R.J. Reynolds Tobacco Company; Analysis to Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 992-3025]

R.J. Reynolds Tobacco Company; Analysis to Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed Consent Agreement.

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SUMMARY: the consent agreement in this matter settles alleged

violations of federal law prohibiting unfair or deceptive acts or

practices or unfair methods of competition. The attached Analysis to

Aid Public Comment describes both the allegations in the draft

compliant that accompanies the consent agreement and the terms of the

consent order--embodied in the consent agreement--that would settle

these allegations.

DATES: Comments must be received on or before May 17, 1999.

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: Joel Winston or Beth Grossman, FTC/S-

4002, Washington, DC 20580. (202) 326-3153 or 326-3019.

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 above-captioned 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. The following Analysis to Aid

Public Comment describes the terms of the consent agreement, and the

allegations in the complaint. An electronic copy of the full text of

the consent agreement package can be obtained from the FTC Home Page

(for March 3,1999), on the World Wide Web, at ``http://www.ftc.gov/os/

actions97.htm.'' A paper copy can be obtained from the FTC Public

Reference Room, Room H-130, Sixth Street and Pennsylvania Avenue, NW,

Washington, DC 20580, either in person or by calling (202) 326-3627.

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)).

Analysis of Proposed Consent Order to Aid Public Comment

The Federal Trade Commission has accepted an agreement to a

proposed consent order from R.J. Reynolds Tobacco Company

(``Reynolds'').

The proposed consent order has been placed on the public record for

sixty (60 days for receipt 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 agreements' proposed order.

This matter involves an alleged deceptive representation for

Winston cigarettes, that Reynolds has advertised do not contain

additives. According to the FTC complaint, through these

advertisements, Reynolds represented that smoking Winston cigarettes,

because they contain no additives, is less hazardous to a smoker's

health than smoking otherwise comparable cigarettes that contain

additives. The complaint alleges that Reynolds did not have a

reasonable basis for the representation at the time it was made. Among

other reasons, according to the complaint, the smoke from Winston

cigarettes, like the smoke from all cigarettes, contains numerous

carcinogens and toxins.

The proposed consent order contains provisions designed to prevent

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

Part I of the order requires Reynolds to include the following

clear and prominent disclosure in certain advertising for its Winston

cigarettes: No additives in our tobacco does NOT mean a safer

cigarette. (The order requires a similar disclosure in advertising for

other tobacco products Reynolds advertises as having no additives.) The

disclosure must be included in all advertising for Winston no-additive

cigarettes, regardless of whether that advertising contains a ``no

additives'' claim, for a period of one year beginning no later than

July 15, 1999. The disclosure must be included in all Winston

advertising that represents (through such phrases as ``no additives''

or ``100% tobacco'') that the product has no additives, for the

duration of the order. This Part also contains certain exemptions from

the disclosure requirement:

Advertisements not required to bear the Surgeon General's

health warning;

Certain ads for bona fide events or teams sponsored by

Winston which contain neither a ``No additives'' claim nor any other

selling message or product description; and

If Reynolds possesses scientific evidence demonstrating

that its ``no additives'' cigarette poses materially lower health risks

than other cigarettes of the same type.

Part I also specifies the manner in which the disclosure must be

made, which is exemplified by two model advertisements attached to the

order. In general, the disclosure must be within a rectangular box that

is no less than 40% of the size of the box containing the Surgeon

General's warning.

Part II of the order requires Reynolds to instruct each of its

sales representatives to remove or sticker, with the applicable

disclosure, any advertisement displayed in a retail establishment

representing that Winston cigarettes have no additives. All such

actions must be completed by July 15, 1999.

Part III-VII of the order require Reynolds to keep copies of

relevant advertisements and materials substantiating claims made in the

advertisements; to provide copies of the order to certain of its

personnel; to notify the Commission of changes in the composition or

formula of Winston cigarettes that may affect the order; to notify the

Commission of changes in corporate structure; and to file compliance

reports with the Commission. Part VIII provides that the order will

terminate after twenty (20 years under certain circumstances.

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 to modify in any way

their terms.

[[Page 13206]]

By direction of the Commission.

Donald S. Clark,

Secretary.

Concurring Statement of Commissioner Orson Swindle

R.J. Reynolds Tobacco Co., File No. 992-3025

I have voted to accept this consent agreement for public comment

because the remedies, including corrective statement in Winston

Advertisements for one year, are warranted by the facts of this case.

The nationwide advertising campaign for ``no additives'' Winston

cigarettes, launched in August 1997, is unusually extensive. Based on

my reading of the record, I am convinced that many consumers interpret

ads containing express ``no additives'' claims to mean that Winstons

are not as harmful as other cigarettes, and such health claim is

presumably important to consumers in their purchasing decisions. Based

on the extent and magnitude of the ongoing ad campaign and the

demonstrated strength of the implied health claim, I am willing to

infer that the claim will linger in the minds of consumers for one year

absent a corrective statement. I am particularly concerned about a

lingering effect of the ads because of the well-recognized health risks

of smoking. Under these circumstances, I support the corrective

advertising remedy contained in the proposed consent order.

[FR Doc. 99-6486 Filed 3-16-99; 8:45 am]

BILLING CODE 6750-01-M