Standard Brands, Inc

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IN THE MATTER OF STANDARD BRANDS, INC.

CONSENT ORDER, ETC., IN REGARD TO ALLEGED VIOLATION OF SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket C-.'1060. Complaint, March 17, 1981-Decision. March, 1981 This consent order requires, among other things, a New York City manufa.cturer of various products, including "Fleischmann s Margarine" products, to cease referring to any test or survey when making representations regarding the ced test performance, benefit, choice or superiority of a product, unless refere or survey has been scientifically designed, executed and analyzed; and provides substantiation for those claims. The firm is further barred from representing that survey respondents recommend or use a particular brand of product more often than a competitive brand, unless the company discloses the fact that an equal or greater percentage of such respondents have brand preference. Additionally, the order requires the firm to maintain, for a period of three years, records substantiating advertising claims. Appearances For the Commission: Mitchell Paul and Julie Niemasik. For the respondent: C. Henry Freas. Jr. in-house counsel. 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 Standard Brands, Inc. , 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:

PARAGRAPH 1. Respondent Standard Brands, Inc. is a corporation organized, existing and doing business under and by virtue of the laws of the State of Delaware, with its principal place of business located at 625 Madison Ave" New York, New York. PAR. 2. Standard Brands, Inc. is now, and for some time in the past has been, engaged in the manufacture, distribution, advertising and sale of various products, including "Fleischmann s Margarine products.

PAR, 3. Respondent Standard Brands causes the said products, when sold, to be transported from its place of business in various ::145-;;:,4 0-82- Complaint 9TYT.C, States of the United States to purchasers located in various other States of the United States and in the District of Columbia, Respondent Standard Brands maintains, and at all times mentioned herein has maintained, a course of trade in said products in and affecting commerce. The volume of business in such commerce has been and is substantial.

PAR, 4. In the course and conduct of its business, respondent has disseminated and caused the dissemination of advertisements concerning "Fleischmann s Margarine" products in or affecting commerce, as "commerce" is defined in the Federal Trade Commission Act, by means of advertisements printed in magazines and newspapers distributed by the mail across state lines and transmitted by television stations located in various States of the United Statesand and in the District of Columbia, having sufficient power to carry such broadcasts across state lines, for the purpose of inducing, and which were likely to induce, directly or indirectly, the purchase of said "Fleischmann s Margarine" products.

PAR. 6. Among the advertisements so disseminated or caused to be disseminated by respondent are the advertisements attached as Exhibits A through D hereof.

PAR, 6. In Exhibits A through D and others substantially similar thereto, disseminated as aforesaid, respondent has represented directly or by implication that:

a) When a doctor chooses margarine, chances are it' s Fleischmann b) Twice as many doctors recommend Fleischrnann s margarine as any other brand of margarine;

c) Twice as many doctors personally use Fleischmann s margarine as any other brand of margarine;

d) Twice as many doctors recommend and personally use Fleischmann s as any other brand of margarine;

e) Every 15 seconds a doctor recommends Fleischmann s marganne.

PAR. 7. In Exhibits A through D and others substantially similar thereto, respondent has represpnted directly or by implication that a survey of doctors proves the representations in Paragraph Six above. PAR. 8. In Exhibits C and D and others substantially similar thereto, disseminated as aforesaid, respondent has represented directly or by implication that:

a) Of those doctors who recommend a polyunsaturated margarine, ,, STANDARD BRANDS, INC.

233 Complaint twice as many recommend Fleischmann s as any other brand of margarine;

b) Of those doctors who recommend a polyunsat.urated margarine twice as many personally use Fleischmann s as any other brand of margarine;

c) Of those doctors who recommend a polyunsaturated margarine, twice as many recommend and personally use Fleischmann s as any other brand of margarine.

PAR. 9. In Exhibits C and D and others substantially similar thereto, respondent has represented directly or by implication t.hat the aforementioned survey proves the representations in Pare-graph Eight above.

PAR. 10. In truth and in fact, the aforementioned survey, conducted for Standard Brands by William Douglas McAdams, Inc. and entitled "Marketing Insights Into Physicians' Attitudes and Opinions Concerning Lipids and Cardiovascular Disease (General Medicine)" (hereinafter referred to as the "McAdams survcy ), does not prove the representations in Paragraphs Six and Eight for reasons including but not limited to the following: a) Of those survey respondents who were asked the question Which brand(s) of margarine do you recommend?" , most (84.5%) did not state that they recommended Fleischmann s margarine; b) Of those survey respondents who were asked the question, Which brand(s) of margarine do you recommend?", most (at least 67. 50/0) did not recommend a specific name brand of margarine; c) Of those survey respondents who were asked the question you use margarine at home? If yes: which brand?", most (82.2%) did not state that they personally used Fleischmann s margarine; d) Of those survey respondents who were asked the question you use a margarine at home? If yes: Which brand?" , nearly one-half (47. 1%) did not state that they used margarine or were unaware of the specific name brand ofthe margarine they personally used. e) The survey respondents neither were asked nor stat.ed the frequency of their recommendations of Fleischmann s margarine to their patients or to anyone else.

Therefore, the representations referred to in Paragraphs Seven and Nine were and are unfair and deceptive, PAR. l1. In Exhibits A through D and others substantially similar thereto disseminated as aforesaid, respondent represented directly or by implication that, in responding to the survey, respondents had Complaint 97 F.

used their medical expertise in recommending, using, or choosing Fleischmann s Margarine, PAR. 12. In Exhibits A through D and others substantially similar thereto, disseminated as aforesaid, respondent represented directly or by implication that it possessed and relied upon a reasonable basis for the representations in Paragraphs Six, Seven, Eight, Nine and Eleven at the time of their initial and each subsequent dissemination.

PAR. 13. In truth and in fact, respondent did not possess or rely upon a reasonable basis for the representations in Paragraphs Six Seven, Eight, Nine and Eleven at the time of their initial and each subsequent dissemination. Therefore, such representations were and are unfair and deceptive.

PAR. 14. In the course and conduct of its aforesaid business, and at all times mentioned herein, respondent Standard Brands has been and now is, in substantial competition in or affecting commerce, with corporations, firms and individuals engaged in the sale and distribution of products of the same general kind and nature as those sold by Standard Brands.

PAR. 15. The use by respondents of the aforesaid unfair and/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 Fleischmann s margarine manufactured by Standard Brands. PAR. 16. 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 or affecting commerce in violation of Section 5 of the Federal Trade Commission Act, \ ; ! . .._ _.. ., .j, .:....../?;..;;:.:. : :. ;.,,,_ ..: :\.:;: .....,.....( .,;jy.. . . : \ (.;,. \ \ ( : .. /);; 233 Complaint 8vr:J.....-.1- ""\/ f(; 0(::(X 17(Jl ;Y a '-T;;:1(: GI H (;-( r i :.n t1-: -1-- "\ c.; " I i q r. I I ' 1\ a r: I ri I 1. i; l :. eJ- . . Et I, Jfil llfiGJIIil \ADE FROM - 100% ;r" //).

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7(?L' Ih.! no one .5)0f? ("r",. '"''U, !;F0!..1'0 .eton- - ,c "., &Jd:i. r-I II " !,,,o:!.' ",Jucc "'H .\C",m ,hal", ,,' loo ..,or r., l"';''- .1 a",. ,.,oj I 'O!L L..J in I ,o,,j J'''''r r''' . H,nnb,.oJ ..."". T. " n!' 1, .Jon ...h;ch J.'x,,,,, rC(- ".m. ,,, "\Co,,. Ie"., ",!:'- . c C':.:n,.,1.. ,_..-. H:. I.'SH''' ,nJ ..n" mol!.. . rk,..h"""", IIfr:. ,,,", ""JOI""""..".. I 11':""''')'''''1'",,, ... ' ..1"1.- A..,,...... !lJ '''-. "J 1""" ,"m,r-."",,"I,,d'. - , 011 . F18jschm""I""()" " I '" ',""011;u I II "' clm ro,,""1. no d"'I,"c, , 11-"" An. " ,.. FI"..I1""no t.." ..1 :P:' '.Ud om r,," l.e."... 1..':0. 5,. '-'C7:ib1 . (C- "I.' ,,.-r ' M.. ' " ' r. y",,, "0, !ole )oY ,I...lio,o.,, 0""" :;C ,,'um "nrolo"I 01 P'C'O"''''' i. ..00110. f'"nJof ("' A'l L -: E.: Il.,,,,a ,.. Il',," 1",;" o'" 1"0';" ". 1.)(!IllIT D FL.,! /3/.L STANDARD BRANDS, INC. 241 233 Decision and Order DECISION AND ORDER The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondent named in the caption hereof, and the respondent 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 respondent with violations of the Federal Trade Commission Act; and The respondent and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondent of all the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signing of such agreement is for settlement purposes only and does not constitute an admission by respondent 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 respondent has 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 of its Rules, the Commission hereby issues its complaint, makes the following jurisdictional findings, and enters the following order:

1. Respondent Standard Brands, Inc., is a corporation, organized existing and doing business under and by virtue of the laws of the State of Delaware, with its executive office and principal place of business located at 625 Madison Ave., New York, New York. 2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondent and the proceeding is in the public interest.

ORDER Part I It is ordered. That respondent Standard Brands, Inc" a corporation (hereinafter referred to as respondent), and its successors, assigns officers, agents, representatives and employees, directly or through any corporation, subsidiary, division or other device, in connection Decision and Order 97 F. with the advertising, offering for sale, sale or distribution of any product (hereinafter "Product") in or affecting commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

1. Making representations, directly or by implication, by referconcerning theence to a surveyor test, or the results thereof, performance or any characteristic, benefit, recommendation, usage or choice of or other preference for such Product, unless: (a) such surveyor test is designed, executed and analyzed in a competent and reliable scientific manner; and represented by (b) such surveyor test substantiates the claim(s) providing a reasonable basis therefor; and (c) in regard to any claims of sup(;riority based thereon, such surveyor test establishes that such Product is superior to each compared product in respect to which the specific representation is made to a degree that will be discernible to or of benefit to consumers or potential consumers to whom the representation is directed.

2, Representing, directly or by implication, that survey respondents:

(a) recommend such Product more often than any competing product when, in fact, an equal or greater percentage of such respondents do not recommend a specific brand of the product without disclosing such fact(s); or (b) use such Product more often than any competing product when, in fact, an equal or greater percentage of such respondents do not use a specific brand of the product, without disclosing such fact(s); or (c) use such Product more often than any competing product when in fact, an equal or greater percentage of such respondents are not aware of the specific brand of the product which they do use, without disclosing such fact(s).

3. Representing, directly or by implication, by reference to a surveyor test of experts, that experts recommend use, choose, or otherwise prefer such Product in any respect unless: (a) such experts in fact possess the expertise to evaluate such Product with respect to such representations; and (b) such experts actually exercised their expertise by evaluating or , Al"'UAn.,L' .u.i"

233 Decision and Ordet testing such Product, and based their stated preferences, findings,- - n ()r opinions on such exercise of their expertise; and , (c) such representation, to the extent .it expresses or implies a product comparison, is supported by an. actual comparative evaluation or test by s)lch experts; and (d) such representation, to the extent it expresses or implies that such Product is superior to competing products, is supported by an actual comparative evaluation or test by such experts and by a conclusion therefrom that such Product is superior in fact. to the competing products with respect to the feature(s) so represented as compared.

4. Representing, directly or by implication, that such product is recommended, used, chosen, or qtherwisepreferred in any respect more often than any or all competing products unless and only to the extent that respondent possessed and relied upon a reasonable basis for s)lch representation at the time of its initial and each subsequent dissemination. A reasonable basis shall consist of competent and reliable evidence which substantiates a statement or representation. 5. Failing to maintain records: (a) which provided the basis upon which respondent relied at the time of the initial and each subsequent dissemination of the claim; and (b) which shall be maintained by respondent for a period of three years from the date such advertising or sales promotional material was last disseminated by respondent or any division or subsidiary of respondent.

Part II For purposes of this Order, each of the terms listed below is defined as follows:

1. The term experts shall be deemed to. be an individual(s), group(s) or institution(s), possessing, as a result of experience, study or training, knowledge of a particular subject, which kn.owledge is superior to that generally acquired by ordinary individuals. 2. An advertising claim which is a personal endorsement of a product reflecting solely the subjective opinion of the endorser shall not be deemed to be a test.

Part II It is further ordered, That respondent shall, within 60 days after 244 FEDERAL TRAm; COMMISSION DECISIONS Decision and. Ord' - 97 F. service upon it of this Order, fie with the Commission a report in writing, setting forth in detail the manner and form in which it has complied with this order.

It is further ordered, That respondent shall forthwith distribute a copy of this Order to each of its offcers, agents, representatives or employees engaged in the preparation or placement of advertisements.

It is further ordered, That respondent notify the Commission at least 30 days prior to any proposed change in the 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 this Order.

EXXON COHl'. . 1''1 AL. q,J 245 Interlocutory Order