American Tobacco Company

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IN THE MATTER OF THE AMERICAN TOBACCO COMPANY CONSENT ORDER, ETC.. IN REGARD TO ALLEGED VIOLATION OF SEe. OF THE FEDERAL TRADE COMMISSION ACT Docket C-3547. Complaint, Jan. 1995--Decision, Jon. , 1995 This consent order prohibits, among other things, a Connecticut-based company from disseminating advertising, for Carlton or any other cigarettes, that represents that consumers will get less tar or nicotine by smoking any number of cigarettes of any of its brands than by smoking one or more cigarettes of any other brand, unless such representations are both true and substantiated by competent and reliable scientific evidence. Appearances For the Commission: Shira D. Modell. For the respondent: Daniel O'Neill and Thomas Beazon Chadbourne Park, New York, N. COMPLAINT The Federal Trade Commssion, having reason to believe that The American Tobacco Company, a corporation ("respondent ), has violated the 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 The American Tobacco Company is a Delaware corporation, with its office and principal place of business located at 281 Tresser Boulevard, Stamford, Connecticut. PAR. 2. Respondent has manufactured, labelled, promoted offered for sale sold, and distributed cigarettes, including Carlton brand cigarettes, to consumers.

PAR. 3. The acts or practices of respondent alleged in this complaint have been in or affecting commerce, as "commerce " is defined in Section 4 of the Federal Trade Commission Act. PAR. 4. Respondent has disseminated or has caused to be disseminated advertisements for its Carlton brand cigarettes, including, but not necessarily limited to, the attached Exhibits A- Complaint J J9 F.TC. which depict ten packs of Carlton brand cigarettes and single packs of other brands of cigarettes, with the tar and nicotine ratings for Carlton and the other brands of cigarettes under each pack. Exhibits C contain the following statements;

A. " 10 packs of Carlton have less tar than I pack of these brands. " (Exhibit A.) B. "A WHOLE CARTON OF CARLTON HAS LESS TAR THAN I PACK OF THESE BRANDS. " (Exhibit B.

C. " IOta I. 10 packs of Carlton have less tar than I pack of these brands. (Exhibit e.) PAR. 5. Through the presentation of the tar of its Carlton product as a numerical multiple, fraction or ratio of the tar of other brands of cigarettes, and/or the visual depiction of ten packs or a carton of Carlton cigarettes versus one pack of the other brands in the advertisements referred to in paragraph four, including but not necessarily limited to the advertisements attached as Exhibits Arespondent has represented, directly or by implication, that consumers will get less tar by smoking ten packs of Carlton brand cigarettes than by smoking a single pack of the other brands of cigarettes depicted in the ads, which are rated as having more than 10 mg. of tar.

PAR. 6. In truth and in fact, consumers will not necessarily get less tar by smoking ten packs of Carlton brand cigarettes than by smoking a single pack of the other brands of cigarettes depicted in the ads. Although the cigarettes depicted are rated as having more than 10 mg. of tar, those ratings are obtained through smoking machine tests that do not reflect actual smoking, in part because the machines do not take into account such behavior as compensatory smoking. Therefore, the representation set forth in paragraph five was, and is false and misleading.

PAR. 7. Through the presentation of the tar of its Carlton product as a numerical multiple, fraction or ratio of the tar of other brands of cigarettes, and/or the visual depiction of ten packs or a carton of Carlton cigarettes versus one pack of the other brands in the advertisements referred to in paragraph four, including but not necessarily limited to the advertisements attached as Exhibits Arespondent has represented, directly or by implication, that at the time it made the representation set forth in paragraph five, respondent possessed and relied upon a reasonable basis that substantiated that representation.

THE AMERICAN TOBACCO COMPANY Complaint PAR. 8. In truth and in fact, at the time it made the representation set forth in paragraph five, respondent did not possess and rely upon a reasonable basis that substantiated such representation. Therefore the representation set forth in paragraph seven was, and is, false and misleading.

PAR. 9. The acts and practices of respondent as alleged in this complaint constitute unfair or deceptive acts or practices in or affecting commerce in violation of Section Sea) of the Federal Trade Commission Act.

Complaint 119 FTC. EXHIBIT A Lx'1:.it A SURGEON GE ERAL' S ' 'ING: Smoking 5'1 Pregnanr Women ;\:a' ,2sull 'n ela: !nrurv. Pfe ature BlIh Q L N Birh We:gr. ,,,;.: ,;_. THE AMERICAN TOBACCO COMPANY Complaint EXHIBIT B SURGEON GEIERAL' S WARNING Oeliling Smoking !:?t cwGreallvRBdumSefiousRlsKswYourHeal1h . "L. ot_:. r"".... 5"".""1IO.UO"". ",,"".. O!",.,,,,, ,ftc 119 F.

Complaint EXHIBIT C .L'';-: '- URGEON GENERAL' S WARNING, Smoking JSeS L ng Cancer. liean Cisnse t:mcnvsema. And Mav C8mcilca1e Preq:"arn' THE AMERICAN TOBACCO COMPANY 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 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, its attorney and counsel for the Commission having thereafter executed an agreement containing a consent order an admission by respondent 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 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 a 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 The American Tobacco Company 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 281 Tresser Boulevard, Stamford, Connecticut. 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.

Dccision and Order 119 F. ORDER It is ordered That respondent, The American Tobacco Company, a corporation, its successors and assigns, and its offcers, agents representatives and employees, directly or through any corporation, subsidiary, division or other device, in connection with the manufacturing, labeling, advertising, promotion, offering for sale assale or distribution of any cigarette in or affecting commerce, commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from representing, through the presentation of the tar ratings of any of respondent's brands of cigarettes as a numerical multiple, fraction or ratio of the tar of any other brand of cigarettes, and/or the visual depiction of ten packs or a carton of any of respondent s brands versus one pack of any other brand, directly or by implication, that consumers will get less tar by smoking ten packs of any cigarette rated as having I mg. of tar than by smoking a single pack of any other brand of cigarettes that is rated as having more than 10 mg. of tar. For purposes of this order, the tenn cigarette" shall be as defined in Section 1332 (1) of Title J 5 of the United States Code.

II.

It is further ordered That respondent, The American Tobacco Company, 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 manufacturing, labeling, advertising, promotion, offering for sale, sale or distribution of any cigarette in or affecting commerce, as commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from representing, through the presentation of the tar or nicotine ratings of any of respondent s brands of cigarettes as a numerical multiple, fraction or ratio of the tar or nicotine ratings of any other brand of cigarettes, and/or the visual depiction of more than one pack of any of respondent s brands versus one pack of any other brand, directly or by implication, that consumers wil get less tar or nicotine by smoking any number of cigarettes (or packs or cartons of cigarettes) of any of respondent THE AMERICAN TOBACCO COMPANY Decision and Order brands than by smoking one or more cigarettes (or packs or cartons . of cigarettes) of any other brand, unless such representation is true and, at the time of making such representation, respondent possesses and relies upon competent and reliable scientific evidence that substantiates 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 any objective manner by persons qualified to do so, using procedures generally accepted in the profession to yield accurate and reliable results.

It is further ordered, That presentation of the tar and/or nicotine ratings of any of respondent's brands of cigarettes and the tar and/or nicotine ratings of any other brand (with or without an express or implied representation that respondent's brand is " low lower, " or lowest" in tar and/or nicotine) shall not be deemed to constitute a numerical multiple, fraction or ratio and shall not, in and of itself, be deemed to violate paragraph I or II of this order where no more than a single cigarette or pack of respondent s brand is visually depicted versus a single cigarette or pack of any other brand. 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 copymg:

A. All materials that were relied upon in disseminating such representation; and B. All tests, reports, studies, surveys, demonstrations or other evidence in its possession or control that contradict, qualify, or call into question such representation, or the basis relied upon for such representation, including complaints from consumers. Decision and Order J 19 FTC. It is further ordered That respondent shall distribute a copy of this order to each of its operating divisions and to each of its officers agents, representatives, or employees engaged in the preparation and placement of advertisements, promotional materials, product labels or other such sales materials covered by this order. VI.

It is further ordered, That respondent shall notify the Commssion at least thirty (30) days prior to any proposed change in the corporation, 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 under this order.

VII.

It is further ordered That respondent 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.

CREATIVE AEROSOL CORP.

Complaint