Nestle Food Company

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IN THE MATTER OF NESTLE FOOD COMPANY CONSENT ORDER, ETC., INREGARD TO ALLEGED VIOLATION OF SECS. 5 AND 12 OF THE FEDERAL TRADE COMMISSION ACT Docket C-3365. Complaint, Jan. 21, 1992--Decision, Jan. 21, 1992 This consent order prohibits, among other things, the California-based marketer of Carnation Coffee-mate Liquid from misrepresenting the amount of total fat, saturated fat, or cholesterol in Coffee-mate Liquid or any other milk product or non-dairy substitute, relative to the serving size depicted in its advertisements or promotional materials.

Appearances For the Commission: Anne V. Maher and C. Lee Peeler. For the respondent: Sara Holtz and Randall Boyce, San Francisco, CA.

COMPLAINT The Federal Trade Commission, having reason to believe that Nestle Food Company, formerly known as Carnation Company ("respondent"), has violated provisions of the Federal Trade Commission Act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, alleges:

PARAGRAPH 1. Respondent is a Delaware corporation with offices and principal place of business located at 800 North Brand Boulevard, Glendale, California.

PAR. 2. Respondent has advertised, offered for sale, sold and distributed food products, including Coffee-mate Liquid, a non-dairy liquid creamer. Coffee-mate Liquid is a food within the meaning of Sections 12 and 15 of the Federal Trade Commission Act. Responsibility for advertising, sale and distribution of Coffee-mate Complaint 115 F.T.C.

Liquid has been transferred to Nestle Beverage Company. Both respondent and Nestle Beverage Company are wholly owned subsidiaries of Nestle Holdings, Inc.

PAR. 3. The acts and practices of respondent alleged in this complaint have been in or affecting commerce as commerce is defined in the Federal Trade Commission Act. PAR. 4. Respondent has disseminated or has caused to be disseminated advertisements and promotional materials for Coffeemate Liquid, including but not necessarily limited to the advertisements attached as Exhibits A and B. Specifically, the aforesaid advertisements contain the following statements and depictions: a. Enjoy the rich, creamy taste of new Coffee-mate Liquid in more than just coffee. Try it on fruit, cereal, or in your favorite recipe. It's low in fat, lactose-free, and has no cholesterol. [Depiction of carton of Coffee-mate Liquid, a cup of coffee, a bowl of cereal, and a bowl of fruit.] (Exhibit A). b. I like rich, creamy tasting things, but I also like to stay away from cholesterol and saturated fat. I found a smart new way to do both. New Coffeemate Liquid non-dairy creamer. All the rich, creamy taste of half & half but 75% less saturated fat and no cholesterol. In coffee, over fruit and cereal, Coffee-mate Liquid is a smart new way to have the taste you like without the fat and cholesterol you don't. [Depiction of Coffee-mate Liquid being poured first over bow] of fruit and cereal, then into a cup of coffee, and then again over a bowl of fruit.] (Exhibit B). PAR. 5. Through the use of the statements and depictions contained in the advertisements referred to in paragraph four, including but not necessarily limited to the advertisements attached as Exhibits A and B, respondent has represented, directly or by implication, that Coffee-mate Liquid is a low-fat product when consumed in an amount normal for use on cereal, on fruit or in cooking.

PAR. 6. In truth and in fact, Coffee-mate Liquid is not a low-fat product when consumed in an amount normal for use on cereal, on fruit or in cooking. Therefore, the representation as set forth in paragraph five was and is false and misleading. PAR. 7. Through the use of the statements and depictions contained in the advertisements referred to in paragraph four, including but not necessarily limited to the advertisements attached as Exhibits A and B, respondent has represented, directly or by NESTLE FOOD CORPORATION 69 67 Decision and Order implication, that Coffee-mate Liquid is lower in fat than other foods, such as whole milk or low-fat (2%) milk, for which it would be a substitute when used on cereal, on fruit or in cooking. PAR. 8. In truth and in fact, Coffee-mate Liquid is not lower in fat than other foods, such as whole milk or low-fat (2%) milk, for which it would be a substitute when used on cereal, on fruit or in cooking. A one-half cup serving of Coffee-mate Liquid has 8.5 grams of fat, which represents nearly twice the amount of fat in a one-half cup serving of whole milk (4.4 grams) and nearly four times the amount of fat in a one-half cup serving of low-fat (2%) milk (2.3 grams). Therefore, the representation as set forth in paragraph seven was and is false and misleading.

PAR. 9. The acts or practices of respondent, as alleged in this complaint, constitute unfair or deceptive acts or practices in or affecting commerce and the making of false advertisements in violation of Sections 5(a) and 12 of the Federal Trade Commission Act.

DECISION AND ORDER The Federal Trade Commission having initiated an investigation into certain acts and practices of the respondent named in the caption hereof, and the respondent and Nestle Beverage Company, both of which are wholly owned subsidiaries of Nestle Holdings, Inc., 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 violation of the Federal Trade Commission Act; and The respondent, Nestle Beverage Company and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondent and Nestle Beverage Company 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 respondent or Nestle Beverage Company that the law has been Decision and Order 115 F.T.C.

violated as alleged in such complaint, and waivers of 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 statement and enters the following order: 1. Respondent Nestle Food Company is a corporation organized, existing and doing business under and by virtue of the laws of the state of Delaware, with offices and its principal place of business located at 800 North Brand Boulevard, Glendale, California. Nestle Beverage Company is a corporation organized, existing and doing business under and by virtue of the laws of the state of Delaware, with offices and its principal place of business located at 345 Spear Street, San Francisco, California. 2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondent and Nestle Beverage Company, and the proceeding is in the public interest. ORDER DEFINITIONS For purposes of this order, the term milk5 1 7 1 1 9 1585 2221 169 47 95.081619 product shall mean any product for which a federal standard of identity has been established under 21 CFR 131 as currently in effect as of the date of this order.

For purposes of this order, the term non-dairy5 1 7 2 1 9 1675 2453 206 37 55.327576 substitute”5 1 7 2 1 10 1900 2452 90 36 95.266312 shall4 1 7 2 2 0 655 2510 1337 59 -1 5 1 7 2 2 1 655 2536 103 24 96.873108 means 1 7 2 2 2 773 2534 68 35 96.709999 any5 1 7 2 2 3 856 2522 147 47 96.944054 products 1 7 2 2 4 1018 2520 116 36 96.630394 which5 1 7 2 2 5 1149 2519 29 35 96.630394 is5 1 7 2 2 6 1193 2517 206 45 96.407913 commonly5 1 7 2 2 7 1414 2515 88 36 96.904884 used5 1 7 2 2 8 1516 2526 37 25 95.886780 as5 1 7 2 2 9 1568 2525 20 25 95.886780 a5 1 7 2 2 10 1602 2512 185 37 96.776947 substitutes 1 7 2 2 11 1801 2512 56 35 96.081116 for5 1 7 2 2 12 1871 2521 19 25 96.081116 a5 1 7 2 2 13 1904 2510 88 35 96.628563 milk4 1 7 2 3 0 655 2569 1337 61 -1 5 1 7 2 3 1 655 2584 151 46 96.961334 products 1 7 2 3 2 824 2581 129 41 96.795464 which,5 1 7 2 3 3 973 2580 56 36 96.371025 for5 1 7 2 3 4 1046 2588 174 38 96.854179 purposes5 1 7 2 3 5 1239 2576 42 36 96.887878 of5 1 7 2 3 6 1296 2575 68 37 96.963669 this5 1 7 2 3 7 1384 2575 113 40 96.526093 order,5 1 7 2 3 8 1517 2573 90 36 95.423126 shall5 1 7 2 3 9 1627 2572 144 36 96.739609 includes 1 7 2 3 10 1787 2571 64 35 96.722183 but5 1 7 2 3 11 1868 2575 62 30 96.487221 not5 1 7 2 3 12 1947 2569 45 35 96.527802 be4 1 7 2 4 0 656 2638 661 47 -1 5 1 7 2 4 1 656 2641 138 36 96.479347 limited5 1 7 2 4 2 809 2647 36 29 96.587540 to5 1 7 2 4 3 861 2650 68 35 96.452240 any5 1 7 2 4 4 944 2638 190 45 96.685555 non-dairy5 1 7 2 4 5 1150 2646 167 25 96.174263 creamer. NESTLE FOOD CORPORATION 71 67 Decision and Order I.

It is ordered, That Nestle Food Company, formerly known as Carnation Company, and Nestle Beverage Company (collectively thes 1 3 1 3 2 660 857 258 47 95.883980 companies), their successors and assigns, and their 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 any food, in or affecting commerce as commerce is defined in the Federal Trade Commission Act, do forthwith cease and desist from: A. Misrepresenting in any manner, directly or by implication, through numerical or descriptive terms or any other means, the absolute or comparative amount of total fat, saturated fat or cholesterol in any milk product or any non-dairy substitute; and B. Misrepresenting in any manner, directly or by implication, through numerical or descriptive terms or any other means, the existence or amount of total fat, saturated fat or cholesterol in any milk product or non-dairy substitute relative to the serving size or amount customarily consumed for any particular use being advertised or promoted.

Provided, however, that nothing in provisions A and B above shall prohibit any representation as to the amount of total fat, saturated fat or cholesterol in any milk product or non-dairy substitute if such representation is specifically permitted in labeling, for the serving size advertised or promoted for such product, by regulations promulgated by the U.S. Food and Drug Administration pursuant to the Federal Food, Drug and Cosmetic Act. II.

This order shall not apply to an unaffiliated purchaser of the assets of the dairy currently owned by Nestle Food Company and located in Phoenix, Arizona, provided that the sale of such dairy's assets are conducted in a manner consistent in all material respects with the description and terms of that sale as set forth in the attached Decision and Order 115 F.T.C.

letter, dated October 16, 1991, from Nestle Food Company to Federal Trade Commission staff, and provided further that Nestle Food Company shall remain responsible under the terms of this order for any representation made, as covered by Part I of this order, for any milk product or non-dairy substitute marketed under a trademark of Nestle Food Company.

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It is further ordered, That for three (3) years after the last date of dissemination of the representation, the companies, or their successors and assigns, shall maintain and, upon request, make available to the Federal Trade Commission for inspection and copying copies of:

A. All materials that were relied upon by the companies in disseminating any representation covered by this order; and B. All test reports, studies, surveys, demonstrations or other evidence in their possession or control that contradict, qualify, or call into question any representation that is covered by this order. IV.

It is further ordered, That the companies shall notify the Commission at least thirty (30) days prior to any proposed change in the companies, 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 companies which may affect compliance obligations arising out of this order. V.

It is further ordered, That the companies shall, within thirty (30) days after service upon them of this order, distribute a copy of this order to each of their operating divisions, to each of their managerial employees, and to each of their officers, agents, representatives, or employees engaged in the preparation or placement of advertising or other material covered by this order. NESTLE FOOD CORPORATION 73 67 Decision and Order VI.

It is further ordered, That the companies shall, within sixty (60) days after service of this order and at such other times as the Commission may require, file with the Commission a report, in writing, setting forth in detail the manner and form in which they have complied with this order.

Decision and Order 115 F.T.C.

ATTACHMENT NESTLE USA, INC.

October 16, 1991 Michelle Rusk, Esq.

Anne Maher, Esq.

Federal Trade Commission Washington, D.C. 20680 Dear Ms. Rusk and Ms. Maher:

I am representing Nestle Food Company in the sale of the assets of its Phoenix dairy operation. The following is some information about the proposed sale of the dairy which we believe is relevant to excluding it from the proposed order. First, and perhaps most importantly, Nestle Food Company is only selling assets of the dairy located in Phoenix, Arizona to an unaffiliated entity. Those assets are valued at less the 1% of the total value of the Nestle Food Company. Secondly, to assist in promoting a smooth transition of the sale of the assets by the Nestle Food Company to the unaffiliated entity, Nestle Food Company will be licensing the new owner to use certain of its trademarks for a limited period of time. Under the terms of the trademark license, Nestle will have the ability to reasonably control the labeling and advertising of products that display a Nestle trademark. Thirdly, the dairy operation is a regional stand-alone business. It manufactures milk, sour cream, cottage cheese and the like. The dairy does not manufacture any of the products promoted in the alleged violative advertising. Fourthly, while a minority of the shareholders of the proposed purchaser include a present and a former Carnation employee, none of the shareholders had any responsibility or involvement in the alleged violative advertising. Lastly, we wish to stress that the sale of the assets of the dairy is purely the result of a business decision by Nestle Food Company to discontinue its involvement with this type of business operation, and is not motivated in any way by an attempt to circumvent the order.

Yours very truly, /S/ Mark Evans NESTLE FOOD CORPORATION 75 67 isi Decision and Order EXHIBIT A @our on the flavo —S Va ‘and save TEES Enjoy the rich, creamy taste :, of new, Coffee-mate - Liquid in more than just5 1 6 2 1 2 666 1085 94 46 62.181087 coffee.5 1 6 2 1 3 769 1085 39 46 62.181087 Try5 1 6 2 1 4 824 1089 20 26 87.426666 it5 1 6 2 1 5 862 1102 7 16 79.954636 -3 1 6 3 0 0 602 1120 225 51 -1 4 1 6 3 1 0 602 1120 225 51 -1 5 1 6 3 1 1 602 1140 39 17 94.409363 on5 1 6 3 1 2 650 1129 74 42 65.296860 fruit,5 1 6 3 1 3 733 1120 94 51 95.702164 cereal,3 1 6 4 0 0 565 1163 345 147 -1 4 1 6 4 1 0 586 1163 288 37 -1 5 1 6 4 1 1 586 1165 87 29 28.994431 orin5 1 6 4 1 2 682 1164 70 36 96.461342 yours 1 6 4 1 3 762 1163 112 28 96.461342 favorite4 1 6 4 2 0 567 1199 334 37 -1 5 1 6 4 2 1 567 1200 10 33 26.233475 ”5 1 6 4 2 2 602 1205 98 31 50.613892 recipe.5 1 6 4 2 3 708 1203 38 26 72.812920 It's5 1 6 4 2 4 754 1200 69 27 96.759804 lows 1 6 4 2 5 817 1209 30 18 95.919037 in5 1 6 4 2 6 855 1199 46 31 95.919037 fat,4 1 6 4 3 0 567 1235 343 37 -1 5 1 6 4 3 1 601 1237 179 31 51.426125 lactose-free,5 1 6 4 3 2 792 1236 55 27 96.723816 ands 1 6 4 3 3 858 1235 52 27 96.848038 has4 1 6 4 4 0 565 1272 252 38 -1 5 1 6 4 4 1 565 1278 6 30 0.000000 ?5 1 6 4 4 2 601 1272 216 38 12.508240 nocholesterol..5 1 6 4 4 3 832 1294 15 15 58.435558 .2 1 7 0 0 0 1612 2204 120 10 -1 3 1 7 1 0 0 1612 2204 120 10 -1 4 1 7 1 1 0 1612 2204 120 10 -1 5 1 7 1 1 1 1612 2204 76 10 30.037979 aN5 1 7 1 1 2 1695 2205 37 9 22.412125 Dm2 1 8 0 0 0 1572 2243 197 46 -1 3 1 8 1 0 0 1572 2243 197 46 -1 4 1 8 1 1 0 1572 2243 197 46 -1 5 1 8 1 1 1 1572 2243 151 38 73.626495 saves 1 8 1 1 2 1761 2283 8 6 48.893272 :2 1 9 0 0 0 1602 2284 259 90 -1 3 1 9 1 0 0 1602 2284 259 90 -1 4 1 9 1 1 0 1602 2284 259 90 -1 5 1 9 1 1 1 1602 2284 259 90 0.000000 SOc2 1 10 0 0 0 1752 2224 116 298 -1 3 1 10 1 0 0 1752 2224 116 298 -1 4 1 10 1 1 0 1760 2224 108 195 -1 5 1 10 1 1 1 1760 2224 108 195 95.000000 4 1 10 1 2 0 1752 2369 84 153 -1 5 1 10 1 2 1 1752 2369 84 153 95.000000 2 1 11 0 0 0 969 2367 817 71 -1 3 1 11 1 0 0 969 2367 817 71 -1 4 1 11 1 1 0 970 2367 783 33 -1 5 1 11 1 1 1 970 2386 60 14 0.658066 “-5 1 11 1 1 2 1093 2381 20 10 87.955719 ‘on5 1 11 1 1 3 1130 2381 17 10 78.853836 ones 1 11 1 1 4 1156 2377 35 14 78.853836 16-0:5 1 11 1 1 5 1600 2380 55 11 46.669167 onone5 1 11 1 1 6 1662 2375 46 15 0.000000 3-on5 1 11 1 1 7 1728 2367 25 20 30.542763 6°4 1 11 1 2 0 969 2391 817 32 -1 5 1 11 1 2 1 969 2401 35 6 63.580837 =5 1 11 1 2 2 1171 2401 22 22 8.491577 <75 1 11 1 2 3 1600 2398 75 17 7.757202 cantonal5 1 11 1 2 4 1696 2391 22 21 0.000000 ,o”5 1 11 1 2 5 1741 2396 45 15 29.254028 <4].4 1 11 1 3 0 1600 2400 109 38 -1 5 1 11 1 3 1 1600 2396 54 49 21.376205 Colter5 1 11 1 3 2 1665 2396 44 49 21.376205 gute!2 1 12 0 0 0 551 2380 1031 158 -1 3 1 12 1 0 0 551 2380 1031 158 -1 4 1 12 1 1 0 551 2380 1031 158 -1 5 1 12 1 1 1 551 2380 419 158 95.000000 5 1 12 1 1 2 1230 2380 352 125 95.000000 2 1 13 0 0 0 1600 2431 162 29 -1 3 1 13 1 0 0 1600 2431 162 29 -1 4 1 13 1 1 0 1600 2431 162 29 -1 5 1 13 1 1 1 1600 2441 52 19 96.930962 Liquids 1 13 1 1 2 1660 2442 82 18 95.041557 non-dairy5 1 13 1 1 3 1759 2431 3 29 0.737953 j2 1 14 0 0 0 1021 2462 690 22 -1 3 1 14 1 0 0 1021 2462 690 22 -1 4 1 14 1 1 0 1021 2462 690 22 -1 5 1 14 1 1 1 1021 2473 57 6 34.179237 =5 1 14 1 1 2 1094 2470 66 10 81.307503 creamer5 1 14 1 1 3 1168 2464 38 20 95.680222 only5 1 14 1 1 4 1600 2468 68 11 94.945374 creamer5 1 14 1 1 5 1675 2462 36 20 95.351868 only2 1 15 0 0 0 970 2392 362 82 -1 3 1 15 1 0 0 970 2392 362 82 -1 4 1 15 1 1 0 1093 2392 189 30 -1 5 1 15 1 1 1 1093 2399 53 23 96.415306 cartons 1 15 1 1 2 1250 2392 2 3 4.898003 .5 1 15 1 1 3 1279 2409 3 6 3.195610 '4 1 15 1 2 0 970 2407 312 60 -1 5 1 15 1 2 1 970 2407 96 60 63.628864 QD5 1 15 1 2 2 1093 2421 111 16 0.000000 Coffee-Rate’5 1 15 1 2 3 1255 2420 27 20 31.294930 |!4 1 15 1 3 0 975 2440 357 34 -1 5 1 15 1 3 1 975 2446 94 28 1.822754 A5 1 15 1 3 2 1094 2443 51 18 92.871918 Liquids 1 15 1 3 3 1153 2443 84 18 95.573959 non-dairy5 1 15 1 3 4 1252 2440 30 14 15.470673 “ft;5 1 15 1 3 5 1330 2444 2 7 0.000000 i2 1 16 0 0 0 949 2511 204 18 -1 3 1 16 1 0 0 949 2511 204 18 -1 4 1 16 1 1 0 949 2511 204 18 -1 5 1 16 1 1 1 949 2513 24 16 92.121361 IN5 1 16 1 1 2 981 2512 37 17 95.203949 THES 1 16 1 1 3 1027 2512 66 17 94.335121 DAIRY5 1 16 1 1 4 1101 2511 52 17 94.335121 CASE Decision and Order 115 F.T.C.

EXHIBIT B CARNATION COFFEE-MATE LiQuib “SMART WAY"

CLIENT Carnation Company COMMERCIAL NO CMCM 9023 LENGTH 30 Secoras EXHIBIT p But | also Ske to stay away from cholesterol are $a7_*aie0 ‘al New Cotlee-mate Liquid non-gairy creamer Dul 75%. ‘ess Satucated ‘at and nO ncotee cnc-esterol ever tres or cereal CoMee mate U'Cu.6 $a S™aT “ew way ‘0 ANNCR .VO)ALen cee ary arc sas Mave t™@ taste you “ae winout 7m fal and New Cotee-mate L-quia vom Carranon cmclesiero' yo. gon: In your Qrecet § Oar'y case ST. IVES LABORATORIES, INC. 77 77 Complaint