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Written Statement of R. J. Reynolds Tobacco Eompany to the Subcommittee on Transportation, Tourism,, and Hazardous M terials of the Committaelon Energy and Comaerce United States House of Representatives April 12', 198'8' Mr. Chairman, by letter dated April 8, 1988, we advised you that because of our concerns that your hiearings.and the attendant publicity would, seriously prejudice the ability of thee defendants in the Qi'pollone case tareceive a fair trial, we declired your invitation, to appear at your hearing and said that we would provide a written statement in lieu of our appearance. In your press release dated April 6, 19'88, you stated that your subcoiar.:ittee is interested in our response toiclaims that we,and other cigarette companies use deceptive advertise- ments and cited as an exan:ple our NOW advertisements and American Tobacco"s CARLTON advertisements, each of which clair that they, are the "lowest" in "tar". with respect to our advertising in general, we are con- vinced that our advertisements comply in all respects wi!th appli- cable laws and regulations and are not, fniany way, deceptive. Our cigarettQ advertising is directed to adult smokers and: is intendedito encourage switching from competitive brands to our brands. Our advertising isinot designed to start people i

smoking or to prevent smokers from quitting. Nor does our advertising have the effect of promoting such behavior. Claims have been made that cigarette advertising is intendedito encourage youth, to smoke. These claims simply are not true. The vast preponderance of' available evidence clearly indicates that the primary impetus for smoking by youth is peer pressure. The influence of'parents andi teachers also plays a, part, but advertising has almost no influence. Our adverti'sing, does present our products in a pleasur- able way because to the millions of'Americans who choose to smoke, cigarettes provide a real source of pleasure and'enjoyment. 0'ur marketing approach is to, id'entify! segrents or categories within the smoking, public based upon smokers' wants and then, to develcp marketing strategies and advertising designed to attract smokers in these categories to o r brands andito maintainn their loyalty to our brands. Expert testimony presented to Congress in 19'82 and 1986' cliear.y demonstrated that cigarette advertisements do not sell the idea of'smokingito yoLth, nonsmokers or former smokers. No crediblwstudies that we are aware of show advertising,exertingg any i'nfluence other than to presarve: brand!l'oyalty and encourage switching among brands. I~n your 1'etter, you specifically expresse.d an, interest in our recent NoVadvertising. For your infornation, Reynolds -2'-

currently narkets six styles of'N'ON'brand cigarettes: soft packk filter kings (;85"s), soft pack menthol kings (85's), soft pack filter 100's, soft pack menthol 100"s, box kings (80''s)I and box 1100'a. The tar ratings of'these N'oN styles range from less than .,5 mg .(ltaw box kings to 3 mg. (NOW soft pack menthol 100''s)'. There are eleven styles of Carlton cigarettes ¢urrently avaiTable to the public with tar ratings ranging from less than .5 mg. tar (Carlton box kings (8D''s)i)to 7 mg. tar (Carlton soft pac}; 12Q's). We would like to point out that the two NoWads attached to your Apri~l 6, 1988, nek.s release (Exhibits A and B'attached; heretc), relate to NOW soft pack_ i'lter and'menth l 100''g, while the Carlton ad (Exhibit C attached'hereto) involves Carlton Lolt pack ailter kings (85"s)'. Smokers have growm accustomed to the various brand styles of cigarettes on the market and are very familiar with the differences between filter and'menthol, kings and' 100's, and soft packs and boxes. Moreover, those smokera with a particular interest in~tar levels are aware that tar ratings can and often do differ frotr style to style. The N0W, ads attached to your news release (Exhibits A and'B) provide in a clear, and'straightfortiraid fashion accurate information regarding tar ratings for the specific comparable -3-

styles of the competitive brands illustrated. These ads clearly compare the respective tar rati'ngs of NoW'sott pack fiiter and d menthol 100's with the soft pack filter and menthol 100's of competitive brand's, with the result that NOW is lowest. We believe these two ads provide interested smokers with infornnation, that is both accurate and useful. Ihi ourviiew,, "T.owest" on a brand~-sty~l'ebye brand-style comparison basis means that there are no comparable competitive brand styles that are lower i!ntar.This issue was specifically, addressedd by the court in 1976 in American 8rand's. Irnc. v. R. J. ]Reynold's Tobacco Co. ,, 4'13 F. Supp. 1352' (S.D.N.Y., 1976). The court found that there was no evidence that the advertiserents in question caused confusion or had a, tendency'to mislead or deceive consumers. Most importantly, the court noted that such advertisements must be considered in, the context of ' the audience who reads thea, and the publications in which tliey, appear: We take judicial notice of' the fact that today''s newspapers, magazines and other fbrms of advertisement are rife wi~th the message of low tar content in cigarettes, and' find that because of such profusion it is substantially less likely that any reader having an interest in the subject will be mislead by the messages. before us; especially since the actual tar and nicotine content of the product advertised appears to be specified in .very advrQrtise- ment. 413 F. Supp. at 23,601. We believe that the court"s pragmatfc observation r.garding the impact of'"tar" advertising is equally,if not more, true today. CID' ~'. O ~I -4- p ~

From time to, time,, as a part of its market surveillance program, the Federal Trade Commission ("F'TC' or "Cor,.mission"') has contacted us and raised' questions concerni'ng, our cigarette advertising. On at least one occasion, while we did not agree with the Commission's position, our advertising campaign, was, in fact, changed in response to: their concerns. You~have also stated that you have questions concerning such matters as the method used to measure.tar and, nicotine in cigarettes and the laboratory which conducts suchh tests. We assume by this that you are referring to the Tobacco Institute Testing Laboratory ('"TITL"') which, by agreement with the FZ'C, tests for the corparative tar and nicotine yields off cigarettes currently on the market. The Comr.ri;ssion, on its own, initiative, decided to, close.its laboratory because of'the cost of maintaining it and, because the same information was available from other sources. You should be assured'that the Commission's decision to closee thE laboratory was not th~e result of'any pressure brought by Reynolds. In fact, the cigarette manufacturing industry opposed' the decision by FTC'. After the Commi'ssi'on, decids& to close its laboratory,, it initiated discussions with the cigarettw manufacturers, to make certain that procedures for effective monitoring of testing by T'I,TL would be.i'n placs. An arrangement was subsequently agreed upon whereby monitoring by the Commission of TITL's testing was, assured'., f -5m