Chemopharm Laboratory Inc., d/b/a CP Industries; Proposed Consent Agreement With Analysis to Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 932 3135]

Chemopharm Laboratory Inc., d/b/a CP Industries; 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 Utah corporation that markets the ice

melting product, Superior Sno-N-Ice, from making any environmental

claim about any product unless it possesses and relies on competent and

reliable scientific evidence to substantiate the claims. In addition,

the respondent would be prohibited from misrepresenting the existence

or contents of any test or study.

DATES: Comments must be received on or before November 28, 1994.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,

Room 159, 6th St. and Pa. Ave., N.W., Washington, D.C. 20580.

FOR FURTHER INFORMATION CONTACT: C. Steven Baker, Chicago Regional

Office, Federal Trade Commission, 55 East Monroe St., Suite 1437,

Chicago, IL. 60603. (312) 353-8156.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal

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

The Federal Trade Commission having initiated an investigation of

certain acts and practices of Chemopharm Laboratory Inc., d/b/a CP

Industries, a corporation (``proposed respondent''), and it now

appearing that proposed respondent is 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 Chemopharm Laboratory Inc., by

its duly authorized officer, and its attorney, and counsel for the

Federal Trade Commission that:

1. Proposed respondent Chemopharm Laboratory Inc. is a corporation

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

of the State of Utah with its principal office or place of business at

503 North 400 West, Salt Lake City, Utah 84103.

2. Proposed respondent admits all the jurisdictional facts set

forth in the draft of complaint here attached.

3. Proposed respondent waives:

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

respondent, 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 respondent 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 respondent,

(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 respondent's address as

stated in this agreement shall constitute service. Proposed respondent

waives any right it 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 respondent has read the complaint and the order

contemplated hereby. It understands that once the order has been

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

showing it has fully complied with the order. Proposed respondent

further understands that it 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:

1. The term ``product'' means any product that is offered for sale,

sold or distributed to the public by respondent, its successors and

assigns, under the ``Superior Sno-N-Ice Melter'' band name or any other

brand name of respondent, its successors and assigns; and also means

any product sold or distributed to the public by third parties under

private labeling agreements with respondent, its successors and

assigns.

2. The term ``competent and reliable scientific evidence'' means

tests, analyses, research, studies or other evidence based on the

expertise of professionals in the relevant areas, 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 respondent, Chemopharm Laboratory Inc., 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 product 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:

A. Such product is ``environmentally safe,'' ``protects the total

environment,'' or otherwise offers any environmental benefit; or

B. Such product provides the environmental benefits of Calcium

Magnesium Acetate,

unless such representation is true and, at the time of making such

representation, respondent possesses and relies upon competent and

reliable evidence, which when appropriate must be competent and

reliable scientific evidence, that substantiates such representation.

II

It is further ordered that respondent, Chemopharm Laboratory Inc.,

a corporation, its successors and assigns, and its offers, 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 product 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 existence, contents, validity, results,

conclusions, or interpretations of any test or study.

III

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 copying:

A. All materials that were relied upon in disseminating such

representations; 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.

IV

It is further ordered that the respondent shall distribute a copy

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

officers, agents, or employees engaged in the preparation and placement

of advertisements, promotional materials, product labels or other such

sales materials covered by this Order.

V

It is further ordered that respondent 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.

VI

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

after service of this Order upon it, 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 it has complied

with this Order.

Analysis of Proposed Consent Order to Aid Public Comment

The Federal Trade Commission has accepted, subject to final

approval, an agreement containing a consent order from Chemopharm

Laboratory, Inc.,

d/b/a CP Industries, an Utah corporation (``CP Industries'' or

``respondent''). Upon this agreement, the respondent will cease and

desist from claiming that any product is environmentally safe, protects

the total environment, otherwise offers any environmental benefit, or

provides the environmental benefits of Calcium Magnesium Acetate

(``CMA''), unless such representation is true and, at the time of

making such representation, it possesses adequate substantiation. The

proposed consent agreement also prohibits CP Industries from

misrepresenting the results of any test or study.

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

sixy (60) days for receipt 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

proposed order contained in the agreement.

This matter concerns claims made for CP Industries' Superior Sno-N-

Ice Melter product. The complaint accompanying the proposed consent

order alleges, in part, that the respondent engaged in deceptive acts

and practices in violation of Section 5 of the Federal Trade Commission

Act. According to the complaint, the respondent represented that

Superior Sno-N-Ice Melter does not harm or damage the environment; that

Superior Sno-N-Ice Melter provides the environmental benefits of CMA;

that scientific studies of CMA demonstrate that Superior Sno-N-Ice is

beneficial to the environment; and that it had a reasonable basis for

these claims. In fact, Superior Sno-N-Ice Melter contains about 95%

sodium chloride (i.e., rock salt) which does harm or damage the

environment. Therefore, Superior Sno-N-Ice does harm or damage the

environment; Superior Sno-N-Ice Melter does not provide the

environmental benefits of CMA; and scientific studies of CMA do not

demonstrate that Superior Sno-N-Ice Melter is beneficial to the

environment. The complaint therefore alleges that the claims are false

and misleading and also alleges that CP Industries lacked a reasonable

basis for making the claims.

The consent order contains provisions designed to prevent the

respondents from engaging in similar allegedly illegal acts and

practices in the future.

Paragraph I of the proposed consent order requires CP Industries to

cease representing that any product is ``environmentally safe,''

``protects the total environment,'' or otherwise offers any

environmental benefit; or that any product provides the environmental

benefits of CMA, unless such representation is true and substantiated.

Paragraph II of the order prohibits CP Industries from misrepresenting

the existence, contents, validity, results, conclusions, or

interpretations of any test or study.

The remaining parts of the proposed consent order require the

respondent to maintain materials relied upon to substantiate claims

covered by the order, to distribute copies of the order to each of its

operating divisions and 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 compliance reports.

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

proposed consent order. It is not intended to constitute an official

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

way their terms.

Benjamin I. Berman,

Acting Secretary.

[FR Doc. 94-23878 Filed 9-26-94; 8:45 am]

BILLING CODE 6750-01-M