Johnson & Johnson Consumer Products Inc.; Consent Agreement With Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 943-3277]

Johnson & Johnson Consumer Products Inc.; Consent Agreement With

Analysis To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: 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, among other things, prohibit a New Jersey-based consumer

products company and its parents corporation (1) from representing, in

any manner, directly or by implication, the efficacy of any over-the-

counter product--as a contraceptive or as a method of protection

against the transmission of any sexually-transmitted disease--unless,

at the time of making any such representation, the companies possess

and rely upon competent and reliable scientific evidence that

substantiates such representation; and (2) from misrepresenting in any

manner, directly or by implication, the existence, contents, validity,

results, conclusions, or interpretations of any test or study relating

to any over-the-counter product with a use relating to human

reproduction, reproductive organs or sexually-transmitted diseases.

DATES: Comments must be received on or before December 26, 1995.

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

Room 159, 6th Street and Pennsylvania Avenue, NW, Washington, DC.

20580.

FOR FURTHER INFORMATION CONTACT:

Linda K. Badger, San Francisco Regional Office, 901 Market Street,

Suite 570, San Francisco, California 94103. (415) 356-5270.

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)).

The Federal Trade Commission having initiated an investigation of

certain acts and practices of Johnson & Johnson Consumer Products,

Inc., a corporation, and it now appearing that the proposed respondent

and its parent corporation, Johnson & Johnson, are 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 Johnson & Johnson Consumer

Products, Inc., a corporation, by its duly authorized officer, and its

attorney, and its parent corporation, Johnson & Johnson, and its duly

authorized officer, and its attorney, and counsel for the Federal Trade

Commission that:

1. Proposed respondent Johnson & Johnson Consumer Products, Inc.,

is a corporation organized, existing and doing business under and by

virtue of the laws of the State of New Jersey, with its office and

principal place of business located at 1999 Grandview Road, Skillman,

New Jersey 08588.

Johnson & Johnson is a corporation organized, existing and doing

business under and by virtue of the laws of the State of New Jersey,

with its office and principal place of business located at One Johnson

& Johnson Plaza, New Brunswick, New Jersey 08933.

2. Proposed respondent and its parent corporation admit all the

jurisdictional facts set forth in the draft of complaint.

3. Proposed respondent and its parent corporation 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. 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 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 and its parent

corporation, 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 the proposed respondent or its parent

corporation of facts, other than jurisdictional facts, or of violations

of law as alleged in the draft of complaint.

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 Section 2.34 of the

Commission's Rules, the Commission may, without further notice to the

proposed respondent or its parent corporation, (a) 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 (b) 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 the proposed respondent's address and to its parent

corporation's address as stated in this agreement shall constitute

service. The proposed respondent and its parent corporation waive any

right they 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. The proposed respondent and its parent corporation have read the

proposed complaint and order contemplated hereby. The proposed

respondent and its parent corporation understand that once the order

has been issued, they will be required to file one or more compliance

reports showing that they have fully complied with the order. The

proposed respondent and its parent corporation further understand

[[Page 55034]]

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

I

It is ordered that respondent, Johnson & Johnson Consumer Products,

Inc., a corporation, its parent corporation, Johnson & Johnson, and all

the other subsidiaries of Johnson & Johnson, their successors and

assigns (hereinafter collectively ``the companies''), and the

companies' 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 K-Y Plus Nonoxynol-9

Spermicidal Lubricant, or any other personal lubricant and/or

spermicide, in or affecting commerce, as ``commerce'' is defined in the

Federal Trade Commission Act, do forthwith cease and desist from making

any representation, directly or by implication, relating to:

A. The failure rate of any method of contraception due to defects,

misuse, or any other cause;

B. Any such product's ability to provide protection against the

development of tiny holes in condoms during use;

C. Any such product's ability to provide protection against HIV and

other viruses; or

D. The health-related benefits of any such product; unless, at the

time of making any such representation, the companies possess and rely

upon competent and reliable scientific evidence that substantiates such

representation. For the purposes of this Order, ``competent and

reliable scientific evidence'' shall mean those tests, analyses,

research, studies or other evidence based on the expertise of

professionals in the relevant area, that have 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.

II

It is further ordered that the companies and their 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 ``food,'' ``drug'' or ``device,'' as

those terms are defined in Section 15 of the Federal Trade Commission

Act, 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, the efficacy

of any over-the-counter product as a contraceptive or as a method of

protection against the transmission of any sexually-transmitted

disease, unless, at the time of making any such representation, the

companies possess and rely upon competent and reliable scientific

evidence that substantiates such representation.

III

It is further ordered that the companies and their 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 over-the-counter product with a use

relating to human reproduction, reproductive organs or sexually-

transmitted diseases, 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.

IV

It is further ordered that for five (5) years after the last date

of dissemination of any representation covered by this Order, the

companies 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.

V

It is further ordered that the companies notify the Commission at

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

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 corporation which may affect compliance

obligations arising out of the Order.

VI

It is further ordered (1) that respondent Johnson & Johnson

Consumer Products, Inc., shall, within ten (10) days from the date of

service of this Order upon it, distribute a copy of this Order to each

of its operating divisions, to each of its managerial employees, and to

each of its officers, agents, representatives or employees engaged in

the preparation, review or placement of advertising or other materials

covered by this Order, and (2) that the parent corporation, Johnson &

Johnson, shall, within ten (10) days from the date of service of this

Order upon it, distribute a copy of this Order to each of its and of

its subsidiaries' officers, agents, representatives or employees

engaged in the preparation, review of placement of advertising of any

over-the-counter product with a use relating to human reproduction,

reproductive organs or sexually-transmitted diseases.

VII

It is further ordered that this Order will terminate twenty years

from the date of its issuance, or twenty years from the most recent

date that the United States or the Federal Trade Commission files a

complaint (with or without an accompanying consent decree) in federal

court alleging any violation of the Order, whichever comes later;

provided, however, that the filing of such complaint will not affect

the duration of:

A. Any paragraph in this Order that terminates in less than twenty

years;

B. This Order's application to any respondent that is not named as

a defendant in such complaint; and

C. This Order if such complaint is filed after the Order has

terminated pursuant to this paragraph.

Provided further, that if such complaint is dismissed or a federal

court rules that the respondent did not violate any provision of the

Order, and the dismissal or ruling is either not appealed or upheld on

appeal, then the Order will terminate according to this paragraph as

though the complaint was never filed, except that the Order will not

terminate between the date such complaint is filed and the later of the

deadline for appealing such dismissal or ruling and the date such

dismissal or ruling is upheld on appeal.

VIII

It is further ordered that the companies shall, within sixty (60)

days from the date of service of this Order upon them, and at such

other times as the Commission may require, file with

[[Page 55035]]

the Commission a report, in writing, setting forth in detail in the

manner and form in which they have complied with this Order.

IX

It is further ordered that nothing in this Order shall prohibit the

companies from making any representation for any drug that is permitted

in labeling for any such drug under any tentative final or final

standard promulgated by the Food and Drug Administration, or under any

new drug application approved by the Food and Drug Administration.

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 Johnson &

Johnson Consumer Products, Inc. Its parent corporation, Johnson and

Johnson, although not a respondent, also agreed to be bound by the

terms of the consent order. Both parent and subsidiary are New Jersey

corporations.

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.

Johnson & Johnson Consumer Products, Inc., manufacturers and sells

baby care products, personal care products for adults, and bandages.

This matter concerns this company's ``Condom Insurance'' advertisements

for its ``K-Y Plus Brand Spermicidal Lubricant with NonOxynol-9'' (``K-

Y Plus''). In these advertisements, Johnson & Johnson CPI promote the

use of K-Y Plus with condoms as ``insurance'' to protect against

unwanted pregnancies, and HIV and other sexually transmitted diseases

(``STDs'') in case of condom failure. The ads warn consumers to use K-Y

Plus because one in six condoms allegedly fails.

The Commission's complaint charges that respondent's advertising

contained false and/or unsubstantiated representations regarding the

failure rate of condoms and the effectiveness of K-Y Plus.

Specifically, the complaint alleges that the respondent falsely

represented that scientific tests or studies show that up to eighteen

and one half percent of condoms will fail, leaving users vulnerable to

pregnancy and sexually transmitted diseases. The complaint also alleges

that the respondent made unsubstantiated claims that: (1) One out of

six condoms develops tiny holes during use which are big enough for

sperm, HIV and other viruses to pass through; (2) one out of six

condoms fails due to mistake in using condoms or through the

development of tiny holes during use; (3) K-Y Plus provides protection

against the development of tiny holes in condoms during use; and (4) K-

Y Plus provides protection against HIV and other viruses.

The proposed consent order contains provisions designed to remedy

the violations charged and to prevent the respondent or its parent

corporation from engaging in similar acts and practices in the future.

Part I of the proposed order would prohibit the companies from making

any of the unsubstantiated claims delineated above, or any other claims

of a health-related benefit, for K-Y Plus or any other spermicide and/

or lubricant, unless at the time of making them, they possess and rely

upon competent and reliable evidence, which when appropriate must be

competent and reliable scientific evidence.

Part II of the proposed order includes fencing-in relief,

prohibiting the companies from representing, in any manner, directly or

by implication, the efficacy of any over-the-counter product as a

contraceptive or as a method of protection against the transmission of

any sexually-transmitted disease, unless, at the time of making any

such representation, the companies possess and rely upon competent and

reliable scientific evidence that substantiates such representation.

Part III of the proposed order prohibits the companies from

misrepresenting in any manner, directly or by implication, the

existence, contents, validity, results, conclusions, or interpretations

of any test or study relating to any over-the-counter product with a

use relating to human reproduction, reproductive organs or sexually-

transmitted diseases.

The proposed order also requires the companies to maintain

materials relied upon to substantiate claims covered by the order; to

provide a copy of the consent agreement to all employees or

representatives involved in the preparation and placement of the

company's advertisements, as well as to all company executives and

marketing and sales managers; 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.

Concurring Statement of Commissioner Mary L. Azcuenaga in Johnson &

Johnson Consumer Protects Inc. File No. 943 3277

In concur in the acceptance of the proposed consent agreement for

public comment except to the extent that the proposed order imposes

obligations on Johnson & Johnson (the parent company of the respondent

Johnson & Johnson Consumer Products Inc.), which is not named in the

accompanying complaint.

[FR Doc. 95-26679 Filed 10-26-95; 8:45 am]

BILLING CODE 6750-01-M