25230 Federal Register / Vol. 60, No. 91 / Thursday, May 11, 1995 / Notices

1See Dr. Miles Medical Co. v. John D. Park & Sons

Co., 220 U.S. 373 (1911) (resale price maintenance

(‘‘RPM’’) held unlawful upon mere proof of

agreement).

2See, e.g., Pauline Ippolito, Resale Price

Maintenance: Evidence From Litigation, 34 J.L. &

Econ. 263 (1991). See also Kevin J. Arquit, Resale

Price Maintenance: Friend or Foe? 60 Antitrust L.J.

447 (1992).

3Even if the evidence in this case suggests that

Reebok’s dealer advertising and termination

policies supported RPM, deleting the related

fencing-in injunctions likely would be

procompetitive. The order should permit Reebok to

exercise its lawful dealer termination rights and to

engage in any procompetitive minimum advertised

price programs ‘‘unless (this conduct) includes

some agreement on price levels.’’ Business

Electronics Corp. v. Sharp Electronics Corp., 484

U.S. 717, 735–36 (1988).

resale prices at which certain of their

dealers sell certain of their athletic or

casual footwear products. The

complaint alleges that this conduct

violates Section 5 of the Federal Trade

Commission Act.

Reebok and Rockport have signed a

consent agreement to the proposed

consent order that prohibits them from

fixing, controlling or maintaining the

resale prices at which any dealer may

advertise, promote, offer for sale or sell

any Reebok or Rockport product. The

proposed order prohibits Reebok and

Rockport from coercing or pressuring

any dealer to maintain, adopt or adhere

to any resale price, and from securing or

attempting to secure commitments or

assurances from any dealer concerning

resale prices. The proposed consent

order also for a period of ten years

prohibits Reebok and Rockport from

enforcing or threatening to enforce any

policy, practice or plan under which

Reebok or Rockport notifies a dealer in

advance that the dealer is subject to

partial or temporary suspension or

termination if it sells or advertises any

product below a resale price designated

by Reebok or Rockport, and that the

dealer will be subject to a greater

sanction if it continues or renews selling

or advertising any product below a

designated resale price.

The proposed order requires Reebok

and Rockport to mail a letter to their

dealers which will inform them that

they can sell and advertise Reebok and

Rockport products at any price they

choose. The proposed order also

requires Reebok and Rockport, for a

period of five years, to place on any

material in which they suggest resale

prices a statement that the dealer is free

to determine the prices at which it will

sell Reebok or Rockport products.

The proposed order provides that the

order shall terminate 20 years after the

date of its issuance by the Commission.

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.

Donald S. Clark,

Secretary.

Dissenting Statement of Commissioner

Roscoe B. Starek III, in the Matter of

Reebok International, Ltd., File No.

921–0117

I find reason to believe that Reebok

International, Ltd. (‘‘Reebok’’) has

entered into agreements with retailers to

restrain resale prices and has thereby

violated Section 5 of the FTC Act, 15

U.S.C. § 45.1 But I have dissented from

the decision to accept the consent

agreement in this matter because certain

provisions of the Commission’s order

are not necessary to prevent unlawful

conduct and may unduly restrain

procompetitive activity by Reebok.

Under most circumstances, including

those here, the competitive effects of

RPM are ambiguous at worst and a full

rule of reason analysis likely would not

reveal cognizable anticompetitive

effects.2 Therefore, I would prefer that

injunctive relief ordered to address RPM

be strictly tailored to the per se

allegations. The fencing-in restrictions

in this order is related to resale price

advertising (in subparagraphs II (A) and

(C)) and to Reebok’s ‘‘structured

termination policy’’ (subparagraph

II(D))—are unnecessarily broad and may

enjoin efficient conduct.3

[FR Doc. 95–11555 Filed 5–10–95; 8:45 am]

BILLING CODE 6750–01–M

[File No. 942–3027]

Third Option Laboratories, Inc., et al.;

Proposed Consent Agreement With

Analysis to Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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 require,

among other things, a Muscle Shoals,

Alabama company and its officers to

pay $480,000 to be used either for

refunds to consumers or as

disgorgement to the U.S. Treasury and

to send a notice to consumers advising

them of the consent agreement, which

settles allegations that the respondents

made a number of deceptive health

claims for their ‘‘Jogging in a Jug’’

beverage. In future advertisements for

that beverage or similar products, the

respondents would have to clearly and

prominently state that there is no

scientific evidence that the product

provides any health benefits.

DATES: Comments must be received on

or before July 10, 1995.

ADDRESSES: .Comments should be

directed to: FTC/Office of the Secretary,

Room 159, 6th St. and Pa. Ave., NW.,

Washington, D.C. 20580.

FOR FURTHER INFORMATION CONTACT:

Toby Milgrom Levin or Loren G.

Thompson, FTC/S–4002, Washington,

D.C. 20580. (202) 326–3156 or (202)

326–2049.

SUPPLEMENTARY INFORMATION: Pursuant

to section 6(f) of the Federal Trade

Commission Act, 38 Stat. 721, 15 U.S.C.

46 and § 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

§ 4.9(b)(6)(ii) of the Commission’s rules

of practice (16 CFR 4.9(b)(6)(ii)).

In the Matter of: Third Option Laboratories,

Inc., a corporation, and William J.

McWilliams, Danny Bishop McWilliams, and

Susan McWilliams Bolton, individually and

as officers of said corporation. File No. 942–

3027.

Agreement Containing Consent Order to

Cease and Desist

The Federal Trade Commission,

having initiated an investigation of

certain acts and practices of Third

Option Laboratories, Inc., a corporation,

and William J. McWilliams, Danny

Bishop McWilliams, and Susan

McWilliams Bolton, individually and as

officers of said corporation (‘‘proposed

respondents’’), and it now appearing

that proposed respondents are 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

Third Option Laboratories, Inc., by its

duly authorized officer, and William J.

McWilliams, Danny Bishop

McWilliams, and Susan McWilliams

Bolton, individually and as officers of

said corporation, and their attorney, and

counsel for the Federal Trade

Commission that:

1. Proposed respondent Third Option

Laboratories, Inc. is a corporation

organized, existing, and doing business
Federal Register / Vol. 60, No. 91 / Thursday, May 11, 1995 / Notices 25231

under and by virtue of the laws of the

State of Alabama, with its office and

principal place of business at 2806

Avalon Avenue, Muscle Shoals,

Alabama 35661.

Proposed respondents William J.

McWilliams, Danny Bishop

McWilliams, and Susan McWilliams

Bolton are owners and officers of said

corporation. They formulate, direct, and

control the policies, acts and practices

of said corporation and their address is

the same as that of said corporation.

2. Proposed respondents admit all the

jurisdictional facts set forth in the draft

of complaint

3. Proposed respondents 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; 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

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 respondents, 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 respondents

that the law has been violated as alleged

in the draft of 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 § 2.34 of the

Commission’s rules, the Commission

may, without further notice to proposed

respondents, (1) issue its complaint

corresponding in form and substance

with the draft of complaint here

attached 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 U.S. Postal Service of the

complaint and decision containing the

agreed-to order to proposed

respondents’ address as stated in this

agreement shall constitute service.

Proposed respondents 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 in the

agreement may be used to vary or

contradict the terms of the order.

7. Proposed respondents have read

the proposed complaint and order

contemplated hereby. They 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.

Proposed respondents further

understand 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 respondents, Third

Option Laboratories, Inc., a corporation,

its successors and assigns, and its

officers, and William J. McWilliams,

individually and as an officer of said

corporation, Danny Bishop McWilliams,

individually and as an officer of said

corporation, and Susan McWilliams

Bolton, individually and as an officer of

said corporation, and respondents’

agents, representatives, and employees,

directly or through any corporation,

subsidiary, division or other device, in

connection with the manufacturing,

labeling, advertising, promotion,

offering for sale, sale or distribution of

Jogging in a Jug, or any substantially

similar product, 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, that such product:

A. Cures or alleviates heart disease or

its symptoms, including arterial

blockages;

B. Substantially lowers serum

cholesterol or triglycerides;

C. Cures or alleviates arthritis or its

symptoms;

D. Breaks down or eliminates calcium

or other mineral or chemical deposits in

the circulatory system;

E. Improves the condition of the

circulatory system;

F. Cleans internal organs;

G. Prevents or reduces the risk of

cancer, leukemia, heart disease, or

arthritis;

H. Provides the same health benefits

as a jogging regimen;

I. Cures or alleviates lethargy;

J. Cures or alleviates dysentery;

K. Cures or alleviates constipation;

L. Stabilizes blood sugar levels in

insulin-dependent diabetics;

M. Aids in the recovery from viral

diseases;

N. Cures or alleviates swelling of the

legs or muscle spasms; or

O. Is approved by the United States

Department of Agriculture.

II

It is further ordered that respondents,

Third Option Laboratories, Inc., a

corporation, its successors and assigns,

and its officers, and William J.

McWilliams, individually and as an

officer of said corporation, Danny

Bishop McWilliams, individually and as

an officer of said corporation, and Susan

McWilliams Bolton, individually and as

an officer of said corporation, and

respondents’ agents, representatives,

and employees, directly or through any

corporation, subsidiary, division or

other device, in connection with the

manufacturing, labeling, advertising,

promotion, offering for sale, sale or

distribution of any food, food or dietary

supplement, or drug, as ‘‘food’’ and

‘‘drug’’ are defined in sections 12 and 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 making any representation,

in any manner, directly or by

implication, regarding the performance,

safety, benefits, or efficacy of such

product, unless such representation is

true and, at the time of making such

representation, respondents possess and

rely upon competent and reliable

scientific evidence that substantiates

such representation.

For purposes of this Order,

‘‘component and reliable scientific

evidence’’ shall mean 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.

III

It is further ordered that respondents,

Third Option Laboratories, Inc., a
25232 Federal Register / Vol. 60, No. 91 / Thursday, May 11, 1995 / Notices

corporation, its successor and assigns,

and its officers, and William J.

McWilliams, individually and as an

officer of said corporation, Danny

Bishop McWilliams, individually and as

an officer of said corporation, and Susan

McWilliams Bolton, individually and as

an officer of said corporation, and

respondents’ agents, representatives,

and employees, directly or through any

corporation, subsidiary, division or

other device, in connection with the

manufacturing, labeling, advertising,

promotion, offering for sale, sale or

distribution of any 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, that

such product has been tested, approved,

or endorsed by any person, firm,

organization, or government agency.

IV

It is further ordered that respondents,

Third Option Laboratories, Inc., a

corporation, its successors and assigns,

and its officers, and William J.

McWilliams, individually and as an

officer of said corporation, Danny

Bishop McWilliams, individually and as

an officer of said corporation, and Susan

McWilliams Bolton, individually and as

an officer of said corporation, and

respondents’ agents, representatives,

and employees, directly or through any

corporation, subsidiary, division or

other device, in connection with the

manufacturing, labeling, advertising,

promotion, offering for sale, sale or

distribution of any product in or

affecting commerce, as ‘‘commerce’’ is

defined in the Federal Trade

Commission Act, do forthwith cease and

desist from representing, directly or by

implication, that any endorsement (as

‘‘endorsement’’ is defined in 16 CFR

255.0(b)) of any such product represents

the typical or ordinary experience of

members of the public who use such

product, unless such is the fact.

V

Nothing in this Order shall prohibit

respondents 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.

VI

Nothing in this Order shall prohibit

respondents from making any

representation that is specifically

permitted in labeling for any product by

regulations promulgated by the Food

and Drug Administration pursuant to

the Nutrition Labeling and Education

Act of 1990.

VII

It is further ordered that respondents,

Third Option Laboratories, Inc., a

corporation, its successors and assigns,

and its officers, and William J.

McWilliams, individually and as an

officer of said corporation, Danny

Bishop McWilliams, individually and as

an officer of said corporation, and Susan

McWilliams Bolton, individually and as

an officer of said corporation, and

respondents’ agents, representatives,

and employees, directly or through any

partnership, corporation, subsidiary,

division or other device, in connection

with the manufacturing, labeling,

advertising, promotion, offering for sale,

sale or distribution of Jogging in a Jug

or any substantially similar product in

or affecting commerce, as ‘‘commerce’’

is defined in the Federal Trade

Commission Act, do forthwith cease and

desist from employing the name

‘‘Jogging in a Jug’’ or any other name

that communicates the same or similar

meaning for such product; provided,

however, that nothing in this Order shall

prevent the use of such name if the

material containing the name clearly

and prominently contains the following

disclosure:

‘‘THERE IS NO SCIENTIFIC

EVIDENCE THAT JOGGING IN A JUG

[OR OTHER NAME] PROVIDES ANY

HEALTH BENEFITS.’’

For the purposes of this Order,

‘‘clearly and prominently’’ shall mean

as follows:

A. In a television or video

advertisement less than fifteen (15)

minutes in length, the disclosure shall

be presented simultaneously in both the

audio and visual portions of the

advertisement, accompanying the first

presentation of the name. When the first

presentation of the name appears in the

audio portion of the advertisement, the

disclosure shall immediately follow the

name. When the first presentation of the

name appears in the visual portion of

the advertisement, the disclosure shall

appear immediately adjacent to the

name. The audio disclosure shall be

delivered in a volume and cadence

sufficient for an ordinary consumer to

hear and comprehend it. The video

disclosure shall be of a size and shade,

and shall appear on the screen for a

duration, sufficient for an ordinary

consumer to read and comprehend it;

B. In a video advertisement fifteen

(15) minutes in length or longer, the

disclosure shall be presented

simultaneously in both the audio and

visual potions of the advertisement,

accompanying the first presentation of

the name and immediately before each

presentation of ordering instructions for

the product. When the name that

triggers the disclosure appears in the

audio portion of the advertisement, the

disclosure shall immediately follow the

name. When the name that triggers the

disclosure appears in the visual portion

of the advertisement, the disclosure

shall appear immediately adjacent to the

name. The audio disclosure shall be

delivered in a volume and cadence

sufficient for an ordinary consumer to

hear and comprehend it. The video

disclosure shall be of a size and shade,

and shall appear on the screen for a

duration, sufficient for an ordinary

consumer to read and comprehend it.

Provided that, for the purposes of this

provision, the oral or visual

presentation of a telephone number or

address for viewers to contact to place

an order for the product in conjunction

with the name shall be deemed a

presentation of ordering instructions so

as to require the presentation of the

disclosure provided herein;

C. In a radio advertisement, the

disclosure shall immediately follow the

first presentation of the name and shall

be delivered in a volume and cadence

sufficient for an ordinary consumer to

hear and comprehend it;

D. In a print advertisement, the

disclosure shall be in close proximity to

the largest presentation of the name, in

a prominent type thickness and in a

type size that is at least one-half that of

the largest presentation of the name;

provided, however, that the type size of

the disclosure shall be no smaller than

twelve (12) point type. The disclosure

shall be of a color or shade that readily

contrasts with the background of the

advertisement;

E. On a product label, the disclosure

shall be in close proximity to the largest

presentation of the name, in a

prominent type thickness and in a type

size that is at least one-half that of the

largest presentation of the name;

provided, however, that the type size of

the disclosure shall be no smaller than

twelve (12) point type. The disclosure

shall be of a color or shade that readily

contrasts with the background of the

label; and

F. On any packaging of the product

shipped directly to consumers, the

disclosure shall appear on each side of

the packaging on which the name

appears, in close proximity to the largest

presentation of the name. The total area

of the disclosure shall be at least half

that of the name that triggers the

disclosure. The disclosure shall be of a
Federal Register / Vol. 60, No. 91 / Thursday, May 11, 1995 / Notices 25233

color or shade that readily contrasts

with the background of the packaging.

Nothing contrary to, inconsistent

with, or in mitigation of the aboverequired language shall be used in any

advertising or labeling.

Nothing in this part shall apply to: (1)

Advertising appearing on items that are

sold or given or caused to be sold or

given by respondents to consumers for

their personal use and that display the

name ‘‘Jogging in a Jug’’ or any other

name that communicates the same or

similar meaning; or (2) the use of such

name in a nonpromotional manner and

solely for purposes of identification of

the respondent corporation, including

the use of such name as part of

respondents’ letterhead, on shipping

labels, or on crates provided only to

purchasers for resale.

VIII

It is further ordered that respondents,

Third Option Laboratories, Inc., its

successors and assigns, William J.

McWilliams, Danny Bishop

McWilliams, and Susan McWilliams

Bolton, shall pay to the Federal Trade

Commission, by cashier’s check or

certified check made payable to the

Federal Trade Commission and

delivered to the Associate Director for

Enforcement, Bureau of Consumer

Protection, Federal Trade Commission,

6th and Pennsylvania Ave., NW,

Washington, DC 20580, the sum of four

hundred and eighty thousand dollars

($480,000). Respondent shall make this

payment on or before the tenth day

following the date of entry of this Order.

In the event of any default on any

obligation to make payment under this

section, interest, computed pursuant to

28 U.S.C. 1961(a), shall accrue from the

date of default to the date of payment.

The funds paid by respondents shall, in

the discretion of the Federal Trade

Commission, be used by the

Commission to provide direct redress to

purchasers of Jogging in a Jug in

connection with the acts or practices

alleged in the complaint, and to pay any

attendant costs of administration. If the

Federal Trade Commission determines,

in its sole discretion, that redress to

purchasers of this product is wholly or

partially impracticable or is otherwise

unwarranted, any funds not so used

shall be paid to the United States

Treasury. Respondent shall be notified

as to how the funds are distributed, but

shall have no right to contest the

manner of distribution chosen by the

Commission. No portion of the payment

as herein provided shall be deemed a

payment of any fine, penalty, or

punitive assessment.

IX

It is further ordered that respondents,

Third Option Laboratories, Inc., its

successors and assigns, William J.

McWilliams, Danny Bishop

McWilliams, and Susan McWilliams

Bolton, shall, within thirty (30) days

after the date of service of this Order,

send by first class mail, postage prepaid

and address correction requested, to the

last address known to respondents of

each consumer who purchased Jogging

in a Jug in any manner directly from

respondents since January 1, 1993, an

exact copy of the notice attached hereto

as Attachment A. The mailing shall not

include any other documents.

X

It is further ordered that respondents,

Third Option Laboratories, Inc., its

successors and assigns, William J.

McWilliams, Danny Bishop

McWilliams, and Susan McWilliams

Bolton, shall:

A. Within thirty (30) days after the

date of service of this Order, send by

first class certified mail, return receipt

requested, to each purchaser for resale

of Jogging in a Jug with which

respondents have done business since

January 1, 1993 an exact copy of the

notice attached hereto as Attachment B.

The mailing shall not include any other

documents;

B. In the event that respondents

receive any information that subsequent

to its receipt of Attachment B any

purchaser for resale is using or

disseminating any advertisement or

promotional material that contains any

representation prohibited by this Order,

respondents shall immediately notify

the purchaser for resale that

respondents will terminate the use of

said purchaser for resale if it continues

to use such advertisements or

promotional materials; and

C. Terminate the use of any purchaser

for resale about whom respondents

receive any information that such

purchaser for resale has continued to

use advertisements or promotional

materials that contain any

representation prohibited by this Order

after receipt of the notice required by

subparagraph B of this part.

XI

It is further ordered that respondents,

Third Option Laboratories, Inc., its

successors and assigns, and William J.

McWilliams, Danny Bishop

McWilliams, and Susan McWilliams

Bolton, shall, for five (5) years after the

last correspondence to which they

pertain, maintain and upon request

make available to the Federal Trade

Commission for inspection and copying:

A. Copies of all notification letters

sent to consumers pursuant to part IX of

this Order;

B. Copies of all notification letters

sent to purchasers for resale pursuant to

subparagraph A of part X of this Order;

and

C. Copies of all communications with

purchasers for resale pursuant to

subparagraphs B and C of Part X of this

Order.

XII

It is further ordered that, for five (5)

years after the last date of dissemination

of any representation covered by this

Order, respondents, or their successors

and assigns, shall maintain and upon

request make available to the Federal

Trade Commission for inspection and

copying:

A. Any advertisement making any

representation covered by this order;

B. All materials that were relied upon

in disseminating such representation;

and

C. 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.

XIII

It is further ordered that respondents,

Third Option Laboratories, Inc., its

successors and assigns, shall:

A. Within thirty (30) days after the

date of service of this Order, provide a

copy of this Order to each of

respondent’s current principals, officers,

directors, and managers, and to all

personnel, agents, and representatives

having sales, advertising, or policy

responsibility with respect to the subject

matter of this Order; and

B. For a period of seven (7) years from

the date of service of this Order, provide

a copy of this Order to each of

respondent’s principals, officers,

directors, and managers, and to all

personnel, agents, and representatives

having sales, advertising, or policy

responsibility with respect to the subject

matter of this Order within three (3)

days after the person assumes his or her

position.

XIV

It is further ordered that respondents,

William J. McWilliams, Danny Bishop

McWilliams, and Susan McWilliams

Bolton, shall, for a period of seven (7)

years after the date of service of this

Order, notify the Commission within

thirty (30) days of the discontinuance of
25234 Federal Register / Vol. 60, No. 91 / Thursday, May 11, 1995 / Notices

his or her present business or

employment and of his or her affiliation

with any new business or employment

involving the manufacturing, labeling,

advertising, marketing, promotion,

offering for sale, sale, or distribution of

any food, food or dietary supplement, or

drug, as ‘‘food’’ and ‘‘drug’’ are defined

in sections 12 and 15 of the Federal

Trade Commission Act. Each notice of

affiliation with any new business or

employment shall include respondent’s

new business address and telephone

number, current home address, and a

statement describing the nature of the

business or employment and his or her

duties and responsibilities.

XV

It is further ordered that respondents,

shall notify the Commission at least

thirty (30) days prior to any proposed

change in the corporate respondent,

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

under this order.

XVI

It is further ordered that respondents

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 they have complied with

this Order.

Attachment A

By First Class Mail, Postage Prepaid and

Address Correction Requested

[To Be Printed on Third Option Laboratories,

Inc. Letterhead]

[date]

Dear Consumer: Our records indicate that

you purchased Jogging in a Jug from Third

Option Laboratories, Inc. This letter is to

inform you of our settlement of a civil

dispute with the Federal Trade Commission

(‘‘FTC’’) regarding certain claims made in our

advertising for Jogging in a Jug.

The FTC alleged that advertisements for

Jogging in a Jug have made false and

unsubstantiated claims that the product can

cure, treat, or prevent: (1) Heart disease

(including arterial blockages); (2) arthritis; (3)

cancer; (4) leukemia; (5) dysentery; (6)

constipation; (6) lethargy; (8) swelling of the

legs; and (9) muscle spasms. The FTC has

also alleged that our claims that Jogging in a

Jug can ‘‘clean’’ internal organs, break down

or eliminate deposits in the circulatory

system, aid in the recovery from viral

diseases, lower serum cholesterol and

triglyceride levels, and stabilize blood sugar

levels in diabetics, are false and

unsubstantiated. Finally, the FTC has alleged

that we have made false and unsubstantiated

claims that Jogging in a Jug provides the same

health benefits as jogging.

Our settlement with the FTC prohibits us

from making these or other claims for Jogging

in a Jug or any other food, drug, or

supplement in the future unless the claims

are supported by competent and reliable

scientific evidence. We deny the FTC’s

allegations, but have agreed to send this letter

as a part of our settlement with the FTC.

Sincerely,

William J. McWilliams,

President, Third Option Laboratories, Inc.

Attachment B

By Certified Mail, Return Receipt Requested

[To Be Printed on Third Option Laboratories,

Inc. letterhead]

[date]

Dear [purchaser for resale]: Third Option

Laboratories, Inc. recently settled a civil

dispute with the Federal Trade Commission

(‘‘FTC’’) regarding certain claims for our

product, Jogging in a Jug. As a part of the

settlement, we are required to make sure that

our distributors and wholesalers stop using

or distributing advertisements or promotional

materials containing those claims.

The FTC alleged that the advertisements

for Jogging in a Jug have made false and

unsubstantiated claims that the product can

cure, treat, or prevent: (1) Heart disease

(including arterial blockages); (2) arthritis; (3)

cancer; (4) leukemia; (5) dysentery; (6)

constipation; (7) lethargy; (8) swelling of the

legs; and (9) muscle spasms. The FTC has

also alleged that our claims that Jogging in a

Jug can ‘‘clean’’ internal organs, break down

or eliminate deposits in the circulatory

system, aid in the recovery from viral

diseases, lower serum cholesterol and

triglyceride levels, and stabilize blood sugar

levels in diabetics, are false and

unsubstantiated. Finally, the FTC has alleged

that we have made false and unsubstantiated

claims that Jogging in a Jug provides the same

health benefits as jogging.

Our settlement with the FTC prohibits us

from making these or other claims for Jogging

in a Jug or any other food, drug, or

supplement in the future unless the claims

are supported by competent and reliable

scientific evidence. We deny the FTC’s

allegations, but have agreed to send this letter

as a part of our settlement with the FTC.

We request your assistance by asking you

to discontinue using, relying on or

distributing any of your current Jogging in a

Jug advertising or promotional material.

Please also notify any of your retail or

wholesale customers who may have such

materials to discontinue using them. If you

continue to use those materials, we are

required by the FTC settlement to stop doing

business with you.

Thank you very much for your assistance.

Sincerely,

William J. McWilliams,

President, Third Option Laboratories, Inc.

Analysis of Proposed Consent Order to

Aid Public Comment

The Federal Trade Commission has

accepted an agreement to a proposed

consent order from Third Option

Laboratories, Inc. (‘‘Third Option’’), and

William J. McWilliams, Danny Bishop

McWilliams, and Susan McWilliams

Bolton, officers of Third Option.

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 or make

final the agreement’s proposed order.

This matter concerns Jogging in a Jug,

a juice and vinegar beverage marketed

by Third Option. The Commission’s

proposed complaint alleges that the

respondents falsely represented in its

advertising and promotional material

that Jogging in a Jug would: (1) Cure or

alleviate heart disease and its

symptoms, including arterial blockages;

(2) substantially lower serum

cholesterol and triglycerides; (3) cure or

alleviate arthritis and its symptoms; (4)

break down or eliminate calcium or

other mineral or chemical deposits in

the circulatory system; (5) improve the

condition of the circulatory system; (6)

clean internal organs; (7) prevent or

reduce the risk of cancer, leukemia,

heart disease, and arthritis; (8) provide

the same health benefits as a jogging

regimen; (9) cure or alleviate lethargy;

(10) cure or alleviate dysentery; (11)

cure or alleviate constipation; (12)

stabilize blood sugar levels in insulindependent diabetics; (13) aid in the

recovery from viral infections; and (14)

cure or alleviate swelling of the legs and

muscle spasms. The proposed

complaint further alleges that

respondents falsely represented that

they relied on a reasonable basis for

these claims.

In addition, the proposed complaint

alleges that respondents falsely

represented that Jogging in a Jug was

approved by the United States

Department of Agriculture and that the

testimonials or endorsements from

consumers contained in the

advertisements and promotional

materials for Jogging in a Jug reflect the

typical or ordinary experiences of

members of the public who use the

product. The proposed complaint

further alleges that respondents falsely

represented that they relied on a

reasonable basis for these claims.

The proposed consent order contains

provisions designed to prevent the

respondents from engaging in similar

acts and practices in the future. Part I of

the proposed order prohibits the

respondents from making the
Federal Register / Vol. 60, No. 91 / Thursday, May 11, 1995 / Notices 25235

representations challenged as false in

the proposed complaint for Jogging in a

Jug or any substantially similar product.

Part II of the proposed order prohibits

the respondents from making any

representation about the performance,

safety, benefits, or efficacy of any food,

food or dietary supplement, or drug,

unless the representation is true and

respondents possess competent and

reliable scientific evidence that

substantiates it.

Part III of the proposed order

prohibits the respondents from

misrepresenting that any product has

been tested, approved, or endorsed by

any person, firm, organization, or

government agency.

Part IV of the proposed order

prohibits the respondents from

misrepresenting that any endorsement

for any product reflects the typical or

ordinary experience of members of the

public who use the product.

Parts V and VI of the order are safe

harbor provisions. Part V allows

representations for any drug that is

permitted in the labeling for that drug

under any tentative final or final

standard promulgated by the Food and

Drug Administration (‘‘FDA’’), or under

any new drug application approved by

the FDA. Part VI allows representations

permitted in labeling for any product by

regulations promulgated by FDA

pursuant to the Nutrition Labeling and

Education Act of 1990.

Part VII of the order requires that the

respondents cease using the name

‘‘Jogging in a Jug’’ or any name that

communicates the same or similar

meaning unless the material containing

such name clearly and prominently

contains the disclosure ‘‘THERE IS NO

SCIENTIFIC EVIDENCE THAT

JOGGING IN A JUG [OR OTHER NAME]

PROVIDES ANY HEALTH BENEFITS.’’

The terms of Part VII do not apply to:

(1) The use of such name on items that

are sold or given or caused to be sold

or given to consumers for their personal

use; or (2) the use of such name in a

nonpromotional manner and solely for

purposes of identification of the

respondent corporation, including the

use of such name as part of corporate

letterhead, on shipping labels, or on

crates provided only to purchasers for

resale.

Part VIII of the order requires

respondents to pay to the Commission

the sum of four hundred and eighty

thousand dollars ($480,000). The

Commission will then determine, in its

sole discretion, whether to use the

payment to provide direct redress to

consumers or to pay the funds to the

United States Treasury if redress is not

practicable.

Part IX of the order requires the

respondents to send a letter describing

this settlement to identifiable past

purchasers of Jogging in a Jug. Part X of

the order requires the respondents to

send a similar letter to their purchasers

for resale. Part X further requires the

respondents to notify their purchasers

for resale that if the purchasers for

resale do not stop using promotional

materials containing claims covered by

the order, the respondents are required

to stop doing business with them. Part

XI of the order requires that the

respondents maintain for five years

copies of all communications with

consumers and purchasers for resale

pursuant to the terms of Parts IX and X.

Parts XII, XIII, XIV, XV, and XVI

relate to the respondents’ obligation to

maintain records, distribute the order to

current and future officers and

employees, notify the Commission of

changes in employment or corporate

structure, and file compliance reports

with the Commission.

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.

Donald S. Clark,

Secretary.

Statement of Commissioner Mary L.

Azcuenaga, Concurring in Part and

Dissenting in Part, Third Option

Laboratories, Inc., File No. 942 3027

Today, the Commission accepts for

public comment a consent agreement to

remedy various misrepresentations

concerning the purported health

benefits of a drink called ‘‘Jogging in a

Jug.’’ The record shows that the claims

are far removed from reality, and there

is ample reason to believe they violated

section 5 of the FTC Act. I concur in the

complaint on which the order is based

except to the extent that it alleges as a

violation the content of newspaper

articles that are reproduced in the

respondents’ promotional materials and

those materials accurately identify and

reproduce such articles in their original

format without modification. Complaint

¶ 7 and Exhibit F.

Second, I dissent from Part VII of the

order. Although the complaint does not

challenge as materially misleading the

unadorned use of the product’s name,

Jogging in a Jug (nor would I, given the

absence of evidence), Part VII of the

order prohibits, in connection with the

advertising and sale of Jogging in a Jug

(or any similar product), use of the

name Jogging in a Jug, or any other

name communicating a similar

meaning, unless the name is

accompanied clearly and prominently

by a disclosure stating: ‘‘THERE IS NO

SCIENTIFIC EVICENCE THAT

JOGGING IN A JUG [or other name]

PROVIDES ANY HEALTH BENEFITS,’’

and which includes six extensive

paragraphs minutely detailing what will

constitute ‘‘clearly and prominently’’ for

purposes of compliance with this

requirement.

The Commission in the past has used

this form of relief, which can

substantially limit potentially lawful

conduct, to remedy health claims that

seem more credible than those likely to

be taken by reasonable consumers here.

For example, the Commission imposed

a similar requirement to remedy the

pain relief claim it found to have been

conveyed by the name ‘‘Aspercreme’’ in

Thompson Medical Co., 104 F.T.C. 648

(1984). The likelihood that a consumer

would except that a product named

Aspercreme would contain aspirin and

would rely on that claim to his or her

detriment seems to me far greater than

the likelihood that a consumer would

rely to his or her detriment on an

implied message that a product called

Jogging in a Jug would provide the

health benefits of jogging.

[FR Doc. 95–11556 Filed 5–10–95; 8:45 am]

BILLING CODE 6750–01–M

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