LePage's, Inc., et al.; Proposed Consent Agreement With Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 912 3364]

LePage's, Inc., et al.; Proposed Consent Agreement With Analysis

To Aid Public Comment

agency: Federal Trade Commission.

action: Proposed 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, among other things, the Pennsylvania manufacturers of glues

and adhesive tapes from misrepresenting that any product or package is

capable of being recycled, or the extent to which recycling collection

programs are available for such products, and from making

unsubstantiated claims that its products or packages are degradable,

biodegradable or photodegradable, or that their degradability offers

any environmental benefit when disposed of as trash in a sanitary

landfill.

dates: Comments must be received on or before July 5, 1994.

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: Michael Dershowitz, FTC/S-4002,

Washington, DC 20580. (202) 326-3158.

supplementary information: Pursuant to section 6(f) of the Federal

Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Sec. 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 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

Sec. 4.9(b)(6)(ii) of the Commission's Rules of Practice (16 CFR

4.9(b)(6)(ii)).

LePage's Inc., a Corporation, and LP Holdings, Inc., a Corporation;

Agreement Containing Consent Order To Cease and Desist

[File No. 912 3364]

The Federal Trade Commission having initiated an investigation of

certain acts and practices of proposed respondents LePage's, Inc., a

corporation, and LP Holdings, Inc., a corporation, and it now appearing

that proposed respondents are willing to enter into an agreement

containing an order to cease and desist from the acts and practices

being investigated,

It is hereby agreed by and between LePage's, Inc. and LP Holdings,

Inc., by their duly authorized officers, and counsel for the Federal

Trade Commission that:

1. Proposed respondent LePage's, Inc. is a corporation organized,

existing and doing business under and by virtue of the laws of the

State of Pennsylvania.

Proposed respondent LP Holdings, Inc. is a corporation organized,

existing and doing business under and by virtue of the laws of the

State of Delaware. It dominates and controls the acts and practices of

its wholly-owned subsidiary, LePage's, Inc.

The proposed respondents have their principal offices or places of

business at 120 Delta Drive, Pittsburgh, Pennsylvania 15238.

2. Proposed respondents admit all the jurisdictional facts set

forth in the draft of complaint here attached.

3. Proposed respondents waive:

(a) Any further procedural steps;

(b) The requirement that the Commission's decision contain a

statement of findings of fact and conclusions of law;

(c) All rights to seek judicial review or otherwise to challenge or

contest the validity of the order entered pursuant to this agreement;

and

(d) All claims under the Equal Access to Justice Act.

4. This agreement shall not become a 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 the complaint contemplated hereby, 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 proposed

respondents, 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 respondents that the law has been

violated as alleged in the attached draft complaint or that the facts

as alleged in the attached draft complaint, other than the

jurisdictional facts, are true.

6. This 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 Sec. 2.34 of the Commission's

Rules, the Commission may without further notice to proposed

respondents, (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 decision containing the agreed-to order to proposed

respondents' address as stated in this agreement shall constitute

service. Proposed respondents waive any right they might 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 in the agreement may be

used to vary or contradict the terms of the order.

7. Proposed respondents have read the complaint and the order

contemplated hereby. They understand that once the order has been

issued, they will be required to file one or more compliance reports

showing they have fully complied with the order. Proposed respondents

further understand that they may be liable for civil penalties in the

amount provided by law for each violation of the order after it becomes

final.

Order

Definitions

For purposes of this Order, the following definitions shall apply:

The term ``product or package'' means any product or package that

is offered for sale, sold or distributed to the public by respondents,

their successors and assigns, under the LePage's brand name or any

other brand name of respondents, their successors and assigns; and also

means any product or package sold or distributed to the public by third

parties under private labeling agreements with respondents, their

successors and assigns.

``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.

I

It is ordered that respondents, LePage's, Inc., a corporation, and

LP Holdings, Inc., a corporation, their successors and assigns, and

their officers, representatives, agents, and employees, directly or

through any corporation, subsidiary, division, or other device, in

connection with the advertising, labeling, promotion, offering for

sale, sale, or distribution of any product or package in or affecting

commerce, as ``commerce'' is defined in the Federal Trade Commission

Act, do forthwith cease and desist from representing, in any manner,

directly or by implication:

(1) That any such product or package is degradable, biodegradable,

or photodegradable; or,

(2) Through the use of such terms as degradable, biodegradable, or

photodegradable or any other similar terms or expression, that any such

product or package offers any environmental benefits when consumers

dispose or it as trash that is buried in a sanitary landfill,

unless at the time of making such representation, respondents possess

and rely upon competent and reliable scientific evidence that

substantiates such representation.

II

A. It is further ordered that respondents, LePage's, Inc., a

corporation, and LP Holdings, Inc., a corporation, their successors and

assigns, and their officers, representatives, agents, and employees,

directly or through any corporation, subsidiary, division, or other

device, in connection with the advertising, labeling, promotion,

offering for sale, sale, or distribution of any product or package 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 extent to which:

(1) Any such product or package is capable of being recycled; or,

(2) Recycling collection programs for such product or package are

available.

B. Provided, however, respondents will not be in violation of Part

II(A)(2) of this Order, in connection with the advertising, labeling,

offering for sale, sale, or distribution of any non-foam polystyrene or

any non-corrugated paperboard or cardboard product or package, if they

truthfully represent that such product or package is recyclable,

provided that:

(1) Respondents disclose clearly, prominently, and in close

proximity to such representation:

(a) In regard to any non-foam polystyrene product or package, that

such product or package is recyclable in the few communities with

recycling collection programs for non-foam polystyrene; and in regard

to any non-corrugated paperboard or cardboard product or package, that

such product or package is recyclable in the few communities with

recycling collection programs for non-corrugated paperboard or

cardboard; or

(b) The approximate number of U.S. communities with recycling

collection programs for such product or package; or

(c) The approximate percentage of U.S. communities or the U.S.

population to which recycling collection programs for such product or

package are available; and

(2) In addition, in the case of a non-foam polystyrene product or

package, such product or package itself bear a clear identification of

the specific plastic resin(s) from which it is made.

For purposes of this provision, a disclosure elsewhere on the

product package shall be deemed to be ``in close proximity'' to such

representation if there is a clear and conspicuous cross-reference to

the disclosure. The use of an asterisk or other symbol shall not

constitute a clear and conspicuous cross-reference. A cross-reference

shall be deemed clear and conspicuous if it is of sufficient prominence

to be readily noticeable and readable by the prospective purchaser when

examining the part of the package on which the representation appears.

III

It is further ordered that respondents, LePage's, Inc., a

corporation, and LP Holdings, Inc, a corporation, their successors and

assigns, and their officers, representatives, agents, and employees,

directly or through any corporation, subsidiary, division, or other

device, in connection with the advertising, labeling, promotion,

offering for sale, sale, or distribution of any product or package in

or affecting commerce, as ``commerce'' is defined in the Federal Trade

Commission Act, do forthwith cease and desist from representing, in any

manner, directly or by implication, that any such product or package

offers any environmental benefit, unless at the time of making such

representation, respondents possess and rely upon competent and

reliable evidence, which when appropriate must be competent and

reliable scientific evidence, that substantiates such representation.

IV

It is further ordered that for five (5) years after the last date

of dissemination of any representation covered by this Order,

respondents, or their 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.

V

It is further ordered that respondents shall distribute a copy of

this Order to each of their operating divisions and to each of their

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 respondents shall notify the Commission

at least thirty (30) days prior to any proposed change in the

corporations such as a dissolution, assignment, or sale resulting in

the emergence of a successor corporation, the creation or dissolution

of subsidiaries, or any other change in the corporations which may

affect compliance obligations under this Order.

VII

It is further ordered that respondents shall, within sixty (60)

days after service of this Order upon them, 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.

Analysis of Consent Order To Aid Public Comment

The Federal Trade Commission has accepted an agreement, subject to

final approval, to a proposed consent order from respondents LePage's,

Inc., a Pennsylvania corporation, and LP Holdings, Inc., a Delaware

corporation.

The proposed consent order has been placed on the public record for

sixty (60) days for reception of comments by interested persons.

Comments received during this period will become part of the public

record. After sixty (60) days, the Commission will again review the

agreement and the comments received and will decide whether it should

withdraw from the agreement and take other appropriate action, or make

final the agreement's proposed order.

This matter concerns the labeling and advertising of LePage's

Biodegradable Transparent Tape. The Commission's complaint in this

matter alleges that LePage's Biodegradable Transparent Tape is a

cellophane tape made from wood pulp and adhesive material; that the

retail tape product is sold with a hard clear non-foam polystyrene

plastic dispenser that does not identify the type(s) of plastic resin

from which it is made; and that the tape and dispenser are attached to

a non-corrugated paperboard or cardboard backcard. The complaint

charges that the respondents represented without substantiation that

LePage's Biodegradable Transparent Tape will completely break down and

return to nature--i.e., decompose into elements found in nature--within

a reasonably short period of time after customary disposal and that

compared to other transparent tape, LePage's Biodegradable Transparent

Tape offers a significant environmental benefit after customary

disposal. The complaint further charges that the respondents falsely

represented that the plastic tape dispenser and paperboard backcard of

LePage's Biodegradable Transparent Tape are recyclable. In fact, the

complaint alleges, the plastic tape dispenser and the paperboard

package are not recyclable, because there are only a few collection

facilities nationwide that will accept the non-foam polystyrene tape

dispenser or the non-corrugated paperboard or cardboard backcard for

recycling.

The proposed consent order contains provisions designed to remedy

the violations charged and to prevent the respondents from engaging in

similar acts and practices in the future.

Part I of the proposed order requires that the respondents cease

and desist from representing, in any manner, directly or by

implication, that any of their products or packages are degradable,

biodegradable, or photodegradable, or more specifically through the use

of such terms or similar terms that any such product or package offers

any environmental benefits when consumers dispose of it as trash that

is buried in a sanitary landfill, unless at the time of making such

representation, the respondents possess and rely upon competent and

reliable scientific evidence that substantiates such representation.

Part II of the proposed order requires that the respondents cease

and desist from misrepresenting, in any manner, directly or by

implication, with respect to any product or package the extent to which

it is capable of being recycled or to which recycling collection

programs are available. Part II also contains a provision that allows

the respondents to advertise non-foam polystyrene and non-corrugated

paperboard and cardboard products or packages as recyclable without

violating Part II of the order. The respondents may do so if they

truthfully represent that such products or packages are capable of

being recycled; disclose clearly, prominently and in close proximity to

such claim (a) that such product or package is recyclable in the few

communities with recycling collection programs for non-foam polystyrene

or for non-corrugated paperboard or cardborad; or (b) the approximate

number of U.S. communities with recycling collection programs for such

product or package; or (c) the approximate percentage of U.S.

population to which recycling collection programs for such product or

package are available; and in addition, in the case of any non-foam

polystyrene product or package, such product or package itself bears a

clear identification of the specific plastic resin(s) from which it is

made.

Part III of the proposed order provides that if the respondents

represent in advertising or labeling that any product or package offers

any environmental benefit, they must have a reasonable basis consisting

of competent and reliable evidence, which when appropriate must be

competent and reliable scientific evidence, that substantiates the

claims.

The proposed order also requires the respondents to maintain

materials relied upon to substantiate the claims covered by the order,

to distribute copies of the order to certain company officials, to

notify the Commission of any changes in corporate structure that might

affect compliance with the order, and to file one or more reports

detailing compliance with the order.

The purpose of this analysis is to facilitate public comment on the

proposed order. It is not intended to constitute an official

interpretation of the agreement and proposed order or to modify in any

way their terms.

Donald S. Clark,

Secretary.

[FR Doc. 94-10944 Filed 5-5-94; 8:45 am]

BILLING CODE 6750-01-M