Grey Advertising, Inc; Proposed Consent Agreement With Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 952-3231]

Grey Advertising, 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 or deceptive acts or practices and unfair methods of

competition, this consent agreement, accepted subject to final

Commission approval, would prohibit, among other things, the New York

City-based advertising agency from misrepresenting the fat, saturated

fat, cholesterol, or calories in any frozen yogurt, frozen sorbet, and

most ice cream products. The consent agreement settles allegations

stemming from Grey's role in a commercial for The Dannon Company's

``Pure Indulgence'' frozen yogurt. The Commission had alleged that the

commercial falsely implied that some of the flavors in the Pure

Indulgence line were low in fat and calories and were lower in fat than

ice cream.

DATES: Comments must be received on or before October 18, 1996.

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

Room 159, 6th St. and Pennsylvania Avenue, N.W., Washington, D.C.

20580.

FOR FURTHER INFORMATION CONTACT: Elaine Kolish, Federal Trade

Commission, 6th and Pennsylvania Avenue, NW, S-4302, Washington, DC

20850. (202) 326-3042.

Justin Dingfelder, Federal Trade Commission, 6th and Pennsylvania

Avenue, NW, S-4302, Washington, DC 20850. (202) 326-3017.

Rosemary Rosso, Federal Trade Commission, 6th and Pennsylvania

Avenue, NW, S-4002, Washington, DC 20850. (202) 326-2174.

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 pubic 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 Grey Advertising, Inc., 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 Grey Advertising, Inc., by its

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

Trade Commission that:

1. Proposed respondent Grey Advertising, Inc. is a corporation

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

of the State of New York with its principal office or place of business

at 777 Third Avenue, New York, New York 10017.

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; and

(c) All rights to seek judicial review or otherwise to challenge or

contest the validity of the order entered pursuant to this agreement.

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

[[Page 42905]]

an admission by proposed respondent that the law has been violated as

alleged in the draft complaint or that the facts as alleged in the

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 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 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 proposed 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

I

It is ordered That respondent Grey Advertising, 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

advertising, promotion, offering for sale, sale, or distribution of any

frozen yogurt, frozen sorbet or ice cream product (excluding all other

food or confection products in which ice cream is an ingredient

comprising less than fifty percent of the total weight of the involved

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 or any other means, the existence or

amount of fat, saturated fat, cholesterol, or calories in any such

product. If any representation covered by this Part either directly or

by implication conveys any nutrient content claim defined (for purposes

of labeling) by any regulation promulgated by the Food and Drug

Administration, compliance with this Part shall be governed by the

qualifying amount for such defined claim as set forth in that

regulation.

II

Nothing in this Order shall prohibit respondent from making any

representation that is specifically permitted in labeling for any

frozen yogurt, frozen sorbet or ice cream by regulations promulgated by

the Food and Drug Administration pursuant to the Nutrition Labeling and

Education Act of 1990.

III

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 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 respondent which may affect

compliance obligations arising under this Order.

IV

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

days after service of this Order, 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 or placement

of advertisements or other materials covered by this Order.

V

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:

1. All materials that were relied upon in disseminating such

representation; and

2. 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, and complaints or

inquiries from governmental organizations.

VI

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 a complaint will not affect the duration of:

A. Any paragraph in this Order that terminates in less then 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.

VII

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, subject to

final approval, to a proposed consent order from Grey Advertising, Inc.

(``Grey'') concerning advertising claims made by Grey for Dannon Pure

Indulgence frozen yogurts. In a related matter, the Commission has also

accepted, subject to final approval, and separately placed on the

public record, an agreement to a proposed consent order from Grey

involving Grey's role is creating advertising for Hasbro, Inc.'s

Colorblaster Design Toy.

[[Page 42906]]

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 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.

According to the complaint, advertising created by Grey for Dannon

Pure Indulgence frozen yogurt falsely represented that the frozen

yogurt was low in fat, low in calories, and lower in fat than ice cream

when certain flavors of the yogurt were not. The complaint further

alleges that Grey knew or should have known that these claims were

false and misleading. A separate consent order with The Dannon Company,

Inc. resolving allegations about the same advertisement was issued by

the Commission on March 18, 1996. Docket No. C-3643.

The proposed consent order contains provisions designed to remedy

the violations charged and to prevent Grey from engaging in similar

acts and practices in the future.

Part I of the proposed order prohibits Grey from misrepresenting

the existence or amount of fat, saturated fat, cholesterol or calories

in any frozen yogurt, frozen sorbet or ice cream product (excluding all

other food or confection products in which ice cream is an ingredient

comprising less than fifty percent of the total weight of the involved

product). Part I also requires that any representation covered by that

Part that conveys a nutrient content claim defined for labeling by any

regulation of the Food and Drug Administration (``FDA'') must comply

with the qualifying amount set forth in that regulation.

Part II of the proposed order provides that representations that

would be specifically permitted in food labeling, under regulations

issued by the FDA pursuant to the Nutrition Labeling and Education Act

of 1990, are not prohibited by the order.

The proposed order also requires Grey to maintain materials relied

upon to substantiate the claims covered by the order, to distribute

copies of the order to its operating divisions and 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 reports detailing compliance with the order. The order also

contains a provision stating that it will terminate after twenty (20)

years absent the filing in federal court, by either the United States

or the FTC, of a complaint against Grey alleging a violation of 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.

Benjamin I. Berman,

Acting Secretary.

[FR Doc. 96-21029 Filed 8-16-96; 8:45 am]

BILLING CODE 6750-01-M