Tobacco Documents Online

29 UNITED STATES oF AMERICA BEFORE, FEDE~~R~~AL~ TRADE COMMISSION STIPULATION AS TO THE FACTS Pursuant to the provisions of the Federal Trade Commis- sion Act, the Federal Trad'e Commission,, on March 2, 1943, issued its complaint against respondent, P. Lorillard Company, designated in the said' complaint as P. Lorillard Company, Inc., (which said misnomer is hereby expressly waived by respondent~ P. Lorillard~ Company,, and respondent P. Lorillard Company hereby expressly agrees that the Federal Trade Commission may make and enter its findings and order in this proceeding against said respondent P. Lorillard Company, with the same effect as if it had been designated in the complaint herein as P. Lorillard Company)', and caused such complaint to be served as required by law, in which it was charged that said respondent was and had, been using unfair methods of competition and unfair and deceptive acts and': practices in commerce in violation of the provisions of said Act. Said respondent P. Lorillard Company duly filed its answer to the said complaint. IT' IS' HERESY STIPULATED AND AGREED by and between W: T. Kelley„ Chief Counsel' for the Federal Trade Commis- sion and the respondent, that, subject to the approval of the Federal Trade Commission, the following statement of facts may be made a part of the record herein, and that such state- .

30. ment of facts together with the. testimony and evidence already taken and such further testimony and! evidence as may be taken subsequent to the date of this, stipulation, may all be taken as the facts in this proceeding; and that the said Commission may proceed upon the testimony and evidence already taken, upon said statement of facts and upon such testimony an& evidence as may be taken subsequent to the date of thisstipulation, to makeits report, stating itsfhndings as tothe facts (including in- ferences which it'~ may draw from~ the said stipulated facts and fromi thetesdmony and evidence already taken and which may be taken) and its conclusion based thereon, and enter its order disposing of the proceeding. STATEMENT OF FACTS PARAGRAPH ONF,: Respondent P. Lorillard Company is a New Jersey Corporation with its principal office at 15 Exchange Place, Jersey City, N. J., and with its executive offices at 119 West 40th Street, New York City. The, said company has fac- tories for the manufacture of tobacco products in Jersey City, New Jersey, Louisville, Kentucky, Richmond, Virginia and'' Middletown, Ohio. On or about the 15th day of April', 1926, , the said company began the manufacture of, and now manufac- tures, a brand off cigarettes known~ as "OLU GoLD". On or about October 1, 1940, the said company began the manufacture of, and still manufactures, a brand of cigarettes known as "BEEcx- NuT". On or about the first day of January, 1938, the company began the manufacture of a brand of cigarettes known as "SErr- SATION". The said company is not now manufacturingsaid Sen- sation cigarettes,, having, ceased the manufacture thereof on or about the 15th day of June, 1943. In or about April, 1937, the said company began the manufacture of, and still manufac- tures, a pipe tobacco known as "FxiErrns" smoking tobacco. During the periods referred to hereinabove, the said company was engaged, and, except in the case of Sensation cigarettes,, still is engagedy in the sale and distribution of the tobacco prod- ucts hereinabove mentioned, in commerce between and among ~' ~ ~ 3 I M~.

F: 31 various states of the United States, and it has caused ands ex- cept for Sensation cigarettes, now causes the above-named tobacco products, when sold by it, to be transported from the fac- tory or factories where manufactured, to the purchasers thereof in various other states of the United States than that in which the said products have or arc now being manufactured. P. Loril- lard Company is now, and for several years past has been, one of the larger manufacturers of tobacco products in the United States, and is now, and for many years past has been, in sub- stantiali competition with other corporations, persons, firms and partnerships engaged in the manufacture and'~ sale of tobacco products in commerce between and among the various states of the United States. PAxncR:nPrr TErr: The Reader's Digest is a monthly maga- zine published in Pleasantville, New York, from which it has a wide circulation. There were printed and distributed on sub- scriptions and the news stands throughout the United States approximately 5,000,000 copies of the July, 1942 issue of The Reader's Digest. There were printed, -distrilxtted arrd-sokFiTr foreign countries approximately 799,000 copies of the July, 1942 issue of The Reader's Digest. In the said issue of the said magazine, and on pages 5 to 8'thereof, inclusive, there appeared a copyrighted article by Robert Littell entitled~ "Cigarette Ad' Fact and! Fiction"which article statedthrat under a commission by "The Reader's Digest" a research~ laboratory had~ made "a series of objective tests" of seven brands chosen~for the purpose; to-wit, "Lucky Strike", "Camel", "Chesterfield", "Philip Mor- ris", "Old Gold", "Pall Mall", and "Avalon", in a manner "which permitted complete collection, for accurate analysis, of the nicotine and tars contained'~ in the smoke of each brand", and said article further stated that the results of said tests showed that of these seven brands "Old! Golds have the least of all" of nicotine and that "Old Gold has the least" of tars and resins. Said article also contained the following tabulation of the data ascertained by the tests referred tp in the article:

' 32 Brand (the firstfive Nicotine in Smoke (average T6rB in are.theso.oalledl BmokingTime Milligramsper8aaoke "Rig Five" ) (per cig4retCe) cigareEt,e): (percent) Lucky Strike .. 9 min. 6 see. 2.22 2.19 Camel ...... 10 " 0 " 2.20 2.13 Chesterfields .. 9 " 6 " 2.27 2.37 Philip Morris . 9 " 36 " 2.46 2.24 Old Gold'.... 9 " 54 " 2:04 1.98 Avalon ... ... 7 " 54 " 2.20 2.14 Pall Mall .... 12 " 24 " 3.02 2.23 "Big Five" Average ... 9 " 32 " 2.24 2.18 The said article stated,, among other thingsc "The laboratory's generalconelusion' wilt be sad~ ncws for the advertising copy writers, but good' news for the smoker, who need no longer worry as to which cigarette can most effectively nail down his coffin. For one nail is just about as good as another. Says the laboratory report: 'The difFerences between brands are,, practically speaking, small' and no siviglebrandis sol superior to its competitors as to justi fy its selection ont'he groundthatitislessharmtul:' Howsrnallthe variations are maybeseeny from tl>.e data tabulated on page 7."' Neither P. Lorillard Company nor any officer or employee of that company had any knowledge or intimation of the tests referred to in this Paragraph Ten, or of said article published by the Reader's Digest, until it appeared in tbe July, 1942 issue of that magazine, and neither P: Lorillard Company nor any officer or employee of that company was in any way responsible for said tests or said art~iclle~ In the course and' conduct of its business described in Paragraph One hereof, and for the purpose of aiding arid pro- moting the sale by it in interstate commerce of its said "OLD GoLn" brand of cigarettes, respondent, beginning immediately after the publication of said article in the July, 1942 issue of The Reader's Digest, and' continuing, until July, 1943, dis- seminatcd, and caused to be disseminated, by the United States mails, in magazines of nationwide circulation, in newspapers of interstate circulation, by' local radio broadcasts and by nation- wide hook-ups of broadcasts, and by other means in commerce,

33 advertisements in which~ it was stated that respondent's "OLD GoLD" cigarettes were reported' in said article as the "lowest in throat irritating tars and' resins" and "lowest in nicotine" of the seven brands of cigarettes mentioned in the article, according to the said~ tests mad'e for The Reader's Digest and described in said article. In said~ advemtisements reference was made to the tests and article as the basis of and authority for said state- ments. A number of said advertisements contained statements urging the public to read said article and setting forth the name of the magazine, the issue, the name of the article, and the pages of the issue at which it could be foundl Said advertise- ments did not set forth the figures from the table quoted above nor did they set forth the laboratory's general conclusion here- inabove quoted. At the time of said advertisements respondent had neither made nor caused: to be made any tests of its "OLD GoLD" ciga- rettes which showed' that at the time of said! advertisements its "Oz.D GOLD" cigarettes were "lowest in nicotine" and were "lowest in throat irritating tars and resins" and at the time of said advertisements respond'ent had no information as to any tests on such qualities except that-whieh-appeared in-saidju y 1942' issue of The Reader's Digest. FEDERAL TRADE COMMISSION By /s/ W. T. KELLEY W. T. Kelley, Chief Counsel P. 1'_,ORILLARD ~ COM PANY /S/ PERKINS, DANIELS & PERKINS By /s/ F. J. DANIFI,S Counsel for Respondent. Dated this 16th day of November, A. D., 1944. APPROVED: Nbvember 20, 1944. ` FfiDERAL TRADE COMMISSION By /s/ Ons B. JOHNSON Otis B. Johnson, Secretary