The Eskimo Pie Corporation; Proposed Consent Agreement With Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 942 3044]

The Eskimo Pie Corporation; 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 Virginia-based corporation from

misrepresenting the existence or amount of calories or any other

nutrient or ingredient in any frozen dessert product and from falsely

claiming that any frozen dessert product has been approved, endorsed or

recommended by any person, group or organization.

DATES: Comments must be received on or before August 4, 1995.

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 Barbara Di Giulio,

FTC/Chicago Regional Office, Federal Trade Commission, 55 East Monroe

St., Suite 1860, 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

In the Matter of The Eskimo Pie Corporation, a corporation.

The Federal Trade Commission having initiated an investigation of

certain acts and practices of The Eskimo Pie Corporation, a

corporation, and it how appearing that The Eskimo Pie Corporation,

hereinafter sometimes referred to as proposed respondent is willing to

enter into an agreement containing an order to cease and desist from

the use of the acts and practices being investigated,

It is hereby agreed that by and between The Eskimo Pie Corporation,

by its duly authorized officer and its attorneys, and counsel for the

Federal Trade Commission that:

1. Proposed respondent The Eskimo Pie Corporation is a Delaware

corporation, with its office and principal place of business located at

901 Moorefield Park Drive, Richmond, Virginia 23236.

2. Proposed respondent admits all the jurisdictional facts set

forth in the draft of complaint.

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 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

complaint contemplated thereby, 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 the 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 draft of complaint, or that the facts as

alleged in the draft of complaint, other than jurisdictional facts, are

true.

6. The 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 Section 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 and its decision containing the

following order to cease and desist in disposition of the proceeding,

and (2) make the 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 complaint and 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 may 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 the agreement may be used

to vary or contradict the terms of the order.

7. Proposed respondent has read the proposed complaint and order

contemplated hereby. It understands that once the order has been

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

showing that 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.

[[Page 29602]]

Order

I

It is ordered that respondent The Eskimo Pie Corporation, 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, labelling, advertising, promotion, offering for sale,

sale, or distribution of any frozen dessert 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, through numerical or descriptive terms,

logos, symbols, or any other means:

A. The existence or amount of calories or any other nutrient or

ingredient in any such product; or

B. That such product has been approved, endorsed or recommended by

any person, group or organization.

II

It is ordered that respondent The Eskimo Pie Corporation, 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, labelling, advertising, promotion, offering for sale,

sale, or distribution of any frozen dessert product in or affecting

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

do forthwith cease and desist from failing to disclose clearly and

prominently in any advertisement or promotional material that

represents, in any manner, directly or by implication, through

numerical or descriptive terms, logos, symbols, or any other means,

that such product is a useful or appropriate part of a diabetic's diet:

A. The fat content per serving of such product expressed as 1) the

number of grams and 2) the percentage of the ``Maximum Daily Value'',

unless such product is low in total fat;

B. The saturated fat content per serving of such product expressed

as 1) the number of grams and 2) the percentage of the ``Maximum Daily

Value'' of the saturated fat, unless such product is low in saturated

fat; and

C. The statement ``Not a reduced calorie food'' when such a

statement would be required on the label pursuant to regulations

promulgated by the Food and Drug Administration.

The statements required by subparagraphs A.1 and A.2 and B.1 and

B.2 of this Part shall appear in close proximity. For purposes of this

Part, the term ``Maximum Daily Value'' shall mean the daily reference

value or other daily intake limit for total fat or saturated fat

established in an effective final regulation of the Food and Drug

Administration. For purposes of this Part, ``low in fat'' and ``low in

saturated fat'' shall mean the qualifying amount for such terms as set

forth in regulations promulgated by the Food and Drug Administration.

For purposes of this Order, ``clearly and prominently'' shall mean

as follows:

1. In a television or videotape advertisement, the disclosure shall

be presented simultaneously in both the audio and video portions of the

advertisement. The audio disclosure shall be delivered in a volume and

cadence and for a duration sufficient for an ordinary consumer to hear

and comprehend it. The video disclosure shall be of a size and shade,

and shall appear on the screen for a duration, sufficient for an

ordinary consumer to read and comprehend it;

2. In a print advertisement, the disclosure shall be in close

proximity to the representation that triggers the disclosure in at

least twelve (12) point type; and

3. In a radio advertisement, the disclosure shall be delivered in a

volume and cadence and for a duration sufficient for an ordinary

consumer to hear and comprehend it.

III

Nothing in this Order shall prohibit respondent from making any

representation that is specifically permitted in labeling for any

product by regulations promulgated by the Food and Drug Administration

pursuant to the Nutrition Labeling and Education Act of 1990.

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 copying:

A. All materials that were relied upon in disseminating such

representation; and

B. All test reports, studies, surveys, demonstrations, or other

evidence in its possession or control that contradict, qualify, or call

into question such representation, including correspondence from

consumers.

V

It is further ordered that respondent shall notify the Commission

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

respondent 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 respondent which may affect

compliance obligations arising out of this Order.

VI

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, employees, and licensees engaged in

the preparation or placement of advertisements or other materials

covered by this Order.

VII

It is further ordered that respondent, or its successors and

assigns, shall, for three (3) years after the date of the last

dissemination of the representation to which they pertain, maintain and

upon request make available to the Federal Trade Commission for

inspection and copying all advertisements containing any representation

covered by this Order.

VIII

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

after service of this Order, 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 to a

proposed consent order from The Eskimo Pie Corporation (Eskimo Pie).

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 or make final the agreement's proposed

order.

This matter concerns claims made by Eskimo Pie in its advertising

for its Sugar Freedom frozen dessert products.

The Commission's complaint in this matter charges Eskimo Pie with

engaging in unfair or deceptive practices in connection with its

advertising of its [[Page 29603]] Sugar Freedom frozen dessert

products. According to the complaint Eskimo Pie falsely represented

that its Sugar Freedom frozen dessert products are significantly

reduced in calories compared with comparable foods and that they are

low in calories.

The complaint also alleges that Eskimo Pie falsely represented that

the American Diabetes Association has approved or endorsed Eskimo Pie

Sugar Freedom frozen dessert products.

Finally, the complaint alleges that Eskimo Pie represented that its

Sugar Freedom frozen dessert products are particularly useful or

appropriate in the diabetics's diet, but failed to disclose that many

of these products are high in total fat and saturated fat and are not

low or reduced in calories.

The consent order contains provisions designed to remedy the

violations charged and to prevent Eskimo Pie from engaging in similar

deceptive and unfair acts and practices in the future.

Part I of the order prohibits Eskimo Pie from misrepresenting the

existence or amount of calories or any other nutrient or ingredient in

any frozen dessert product; or that such product has been approved,

endorsed or recommended by any person, group or organization.

Part II of the order requires that when Eskimo Pie represents that

any frozen dessert product is a useful or appropriate part of a

diabetic's diet, then it must disclose a) the total fat content if the

product is not low in fat; b) the saturated fat content if the product

is not low in saturated fat; and c) that the product is not a reduced

calorie product when the FDA would require a similar disclosure in

labelling.

Part III of the order provides that representations that would be

specifically permitted in food labeling, under regulations issued by

FDA pursuant to the Nutrition Labeling and Education Act of 1990, are

not prohibited by the order.

Part IV of the order requires Eskimo Pie to maintain copies of all

materials relied upon in making any representation covered by the

order.

Part V of the order requires Eskimo Pie to notify the Commission of

any changes in corporate structure that might affect compliance with

the order.

Part VI of the order requires Eskimo Pie to distribute copies of

the order to its operating divisions and to various officers, agents

and representatives of Eskimo Pie.

Part VII of the order requires Eskimo Pie to maintain copies of all

advertisements containing representations covered by the order.

Part VIII of the order requires Eskimo Pie to file with the

Commission one or more reports detailing compliance with the order.

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

proposed order, and it is not intended to constitute an official

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

their terms.

Donald S. Clark,

Secretary.

[FR Doc. 95-13652 Filed 6-2-95; 8:45 am]

BILLING CODE 6750-01-M