[Federal Register: June 10, 2004 (Volume 69, Number 112)]
[Notices]
[Page 32552-32555]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10jn04-93]
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FEDERAL TRADE COMMISSION
[File No. 042-3033]
KFC Corporation; 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
complaint 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 July 2, 2004.
ADDRESSES: Comments should refer to ``KFC Corporation, File No. 042
3033,'' to facilitate the organization of comments. A comment filed in
paper form should include this reference both in the text and on the
envelope, and should be mailed or delivered to the following address:
Federal Trade Commission/Office of the Secretary, Room H-159, 600
Pennsylvania Avenue, NW., Washington, DC 20580. Comments containing
confidential material must be filed in paper form, as explained in the
SUPPLEMENTARY INFORMATION section. The FTC is requesting that any
comment filed in paper form be sent by courier or overnight service, if
possible, because U.S. postal mail in the Washington area
[[Page 32553]]
and at the Commission is subject to delay due to heightened security
precautions. Comments filed in electronic form (except comments
containing any confidential material) should be sent to the following
e-mail box: consentagreement@ftc.gov.
FOR FURTHER INFORMATION CONTACT: Shira Modell or Michelle Rusk, FTC,
Bureau of Consumer Protection, 600 Pennsylvania Avenue, NW.,
Washington, DC 20580, (202) 326-3116 or 326-3148.
SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), 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 thirty (30) 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 June 3, 2004), on the World Wide Web, at http://www.ftc.gov/os/2004/06/index.htm.
A paper copy can be obtained from the FTC Public
Reference Room, Room 130-H, 600 Pennsylvania Avenue, NW., Washington,
DC 20580, either in person or by calling (202) 326-2222.
Public comments are invited, and may be filed with the Commission
in either paper or electronic form. Written comments must be submitted
on or before July 2, 2004. Comments should refer to ``KFC Corporation,
File No. 042 3033,'' to facilitate the organization of comments. A
comment filed in paper form should include this reference both in the
text and on the envelope, and should be mailed or delivered to the
following address: Federal Trade Commission/Office of the Secretary,
Room H-159, 600 Pennsylvania Avenue, NW., Washington, DC 20580. If the
comment contains any material for which confidential treatment is
requested, it must be filed in paper (rather than electronic) form, and
the first page of the document must be clearly labeled
``Confidential.'' \1\ The FTC is requesting that any comment filed in
paper form be sent by courier or overnight service, if possible,
because U.S. postal mail in the Washington area and at the Commission
is subject to delay due to heightened security precautions. Comments
filed in electronic form should be sent to the following e-mail box:
consentagreement@ftc.gov.
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\1\ Commission Rule 4.2(d), 16 CFR 4.2(d). The comment must be
accompanied by an explicit request for confidential treatment,
including the factual and legal basis for the request, and must
identify the specific portions of the comment to be withheld from
the public record. The request will be granted or denied by the
Commission's General Counsel, consistent with applicable law and the
public interest. See Commission Rule 4.9(c), 16 CFR 4.9(c).
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The FTC Act and other laws the Commission administers permit the
collection of public comments to consider and use in this proceeding as
appropriate. All timely and responsive public comments, whether filed
in paper or electronic form, will be considered by the Commission, and
will be available to the public on the FTC Web site, to the extent
practicable, at http://www.ftc.gov. As a matter of discretion, the FTC makes
every effort to remove home contact information for individuals from
the public comments it receives before placing those comments on the
FTC Web site. More information, including routine uses permitted by the
Privacy Act, may be found in the FTC's privacy policy, at http://www.ftc.gov/ftc/privacy.htm
.
Analysis of Proposed Consent Order To Aid Public Comment
The Federal Trade Commission has accepted, subject to final
approval, an agreement containing a consent order from KFC Corporation
(``KFCC'').
The proposed consent order has been placed on the public record for
thirty (30) days for receipt of comments by interested persons.
Comments received during this period will become part of the public
record. After thirty (30) 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 involves the advertising and promotion of KFC Original
Recipe fried chicken. According to the FTC complaint, KFC represented
that eating KFC fried chicken, specifically 2 Original Recipe fried
chicken breasts, is better for a consumer's health than eating a Burger
King Whopper. The complaint alleges that this claim is false. Although
2 KFC Original Recipe fried chicken breasts have slightly less total
fat (38 g. v. 43 g.) and saturated fat (12 g. v. 13 g.) than Burger
King's Whopper, they have more trans fat (3.5 g. vs. 1 g.), more
cholesterol (290 mg. v. 85 mg.), more sodium (2300 mg. vs. 980 mg.),
and more calories (760 v. 710).
The FTC's complaint also alleges that KFCC represented that eating
KFC fried chicken is compatible with ``low carbohydrate'' weight loss
programs. The FTC alleges that this claim is false because ``low
carbohydrate'' weight loss programs such as the Atkins Diet and the
South Beach Diet, for example, advise against eating breaded, fried
foods.
The proposed consent order contains provisions designed to prevent
KFCC from engaging in similar acts and practices in the future.
Part I of the order prohibits KFCC from representing that eating
KFC fried chicken is better for a consumer's health than eating a
Burger King Whopper, or that eating KFC fried chicken is compatible
with ``low carbohydrate'' weight loss programs, unless the
representation is true and, at the time it is made, KFCC possesses and
relies upon competent and reliable evidence--which in certain specified
cases must be competent and reliable scientific evidence--that
substantiates the representation.
Part II prohibits KFCC from making certain representations about
the absolute or comparative amount of fat, cholesterol, sodium,
calories or any other nutrient in any food it sells that contains
chicken, about the compatibility of such food with any weight loss
program, or about the health benefits of such food, unless the
representation is true and, at the time it is made, KFCC possesses and
relies upon competent and reliable evidence--which in certain specified
cases must be competent and reliable scientific evidence--that
substantiates the representation.
Part II also provides that representations conveying nutrient
content or health claims that have been defined (for labeling purposes)
by regulations promulgated by the Food and Drug Administration
(``FDA'') will be evaluated using the same nutrient thresholds that FDA
has established for those claims. Furthermore, Part II provides that a
mere numerical statement of the amount of a particular nutrient in such
food will not, by itself, be considered to be a weight loss
compatibility or health benefit claim covered by Part II.
Part III permits any representation for any product that is
permitted in labeling for such product pursuant to regulations
promulgated by FDA pursuant to the Nutrition Labeling and Education Act
of 1990.
Parts IV through VII of the order require KFCC to keep copies of
relevant advertisements and materials substantiating claims made in the
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advertisements; to provide copies of the order to certain of its
current and future personnel for three years; 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 or to modify in any
way their terms.
By direction of the Commission.
C. Landis Plummer,
Acting Secretary.
Statement of Commissioner Pamela Jones Harbour
The Commission has entered into a consent agreement with KFC Corp.
(``KFCC'') to settle allegations that the company deceptively
advertised its fried chicken as being compatible with low-carbohydrate
weight loss programs, among other claims. I concur with the
Commission's admirable results in obtaining strong injunctive relief,
and I applaud staff for bringing a national advertising case. I
believe, however, that an even stronger remedy is warranted. KFCC is
fully aware of our nation's struggle with obesity, yet has cynically
attempted to exploit a massive health problem through deceptive
advertising. Companies should not be allowed to benefit monetarily from
this kind of deception, especially where the health and safety of
consumers are compromised. Therefore, I encourage the Commission to
find ways to seek monetary relief in future cases like this one.
Our nation's obesity rate has ``reached epidemic proportions,
afflicting 6 out of every 10 Americans.'' \1\ Being overweight or obese
is ``the second leading cause of preventable death, after smoking,
resulting in an estimated 300,000 deaths per year. The costs, direct
and indirect, associated with [being] overweight and obes[e] are
estimated to exceed $100 billion a year.'' \2\ Obesity has been
described as both an ``epidemic'' and a ``crisis.'' \3\ Many consumers
are interested in controlling their weight, and they rely heavily on
the nutritional information in food advertisements to help them make
choices about which foods to eat.
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\1\ Weight-Loss Advertising: An Analysis of Current Trends, A
Report of the Staff of the Federal Trade Commission (Sept. 2002), at
vii (``Executive Summary''), available at http://www.ftc.gov/bcp/reports/weightloss.pdf
.
\2\ Id.
\3\ See The Time/ABC News Summit on Obesity (Preliminary Agenda
for June 2-4, 2004), available at http://www.time.com/time/2004/obesity
; America's Obesity Crisis, Time (June 7, 2004).
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In the fall of 2003, KFCC apparently was suffering from decreased
fried chicken sales, perhaps as a result of consumers' interest in a
healthier diet.\4\ In October 2003, KFCC embarked on an ad campaign in
which it deceptively advertised that eating KFC fried chicken is
compatible with a ``low carbohydrate'' weight loss program, even though
``low carbohydrate weight loss programs such as the Atkins Diet and the
South Beach Diet advise against eating breaded, fried foods.'' \5\ In
another ad, KFCC advertised that eating two of its ``Original Recipe''
fried chicken breasts was better for a consumer's health than eating a
Burger King Whopper--even though the chicken is nearly equivalent to
the Whopper in fat grams and is actually higher in trans fat,
cholesterol, sodium and calories.\6\ Both ads also promote an entire
bucket of chicken, even though the voiceovers in the ads referenced one
or two-piece servings.\7\
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\4\ See 20/20: Fast Not Fat: Fast Food Chains Will Go to Any
Lengths to Keep People Eating Their Food (ABC News television
broadcast, Oct. 31, 2003); Editorial, KFC blunders in ``health''
ads, Advertising Age (Nov. 3, 2003), at 22; Bob Garfield, Garfield's
AdReview: KFC serves big, fat bucket of nonsense in ``healthy''
spots, Advertising Age (Nov. 3, 2003), at 61.
\5\ In the Matter of KFC Corporation, File No. 042-3033,
Complaint at ]] 5, 8-9 (June 2, 2004).
\6\ Id. at ] 7 (``While compared to Burger King's Whopper, two
KFC Original Recipe fried chicken breasts have slightly less total
fat (38 g. v. 43 g.) and saturated fat (12 g. v. 13 g.), they have
more trans fat (3.5 g. vs. 1 g.), more cholesterol (290 mg. v. 85
mg.), more sodium (2300 mg. vs. 980 mg.), and more calories (760 v.
710).'').
\7\ See, e.g., World News Tonight with Peter Jennings: Good for
You? KFC Adverts (ABC television broadcast, Nov. 19, 2003); NBC
Nightly News with Tom Brokaw: Federal Trade Commission Wanting Proof
That KFC's Chicken Can Be Called a Health Food in TV Commercials
(NBC television broadcast, Nov.18, 2003); KFC Corporation, Complaint
at ] 5 (setting forth voiceovers).
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KFCC knew (or certainly should have known) that its ads were false
and deceptive, and that the ads would encourage consumers to believe
that KFC fried chicken was much healthier for them that it actually is.
Only a few days after the ads aired, an Advertising Age editorial
strongly criticized KFCC for running them, describing the ads as
``desperate and sleazy tactics.'' \8\ In an interview on National
Public Radio, the executive editor of Advertising Age stated that it
was ``very unusual'' for the publication to run such a staff editorial,
but justified it by saying that ``[i]nstead of being truth well told,
which is what advertising should be, it seems like not only an
exaggerated claim, but basically an effort to deceive.'' \9\ Consumer
advocacy groups complained about the ads as well, and the ads were the
subject of much discussion until they stopped airing in late November
2003.\10\
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\8\ Garfield, supra note 4.
\9\ Day To Day: Jonah Bloom Discusses Advertising Age Magazine's
Editorial Criticism of KFC's New Ad Campaign (National Public Radio
broadcast, Nov. 6, 2003).
\10\ See, e.g., Bruce Schreiner, KFC Ends Healthy Fried Chicken
Ad Blitz, Assoc. Press Online (Nov. 19, 2003); 20/20, supra note 4.
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I have voted to accept the proposed settlement because it contains
very strong injunctive relief that will go a long way toward preventing
KFCC from engaging in similar deceptive advertising in the future. In
addition to addressing the specific claims made in the KFCC ads, the
proposed consent agreement also contains more general language
prohibiting KFCC from making representations about the absolute or
comparative amount of fat, cholesterol, sodium, calories, or any other
nutrient in any food it sells that contains chicken; about the
compatibility of such food with any weight loss program; or about the
health benefits of such food, unless the representation is true and, at
the time it is made, KFCC possesses and relies upon competent and
reliable evidence--which in certain specified cases must be competent
and reliable scientific evidence--that substantiates the
representation.\11\
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\11\ In the Matter of KFC Corporation, File No. 042-3033,
Analysis of Proposed Consent Order to Aid Public Comment (June 2,
2004).
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Accepting injunctive relief alone is reasonably consistent with the
Commission's prior settlements in similar cases. However, where a
company appears to have exploited a national health crisis, an even
stronger response from the Commission is warranted. While I recognize
that it may be difficult to calculate monetary relief in these kinds of
cases, I would like to see the Commission develop methodological
approaches that would support seeking such remedies in future cases of
similar types of deceptive advertising, as the Commission has done in
the past. For example, in 1995, the FTC settled charges with The Dannon
Company that it had made false or misleading claims for its Pure
Indulgence line of frozen yogurt. As part of the consent agreement,
Dannon agreed to pay $150,000 in disgorgement.\12\ Similarly, in 1983,
the FTC settled charges with Estee Corporation that it had misled
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consumers by falsely claiming that the sweeteners in its foods had been
accepted by the American Diabetes Association and the Food and Drug
Administration. Estee Corporation agreed to pay $25,000 in cy pres
relief to the American Diabetes Association or the Juvenile Diabetes
Foundation.\13\
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\12\ FTC Press Release, Dannon Agrees To Settle FTC Charges That
Low-Fat Ad Claims for Frozen Yogurt were False and Misleading (Nov.
25, 1995); In the Matter of The Dannon Company, Inc., Dkt. No. C-
3643, 121 F.T.C. 136, 139 (March 18, 1996) (consent order).
\13\ In the Matter of Estee Corporation, Dkt. No. C-3126, 102
F.T.C. 1804, 1812 (Nov. 16, 1983) (consent order). Cy pres relief,
also known as indirect restitution or fluid recovery, is used in
situations where injured persons cannot be directly compensated.
Instead, under cy pres, restitutionary funds are awarded in some
alternate way that indirectly benefits the injured persons.
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While injunctive relief is important in deceptive advertising cases
such as this one, monetary relief may further serve to correct unlawful
conduct, reverse its ill effects, and deter future violations of the
law. Well-formulated cy pres relief, in particular, may provide real
benefits to consumers. It is not only reasonably related to the
violation, but also reasonably likely to reach the individuals most
injured by a particular deceptive advertisement. Should the appropriate
case present itself in the future, I strongly encourage the Commission
to consider the applicability and effectiveness of cy pres and other
potential monetary remedies.
Statement of Commissioner Mozelle W. Thompson
I have voted to accept the consent agreement with KFC Corp. in this
matter and I concur with Commissioner Harbour's statement.
[FR Doc. 04-13083 Filed 6-9-04; 8:45 am]
BILLING CODE 6750-01-P