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) 15 e •n.X:`.Rro.o" 11[C0p1eR:(=O!)172-i7tO Tc6ac:s.-m3 ARNOLD & PORTER 1200 NEW MAMPSMIRE AVENUE. N. W. wASNtNGTON, D. C.2003d 1060 u"COL" iT"LET D["V[R.COLOA;LDO •O=D4 (303) .32-2900 July 10, 1981' ) i ) ) ) j ) 0 James H. Sneed, Esquire Director Bureau of Consumer Protection Federal Trade Commission Washington, D.C. 20580 (aos) .72-0700 Re: Implications of Barclay Filter on FTC "Tar" Testing Program Dear Mr. Sneed: As counsel to Philip Morris Incorporated, we are hereby transmitting the Company's request for your urgent consideration of and prompt action on a serious and sub- stantial issue which fundamentally affects the integrity of the Commission's longstanding -- and heretofore success- ful -- "tar" and nicotine testing program. Substantial concerns have been voiced that a peculiar new type,of.filter used on Barclay cigarettes defeats the basic purpose of the FTC's "tar" testing program, namely, to provide data permitting consumers to make an informed comparison of the "tar" delivered by different cigarette brands. Barclay is now being widely marketed by Brown & Williamson Tobacco Corporation, a subsidiary of BAT Industries Ltd., the world's largest privately-owned tobacco company, and supported with,an advertising and promotional campaign of unprecedented proportions. As a result of its unusual construction, the Barclay filter is duplicitous -- it functions one way on the Commission's present smoking machine but in a radically different way in the smoker's mouth. While Barclay is proclaimed to be an "ultra low tar" cigarette, in truth and in substance it is not. By artful design, the Barclay filter exploits a loop- hole in the testing protocol and thereby effectively destroys

1. 0 11 I i ARNOLD & PORTER James H. Sneed, Esquire July 10, 1981 Page Two the reliability of the "tar" rankings produced by the current FTC testing method. It also subverts the long- standing agreement between the Commission and the cigarette manufacturers governing "tar" disclosure in advertising. In response to your staff's recent request for comments on the questions raised about the Barclay filter, Philip Morris has today submitted the attached technical memorandum which explains in some detail how the Barclay filter circumvents the smoking machine. The memorandum describes the pivotal role of dilution in determining "tar" delivery -- the greater the dilution, the lower the "tar." It demonstrates how the peculiar construction of the Barclay filter -- using impermeable channels that totally segregate dilution air from "tar"-yielding 9moke -- results in high dilution and therefore low "tar" on the machine, but rela- tively little dilution and substantially higher "tar" when the cigarette is smoked in the mouth, where the inner surfaces of the lips partially or totally close off the dilution channel exits. The memorandum further demonstrates that no other filter produces such a change in dilution and "tar" between the smoking machine and the smoker's mouth. As we have stated to the staff, the loophole in the Commission's testing program which Barclay exploits can be easily corrected by modifying the cigarette holding device used in the testing apparatus. But the damage to the usefulness and trustworthiness of the Commission's testing program already caused by the massive advertising and promotion of Barclay as "99% tar free" and as a one milli- gram "tar" cigarette "by FTC method" has profound and far- reaching implications that require more than a future change in the Commission's testing equipment. According to its manufacturer's claims, Barclay's massive advertising and promotion have already attracted approximately 1.2% of the market -- roughly equivalent to 700,000 consumers -- many of whom are undoubtedly relying upon the brand's ultra low "tar" representations. Moreover, Brown & Williamson is

~ ARNOLD & PORTER James H. Sneed, Esquire 1 July 10, 1981 Page Three ) I ) t f I reportedly about to incorporate the Barclay filter on other brands. Business Week, July 13, 1981, at 72. In the absence of prompt and effective measures by the Commission to close the loophole exploited by Barclay, it must be assumed that other manufacturers will feel free to incorporate similarly functioning filters on their own products. The inevitable proliferation of such altered products -- all claiming to fall within the "ultra low tar" category "by FTC method," even though their actual deliveries to the smoker will remain basically unchanged -- will demolish the credibility of the-Commission's "tar" testing program. The result will be a marketplace in which com- peting brands can no longer be differentiated from one another on the basis of the "tar" rankings derived through the FTC method. ' regarding "tar" advertising. The foregoing considerations, and the supporting information in our attached technical memorandum, will come as no surprise to Brown & Williamson. In November 1980, when Barclay was still in test markets, Philip Morris provided Brown s Williamson with detailed information demonstrating the differential functioning of the Barclay filter on the smoking machine as contrasted with its opera- tion in the smoker's lips. Nevertheless, Brown & Williamson chose to continue to expand its distribution and promotion of Barclay in the teeth of this information as to the damaging effect of the filter on the integrity of the Commission's testing program and the FTC-industry agreement As evidenced in materials transmitted to the major companies by your staff, R.J. Reynolds Tobacco Company had independently reached conclusions similar to those of Philip Morris regarding the operation of the Barclay filter. Thus, the Commission has now received evidence from at least two major research laboratories with long experience in cigarette testing, showing that Barclay -- unlike any other brand -- operates on the smoking machine in a radically different manner than it does in the smoker's mouth.

) I I I ) f ) ARNOLD & PORTER James H. Sneed, Esquire July 10, 1981 Page Four Accordingly, for the reasons discussed above and more fully developed in the accompanying memorandum, Philip Morris urges that the following steps be taken immediately by the Commission: First, Brown & Williamson should be notified by the Commission forthwith that serious and substantial questions have been raised regarding the validity of Barclay's "tar" claims, and that pending final resolution of the issue by the Commission, Brown & Williamson (1) should cease making any direct or indirect representations in its advertising, packaging or promotional materials as to Barclay's "tar" yield but (2) should include a sthtement in all Barclay advertising, in lieu of the present FTC "tar" disclosure, that Barclay's "tar" delivery is not properly determinable by present FTC method. Second, the Commission should not include Barclay in its forthcoming periodic "Report of 'Tar', Nicotine and Carbon Monoxiae Content of the Smoke of [Various] Varieties of Cigarettes" if the present FTC method is utilized. Barclay"should be included in future reports only after having been tested in accordance with a suitably modified testing protocol. Third, in order to preserve the integrity and re- liability of its "tar" testing-program, the Commission should inform all interested parties regarding the interim- action it is taking in connection with this matter. a . Finally, as recommcnded to your staff, the Commission laboratory should promptly modify the cigarette holding ~ device used in its apparatus, in the manner proposed by © Philip Morris, in order to insure valid and reliable com- ~N parative "tar" results for all cigarette brands on the ~ market. All cigarette manufacturers should be immediately ~ I

< • ARNOLD & PORTER 41 D James H. Sneed, Esquire July 10, 1981 Page Five notified of the modification adopted, and should thereafter be required to report "tar" results "by FTC method" only in accordance with test results obtained by use of the modified holding device. Sincerely yours, ARNOLD & PORTER ) j & 4..j- Abe Krash Jerome I. Chapman Hadrian R. Katz Alexander Holtzman G. Carlton Adkins ) j I i Counsel for Philip Morris Incorporated cc: Chairman David Clanton Commissioner Paul Rand Dixon Commissioner Michael Pertschuk Commissioner Patricia Bailey Wallace S. Snyder, Esq. Matthew L. Myers, Esq.