Oak Hill Industries Corp., et al.; Proposed Consent Agreement With Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 922 3162]

Oak Hill Industries Corp., et al.; Proposed Consent Agreement

With Analysis To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

-----------------------------------------------------------------------

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, a New York manufacturer of plastic

tableware 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 any unsubstantiated

representation that any product or package it markets offers any

environmental benefit.

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 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)).

Agreement Containing Consent Order To Cease and Desist

In the Matter of: Oak Hill Industries Corp., a corporation, and

Malcolm Foster, individually and as an officer of said corporation.

The Federal Trade Commission having initiated an investigation of

certain acts and practices of Oak Hill Industries Corp., a corporation,

and Malcolm Foster, individually and as an officer of said corporation

(``proposed respondents''), 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 Oak Hill Industries Corp., by

its duly authorized officer, and counsel for the Federal Trade

Commission that:

1. Proposed respondent Oak Hill Industries Corp. is a corporation

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

of the State of New York, with its principal office or place of

business at 330 East 59th Street, New York, NY 10022.

Proposed respondent Malcolm Foster is an officer of said

corporation. He formulates, directs, and controls the acts and

practices of said corporation. His address is the same as that of said

corporation.

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 Oak Hill 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

A. It is ordered that respondents, Oak Hill Industries Corp., a

corporation, its successors and assigns, and its officers, and Malcolm

Foster, individually and as an officer of said corporation, and

respondents' agents, representatives, and employees, directly or

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

connection with the labeling, advertising, 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

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

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

polypropylene film, or low-density polyethylene film 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; in regard to

any polypropylene film product or package, that such product or package

is recyclable in the few communities with recycling collection programs

for polypropylene film; and in regard to any low-density polyethylene

film product or package, that such product or package is recyclable in

the few communities with recycling collection programs for low-density

polyethylene film; 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, such product or package itself bears 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.

II

It is further ordered that respondents, Oak Hill Industries Corp.,

a corporation, its successors and assigns, and its officers, and

Malcolm Foster, individually and as an officer of said corporation, and

respondents' agents, representatives, and employees, directly or

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

connection with the labeling, advertising, 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.

III

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.

IV

It is further ordered that the corporate respondents 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, products, labels or other such sales materials covered by

this Order.

V

It is further ordered that the individual respondent shall notify

the Commission in the event of the discontinuance of his present

business or employment and of each affiliation with a new business or

employment. In addition, for a period of five (5) years from the date

of service of this Order, he shall promptly notify the Commission of

each affiliation with a new business or employment whose activities

include the sale, distribution, and/or manufacturing of any plastic

product or package or of his affiliation with a new business or

employment in which his own duties and responsibilities involve the

sale, distribution, and/or manufacturing of any plastic product or

package. Each such notice shall include the individual respondent's new

business address and a statement of the nature of the business or

employment in which such respondent is newly engaged, as well as a

description of such respondent's duties and responsibilities in

connection with the business or employment. The expiration of the

notice provision of this paragraph shall not affect any other

obligation arising under 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

corporation 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 corporation which may affect

compliance obligations under this Order.

VII

It is further ordered that respondents shall, within sixty (6) 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 Oak Hill

Industries Corp., a New York corporation, and Malcolm Foster,

individually and as an officer of the corporate respondent.

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 Oak Hill brand

plastic plates, bowls and utensils. The Commission's complaint in this

matter alleges that Oak Hill brand plastic plates, bowls and utensils

are made from non-foam polystyrene; that they are packaged in thin

plastic packaging which is sometimes made from polypropylene film and

at other times from low-density polyethylene film; and that such

plastic products and packaging do not identify the type(s) of plastic

resin from which they are made. The complaint charges that Oak Hill

falsely represented that the plastic plates, bowls and utensils and the

plastic film packaging are recyclable. In fact, the complaint alleges,

the plastic products and packaging are not recyclable, because there

are only a few collection facilities nationwide that will accept non-

foam polystyrene plates, bowls or utensils or the polypropylene film or

low-density polyethylene film plastic packaging 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 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 I also contains a proviso that allows the respondents

to advertise non-foam polystyrene, polypropylene film or low-density

polyethylene film products or packages as recyclable without violating

Part I 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, polypropylene

film or low-density polyethylene film; or (b) the approximate number of

U.S. communities with recycling collection programs for such product or

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

population to which recycling collection programs for such product or

package are available; and in addition, such product or package itself

bears a clear identification of the specific plastic resin(s) from

which it is made.

Part II 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 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. 94-10950 Filed 5-5-94; 8:45 am]

BILLING CODE 6750-01-M