Currently browsing posts about: FTC (Federal Trade Commission)

A federal judge has said no to the proposed $25 billion purchase of Albertson’s by Kroger.  This is a win for the Federal Trade Commission and for consumers faced with store closures and higher prices almost certainly expected as a result of the merger.

U.S. District Judge Adrienne Nelson agreed in the ruling that the merger was likely to remove direct competition between the two grocers, which would make it unlawful…Albertsons shares were down around 2.2% on Tuesday afternoon. Kroger shares were up around 5%.

I’ve written about the proposed merger in earlier posts.

• Kroger v. the Federal Trade Commission: Not a pretty story
• The proposed Kroger-Albertson’s merger: divestment consequences
• Kroger’s acquisition of Albertsons: What this means

A lot of money was at stake.  Now things are geting really ugly.

Albertson’s is suing Kroger for not trying hard enough to get the merger through the FTC.

Kroger says this charge is baseless.

“This is clearly an attempt to deflect responsibility following Kroger’s written notification of Albertsons’ multiple breaches of the agreement, and to seek payment of the merger’s break fee, to which they are not entitled.

The cases are likely to go on and on.  In the meantime, enjoy going to your local supermarket while you can.

I subscribe to The Hagstrom Report, not least because Jerry Hagstrom reports on items I might not see otherwise.  Here’s one:

Kroger, Albertsons release list of stores to be sold: The Kroger Co. and Albertsons Companies have released the list of stores they intend to sell if their acquisition plan is approved.

He conveniently provided links to Kroger-Albertsons’ list of stores to be divested, and also to an article about the divestments with a handy map.

From the map, you can see that most stores will be divested in the West: Washington (124 store), Arizona (101), Colorado (91), California (63), and Oregon (62).

One reason why the Federal Trade Commission sued to block the merger is evident: there will be fewer grocery stores available.  Other reasons: less competition between the chains, and more power over employee wages, benefits, and working conditions.

The proposal says 579 stores will be sold to a new owner, C&S Wholesale Grocers.

Kroger’s says: “You’ll see that the 579 stores and other assets to be divested were thoughtfully chosen to allow C&S to succeed in the geographies and maintain – if not increase – the level of competition that consumers benefit from.”

The FTC’s oroginal press release explained why the merger is not a good idea:

The FTC charges that the proposed deal will eliminate fierce competition between Kroger and Albertsons, leading to higher prices for groceries and other essential household items for millions of Americans…lower quality products and services, while also narrowing consumers’ choices for where to shop for groceries. For thousands of grocery store workers…[the merger] would immediately erase aggressive competition for workers, threatening the ability of employees to secure higher wages, better benefits, and improved working conditions…executives for both supermarket chains have conceded that Kroger’s acquisition of Albertsons is anticompetitive, with one executive reacting candidly to the proposed deal: “you are basically creating a monopoly in grocery with the merger.”

Monopolies are never good for consumers.  Let’s hope the FTC holds firm on denying this merger.

Just in time for the Thanksgiving holiday, government agencies are, at long last, taking action on food issues.

Two examples:

I.  The Federal Trade Commission has issued warning letters to trade associations and dietitian-influencers they paid to promote sugar and aspartame on social media.

The letter to AmeriBev detail concerns about posts on Instagram and TikTok by Valerie Agyeman, Nichole Andrews, Leslie Bonci, Keri Gans, Stephanie Grasso, Cara Harbstreet, Andrea Miller, Idrees Mughal, Adam Pecoraro, and Mary Ellen Phipps, each of whom also received an individual warning letter.

The letter to The Canadian Sugar Institute expresses concerns about Instagram posts by Jenn Messina and Lindsay Pleskot, each of whom also received an individual warning letter.

The letter to American Beverage (formerly the American Beverage Association) gives the “or else.”

We strongly urge you to review your social media policy. You should also review the Instagram, TikTok, and other social media posts made by your endorsers as to whether they contain sufficiently clear and conspicuous disclosures of any material connections to the American Beverage Association. To help guide your review, please see the Endorsement Guides3 and the staff publication FTC’s Endorsement Guides: What People Are Asking. Violations of the FTC Act may result in legal action seeking a federal district court injunction or an administrative cease and desist order

This action comes as a result of the investigative report in the Washington Post (it is cited in the letter).  I wrote about the Post article here and also posted the the response from the Academy of Nutrition and Dietetics.

The Post investigative team had this to say about the FTC’s warning letters.

Federal regulators announced warnings against two major food and beverage industry groups and a dozen nutrition influencers Wednesday, as part of a broad action to enforce stricter standards for how companies and social media creators disclose paid advertising.

Comment: Let’s hear it for the power of the press!

II.  New York State Attorney General sues PepsiCo for plastic pollution

New York Attorney General Letitia James today filed a historic and groundbreaking lawsuit against PepsiCo Inc. (PepsiCo) for harming the public and the environment with its single-use plastic packaging. The Office of the Attorney General (OAG) found that single-use plastic produced by PepsiCo contributes significantly to high levels of plastic pollution along the Buffalo River, pollution that is contaminating drinking water and harming wildlife.

…PepsiCo, which is headquartered in New York state, manufactures, produces, and packages at least 85 different beverage brands and 25 snack food brands that predominantly come in single-use plastic containers. Plastic packaging has become a persistent and dangerous form of pollution along the shores of the Buffalo River and in its watershed. In 2022, OAG conducted a survey of all types of waste collected at 13 sites along the Buffalo River and its tributaries and found that PepsiCo’s single-use plastic packaging was the most significant. Of the 1,916 pieces of plastic trash collected with an identifiable brand, over 17 percent were produced by PepsiCo. PepsiCo’s plastic packaging far exceeded any other source of this identifiable plastic waste along the river, and it was three times more abundant than the next highest contributor.

According to the New York Times, PepsiCo:

has said it aims to make all of its packaging “recyclable, compostable, biodegradable or reusable” by 2025. The company also says it wants to cut virgin plastic by 50 percent by 2030, compared with 2020.

The company is now being held accountable for that promise.  What a concept!

Comment: While soda-and-bottled-water companies profess commitments to reducing plastic waste, they fight recycling laws (those that require bottle deposits returnable when the bottle is returned) in every way possible.  Attorney General James is doing something quite remarkable; she is holding PepsiCo accountable for some of the externalized costs of producing sodas, bottled water, and snacks.  I hope this sets a strong precedent.  Kudos!

The Federal Trade Commission has issued a Health Products Compliance Guide.

This amazing publication takes on the Dietary Supplement Health and Education Act of 1994.  That act effectively removed the FDA from regulating dietary supplements.  It also allowed supplement labels to make “structure/function” claims that the supplement supported some structure or function of the body, whether or not there was much in the way of scientific evidence to back up those claims (in contrast, FDA-authorized claims must be scientifically substantiated).

Now the FTC is saying:

Marketers of health-related products, including dietary supplements, should be familiar with the requirements under both FDA law and FTC law that labeling and advertising claims be truthful, not misleading, and substantiated.  The FTC approach generally requires that health-related claims be backed by competent and reliable scientific evidence substantiating that the representations are true.

Marketers cannot suggest unsubstantiated benefits, safety, or other characteristics.

Example 4:  An ad for an infant formula states that an ingredient added to the formula can reduce the symptoms of colic.  The ad includes an unrelated chart from a pediatric journal showing that, as a general principle, the length of time that colicky babies cry tends to decrease over the first 12 weeks of life…Using the graph in an ad for the infant formula likely implies that the formula, rather than the babies’ ages, causes the decrease in crying time.

Claims have to be qualified.

Example 10:  An energy drink contains an ingredient that, when consumed daily over an extended period, can result in a significant increase in blood pressure.  Even absent any representation about the product’s safety, the marketer should disclose this potentially serious risk.

Qualifying information must be clear and straightforward.

Example 13:  A company has results from two studies suggesting that its supplement helps to maintain healthy cholesterol levels.  There are, however, significant limitations to each of the studies… The company makes a claim in advertising that “promising, preliminary scientific studies show that our product may be effective in reducing cholesterol.”  The use of the words “promising,” “preliminary,” and “may” is unlikely to sufficiently convey the limitations of the science.

Assertions about the strength of evidence must be accurate.

Example 16: An ad for a supplement includes the statement “Scientists Now Agree!” in discussing the product’s benefit.  This statement likely conveys to consumers that the state of science supporting the benefit has reached the level of scientific consensus.  Unless the advertiser possesses evidence demonstrating that scientists have reached that consensus, the claim is false.

Marketers must consider the totality of the science.

Example 30:  An advertiser wants to claim that a supplement will substantially reduce body fat.  The advertiser has two controlled, double-blind studies showing a modest but statistically significant loss of fat at the end of a six-week period.  However, there is an equally well-controlled, double-blind 12-week study showing no statistically significant difference between treatment and control groups.  Assuming other aspects of methodology are similar, the studies taken together suggest that, if the product has any effect on body fat, it would be very small and may not persist over time.  Given the totality of the evidence, the claim is unsubstantiated.

Here’s the press release. 

The bottom line:  The FTC is requiring evidence for health claims on supplements.

This will affect claims for thousands of supplement products.

Enforcement anyone?  This should be fun to watch.

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A coalition of children’s and consumer advocacy groups (see list below) filed a complaint with the Federal Trade Commission (FTC) charging that Google’s new YouTube Kids app violates restrictions on marketing junk foods to kids.

The coalition’s letter to the FTC details the charges.  YouTube Kids, it says:

• Intermixes advertising and programming in ways that deceive young children.
• Features “branded channels” for McDonald’s, Barbie, Fisher-Price, and other companies.
• Distributes “user-generated” segments that feature toys, candy, and other products without disclosing the business relationships.

The Washington Post gives some examples:

On the American Greetings’ Strawberry Shortcake channel, for instance, a 37-second video features the red-haired doll describing the company’s “Food Fair” app, where characters pick ingredients for recipes. At the end, a banner appears showing the app can be downloaded on iTunes. McDonald’s has a 7-minute video dispelling myths about the contents of Chicken McNuggets. On another video, a deep-voiced announcer warns, “All vegetarians, foodies and gastronauts, kindly avert your eyes,” with a slow-cam close up of a juicy Big Mac. “You can’t get juiciness like this from soy or quinoa.”

Here’s the Coalition list: the Center for Digital Democracy, Campaign for a Commercial-Free Childhood, American Academy of Child and Adolescent Psychiatry, Center for Science in the Public Interest, Children Now, Consumer Federation of America, Consumer Watchdog, Corporate Accountability International, and Public Citizen.

This will be fun to watch.  Stay tuned.

Congress can’t pass a farm bill but it has plenty of time to micromanage nutrition and health.  Buried in the pork-filled Consolidated Appropriations Act of 2014 (see Monday’s post) are some zingers.  Here’s one:

This refers to the ill-fated IWG report I’ve discussed previously. To recap:

• Congress asked the FTC to examine the effects of food marketing to children and make recommendations.
• The FTC, USDA, FDA, and CDC got together and produced a report recommending voluntary guidelines for marketing to children based on the nutritional quality of the foods.
• I thought the guidelines were weak in addition to being voluntary (they allowed lots of junk foods to qualify).
• The food industry disagreed, strongly, and went to Congress to object.
• Congress caved in to industry pressure and said the report could not be released unless the FTC produced a cost-benefit analysis.
• End of story.
• Why Congress feels that it’s necessary to do this again is beyond me.

I suppose we should be glad our legislators are at least doing something.

As for the food industry’s role in all this: when food companies say they are doing everything they can to reduce marketing junk foods to kids, you now know what they really mean.

The Federal Trade Commission (FTC) just ruled that POM Wonderful’s claims for the health benefits of its pomegranate juices and products are indeed deceptive.

The FTC also said POM cannot claim that its products do anything special for heart disease, prostate cancer, and erectile dysfunction—unless it produces convincing evidence for these claims through two randomized, controlled clinical trials.

The dispute over POM’s health claims has gone on for more than two years.  The FTC says POM has not proved that drinking its juice will cheat death.

POM says it has spent $35 million on peer-reviewed research proving that the antioxidants in pomegranate products promote health.

Of course they do.  Antioxidants in all fruits and vegetables promote health.

Maybe POM should resort to the defense used by Coca-Cola against charges that Vitamin Water makes deceptive health claims.

As Stephen Colbert reports, Coca-Cola’s argues: “No consumer could reasonably be misled into thinking Vitaminwater was a healthy beverage.”

Once again: health claims are about marketing, not health.

Expect POM to take the FTC to court over this ruling.  Stay tuned.

Last Friday was a big day for releasing reports that federal agencies would rather keep quiet.  As I discussed in my previous post, the FDA released its long overdue environmental impact report on GM Salmon.

Today, let’s take a look at the FTC’s latest report on the state of food and beverage marketing aimed at children. This is a follow-up to the report the FTC issued in 2008.

The new report cites progress.  From 2006 to 2009, its press release says:

• Total spending on food marketing to youth ages 2-17 dropped from $2.1 billion to $1.79 billion, mainly because of less spending on television advertising.
• But spending on new media, such as online, mobile, and viral marketing, increased by 50 percent.
• Cross-promotions that link marketed foods with popular children’s movies and TV characters increased from 80 children’s movies and TV shows to 120.
• Cereals had 0.9 gram less sugar and 1.6 grams more whole grain.
• Fast food was a  little lower in calories, sodium, sugar, and saturated fat.

The report concludes:

Despite the commendable progress, this report identifies areas where further efforts could be made by the food and beverage industry and the media industry to improve the nutritional quality of foods marketed to youth.

Whether you see this as good news or not such good news depends on whether you see the glass as half full or half empty.

If you are a half-full type, you will rejoice that food companies are voluntarily improving the nutritional quality of their products even if the improvements are small.

If you are a half-empty type (which, in this case, I am), you will be dismayed at the lack of real progress in reducing the marketing of junk foods to kids.

Companies must sell more and more products to grow their businesses.  They are under pressure to reduce such marketing and to improve the quality of the products they sell.  Neither change is likely to increase sales.   Hence: resistance to change.

As Andy Bellatti points out, small nutritional improvements are unlikely to have much of an effect on health: reducing the sugars by 0.9 grams can be interpreted as “better for you” but does not necessarily make a product a good choice.

And as Michele Simon’s interview with former marketer Bruce Bradley suggests, the data on which the FTC based its positive assessments may well have been gamed by the companies reporting it.

As I read this report, it provides plenty of evidence that stopping food and beverage marketing to kids is the issue that matters most to doing something to reverse childhood obesity.

The election is over.    Maybe Let’s Move! can revisit the marketing-to-kids issue.  Someone needs to do it.  And soon.