size 20. Mercury Montego 21. American Motors Universal 22, Jaguar E Type Series III 23. Toyota Land Cruiser Station Wagon 24, Buick Century Station Wagon 25. Ford E-200 26. Dodge Station Wagon 27. Buick Estate Station Wagon 28. Chevrolet Caprice 29. Ford Station Wagon 30. Oldsmobile Cutlass Supreme 31. Mercury Cougar 32. Buick Estate 83. Pontiac LeMans Sport 34. Pontiac Catalina 35. Buick Gran Sport OoNankwone 36.

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Chrysler Ford Ranchero Oldsmobile Delta 88 Royal Pontiac GTO Buick Regal Buick Century 350 Pontiac Grand Am Chevrolet C-10 Suburban ;

Chevrolet Caprice Station Wagon Oldsmobile Vista Cruiser Pontiac LeMans Safari Pontiac Trans AM Cheyrolet [sic] G-10 Beauville Pontiac Stageway Coach Pontiac Grand Prix SJ Pontiac Grand Safari Buick Electra 225 Oldsmobile Toronado Pontiac Catalina Safari Dodge Full Size Dodge GE Full Size Station Wagon Pontiac Grandville Mercury Plymouth Full Size Station Wagon Mercury Station Wagon Lincoln Pontiac Bonneville Ce[Sic]vrolet Laguna Oldsmobile Delta 88 Lamborghini Jarama 400 GT Lamborghini Espada 411 GT Chevrolet C-20 Suburban Oldsmobile Delta 88 Station Wagon Ferrari 365 GTB-4 You don’t have to sacrifice room, ride and safety for economy ... Kelly Cadillac “Choose the car you’ve always wanted”

* * * (picture of Cadillac trademark symbol) (with Kelly Cadillac inserted) * 900 Riverfront Parkway Phone 267-1104 * * * (Depiction of exhibit made in the interest of economy.) 653 Decision and Order DECISION AND ORDER The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondents named in the caption hereof, and the respondents having been furnished thereafter with a copy of a draft of complaint which the Bureau of Consumer Protection proposed to present to the Commission for its consideration and which, if issued by the Commission, would charge respondents with violation of the Federal Trade Commission Act; and The respondents and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondents of all the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by respondents that the law has been violated as alleged in such complaint, and waivers and other provisions as required by the Commission’s rules; and The Commission having thereafter considered the matter and having determined that it had reason to believe that the respondents have violated the said Act, and that complaint should issue stating its charges in that respect, and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period of sixty (60) days, now in further conformity with the procedure prescribed in Section 2.34(b) of its rules, the Commission hereby issues its complaint, makes the following jurisdictional findings and enters the following order:

1. Respondent General Motors Corporation 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 3044 West Grand Boulevard, Detroit, Mich. 2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents, and the proceeding is in the public interest.

ORDER It is ordered, That respondent General Motors Corporation and its officers, agents, representatives, and employees, directly or through any corporation, subsidiary, division or other device, in connection with the advertising, offering for sale, sale or distribution of automobiles, in commerce as “commerce” is defined in the Federal Tradé Commission Act, do forthwith cease and desist from:

Decision and Order 84 F.T.C.

1. Representing, directly or by implication, by reference to a test or tests, that any of respondent’s automobiles is superior with regard to fuel economy to any other automobiles, whether manufactured by respondent or others, unless:

(a) such superiority has been demonstrated, as to the model(s) for which it is claimed, by such test or tests with respect to each sample, or the valid average of all identical samples, of each model represented to have been tested; or (b) the valid test results for each sample, or the valid average of all identical samples, of each model so compared, including the advertised model as well as such makes and models to which the advertised model is compared, are clearly and conspicuously disclosed.

For the purpose of this order “sample” shall mean an actual automobile tested. It is provided, however, That nothing contained in this paragraph is intended to conflict with any guidelines, rules or regulations with respect to fuel economy testing or advertising that may hereafter from time to time be promulgated by any agency of the United States Government, and, if such conflict does occur, the guidelines, rules or regulations shall govern. 2. Misrepresenting in any manner the fuel economy of any automobiles or the superiority of any automobile over competing products in terms of fuel economy.

3. Representing, directly or by implication, by reference to a test or tests, that the performance of any automobile has been tested either alone or in comparison with other automobiles unless such representation(s) accurately reflect the test results and unless the tests themselves are so devised and conducted as to substantiate each such representation concerning the featured tests. 4, Misrepresenting in any manner the purpose, contents or conclusion of any test, report or study relating to the performance of its automobile.

For purposes of Paragraphs 3 and 4 of this order, “test” shall include demonstrations which are claimed to be proof of the representations made.

5, Disparaging the quality or properties of any competing product or products through the use of false or misleading comparisons - relative to fuel economy.

6. Placing in the hands of dealers for any of the products of the company an advertisement which contains any of the representations prohibited by Paragraphs 1-5 above. 661 Complaint It is further ordered, That the respondent corporation shall forthwith distribute a copy of this order to each of its operating divisions.

It is further ordered, That respondent notify the Commission at least Thirty (30) days prior to any proposed change in the corporate respondent 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 arising out of the order. It is further ordered, That the respondent herein shall within sixty (60) days after service upon them of this order file with the Commission a report, in writing, setting forth in detail the manner and form in which they have complied with this order.