America's Favorite Chicken Company; Proposed Consent Agreement With Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 932 3200]

America's Favorite Chicken Company; 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, a Georgia-based fast-food corporation

from misrepresenting the extent to which 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 claims about

any environmental benefit of its products or packaging unless it

possesses competent and reliable evidence to substantiate the claims.

DATES: Comments must be received on or before June 20, 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:

C. Steven Baker or Catherine fuller, FTC/Chicago Regional Office, 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 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)).

Agreement Containing Consent Order To Cease and Desist

The Federal Trade Commission having initiated an investigation of

certain acts and practices of America's Favorite Chicken Company, 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 America's Favorite Chicken

Company, by its duly authorized officer, and its attorney, and counsel

for the Federal Trade Commission that:

1. Proposed respondent America's Favorite Chicken Company, is a

corporation organized, existing and doing business under and by virtue

of the laws of the State of Minnesota with its principal office or

place of business at Six Concourse Parkway, suite 1700, Atlanta,

Georgia 30328.

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:

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

including, but not limited to, any item used by respondent to contain,

serve, or package goods, offered for sale, sold or distributed to the

public by respondent, its successors and assigns; and also means any

such product or package sold or distributed to the public by third

parties under private labeling agreements with respondent, its

successors and assigns.

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

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 respondent, America's Favorite Chicken 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, distribution, or use

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 any such product or package is capable of being

recycled or the extent to which recycling collection programs for such

product or package are available.

II

It is further ordered that respondent, America's Favorite Chicken

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, distribution, or

use 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 product or package offers any environmental benefit, unless 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.

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, representatives, 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 an agreement, subject to

final approval, to a proposed consent order from respondent America's

Favorite Chicken Company.

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 environmental claims made on the labels of

packaging used to contain respondent's food products. The Commission's

complaint charges that respondent made false and unsubstantiated claims

that its packaging was recyclable after ordinary use. In fact, the

complaint alleges, while the respondent's packaging is capable of being

recycled, the vast majority of consumers cannot recycle it because

there are virtually no collection facilities that accept food

contaminated paper packaging for recycling.

The proposed consent order contains provisions designed to remedy

the violations charged and to prevent the respondent from engaging in

similar acts and practices in the future. The proposed order extends to

all products or packages that are used by the respondent to package its

food products or that are sold to the public.

Part I of the proposed consent order prohibits the respondent from

misrepresenting the extent to which any product or packaging is capable

of being recycled or the extent to which recycling collection programs

for such products or packaging are available. Part II of the proposed

order prohibits the respondent from misrepresenting the environmental

benefit of any product or packaging it uses unless at the time such

representation is made the respondent possesses and relies upon

competent and reliable evidence that substantiates the representation.

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.

Donald S. Clark,

Secretary.

[FR Doc. 94-9629 Filed 4-20-94; 8:45 am]

BILLING CODE 6750-01-M