Good News Products, Inc.; Proposed Consent Agreement with Analysis to Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 932-3144]

Good News Products, Inc.; 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 Hamilton, Michigan company from

misrepresenting the nutrient content of eggs or products containing egg

yolks, and from making health claims about such products without

scientific evidence to substantiate the claims.

DATES: Comments must be received on or before September 5, 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:

Phoebe Morse, Boston Regional Office, Federal Trade Commission, 101

Merrimac Street, Suite 810, Boston, Massachusetts 02114-4719. (617)

424-5960.

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 Good News Products, Inc., a corporation,

and it now appearing that Good News Products, Inc., 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 by and between Good News Products, Inc., by its

duly authorized officer, and counsel for the Federal Trade Commission

that:

1. Proposed respondent Good News Products, Inc. is a corporation

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

of the State of Michigan with its office and principal place of

business located at East Washington & M-40, Hamilton, Michigan 49419.

2. Proposed respondent admits all the jurisdictional facts set

forth in the draft complaint.

3. Proposed respondent waives:

(a) Any 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) Any claim 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

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 of facts, other than

jurisdictional facts, or of violations of law as alleged in the draft

complaint.

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 respondent: (1) Issue its complaint corresponding in form and

substance with the draft complaint 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

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 rights 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.

Order

I.

It is ordered that respondent Good News Products, Inc., a

corporation, its successors and assigns, and its officers; and

respondent's 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 eggs or any food containing egg yolk in or affecting

commerce, as ``food'' and ``commerce'' are defined in the Federal Trade

Commission Act, do forthwith cease and desist from misrepresenting, in

any manner, directly or by implication, through numerical or

[[Page 35028]]

descriptive terms or any other means, the absolute or comparative

amount of total fat, saturated fat or any other nutrient or ingredient

in such food.

II.

It is further ordered that respondent Good News Products, Inc., a

corporation, its successors and assigns, and its officers; and

respondent's 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 eggs or any food containing egg yolk in or affecting

commerce, as ``food'' and ``commerce'' are defined in the Federal Trade

Commission Act, do forthwith cease and desist from making any

representation, in any manner, directly or by implication:

A. About the absolute or comparative effect on such food on heart

disease or heart disease risk factors;

B. About the absolute or comparative effect of such food on serum

cholesterol; and

C. About the absolute or comparative health benefits of such food,

unless at the time of making such representation, respondent possesses

and relies upon competent and reliable scientific evidence

substantiating the representation. For purposes of this Order,

``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.

III.

Nothing in this Order shall prohibit respondent from making any

representation that is specifically permitted in labeling for eggs or

any food containing egg yolk by regulations promulgated by the Food and

Drug Administration pursuant to the Nutrition Labeling and Education

Act of 1900.

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 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 and complaints

or inquiries from governmental organizations.

V.

It is further ordered that respondent shall, within thirty (30)

days after service upon it of this Order, distribute a copy of the

Order to each of the respondent's operating divisions, to each of its

licensees, to each of its managerial employees, and to each of its

officers, agents, representatives or employees engaged in the

preparation or placement of advertising or other materials covered by

this Order and shall secure from each such person a signed statement

acknowledging receipt of this Order.

VI.

It is further ordered that respondent, or its successors and

assigns, shall promptly terminate its licensing agreement with any

licensee if respondent has actual knowledge or knowledge fairly implied

on the basis of objective circumstances that such licensee is engaging

in acts or practices that respondent is prohibited from engaging in

under Parts I and II of this Order, unless such licensee immediately

ceases engaging in such acts or practices.

VII.

It is further ordered that respondent, its successors and assigns,

shall notify the Commission at least thirty (30) days prior to any

proposed change in the corporate respondent, including but not limited

to dissolution, assignment or sale resulting in the emergence of a

successor corporation, the creation or dissolution of subsidiaries or

affiliates, or any other corporate change that may affect compliance

obligations arising out of this Order.

VIII.

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

after service of this Order, and at such other items as the Federal

Trade 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 Good News

Products, Inc. (``Good News Products'').

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 claims made by Good News Products in its

advertising and promotional materials for eggs.

The Commission's complaint alleges that Good News Products engaged

in unfair or deceptive practices in connection with the advertising of

its eggs. According to the complaint, Good News Product falsely

represented that its eggs are significantly lower in both saturated fat

and total fat than ordinary eggs.

The complaint also alleges that Good News Products falsely

represented that it had a reasonable basis for claims that the omega-3

fatty acids in Good News Eggs will have a positive effect on risk

factors for heart disease, such as atherosclerosis, high blood

cholesterol levels and high blood pressure, and on rheumatoid

arthritis, and that they may decrease blood cholesterol.

Finally, the complaint alleges that Good News Products falsely

represented that it had a reasonable basis for its claim that, because

Good News Eggs are lower in saturated fat than ordinary eggs, they will

increase blood cholesterol levels less than ordinary eggs.

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. Part I of the proposed order

prohibits Good News Products from misrepresenting the absolute or

comparative amount of total fat, saturated fat or any other nutrient or

ingredient in eggs or any food containing egg yolk.

Part II of the proposed order prohibits respondent from making any

claims about the health benefits, including the absolute or comparative

effect on heart disease or heart disease risk factors, of eggs or foods

containing egg yolk unless, prior to making such claim, Good News

Products has competent and reliable

[[Page 35029]]

scientific evidence to substantiate the claims.

Part III of the proposed order specifically allows respondent to

make any representation permitted in labeling by the Food and Drug

Administration for food under the Nutrition Labeling and Education Act

of 1990.

Part IV of the proposed order requires Good News Products to

maintain copies of all materials relied upon in making any

representations covered by the order.

Part V of the proposed order requires respondent to distribute

copies of the order to its licensees and to various officers, agents

and representatives.

Part VI of the proposed order requires Good News Products to

terminate its licensing agreement with any licensee that it has reason

to know is engaged in practices that respondent is prohibited from

engaging in under parts I and II of the order.

Part VII of the proposed order requires respondent to notify the

Commission of any changes in corporate structure that might affect

compliance with the order.

Part VIII of the proposed order requires respondent 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 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. 95-16446 Filed 7-3-95; 8:45 am]

BILLING CODE 6750-01-M