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already provide it, to mean that the dairy product and the oleo cannot be so mingled together in their presentation to the public for sale that oleomargarine could be consumed by any customer as being a dairy product?

Mr. GRIGGS. Yes, sir, that is right.

Senator HOLLAND. Likewise, as to the coconut ice cream, you are not questioning its healthful quality—you just do not want it to be sold as a dairy product at all? . . · Mr. GRIGGS. That is right.

Senator HOLLAND. I think that these suggestions are good. I hope that the counsel for the committee will place in the record at this point an opinion as to the adequacy of the present provisions of the law going beyond mere labeling to effect the two purposes which he has in mind. (The information to be supplied is as follows:) DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE,

FOOD AND DRUG ADMINISTRATION,

. Washington 25, D. C., December 14, 1955. Mr. HARKER T. STANTON, Counsel, Committee on Agriculture and Forestry,

United States Senate. DEAR MR. STANTON : In response to your letter of December 7, we are pleased to supply the information requested by Senator Holland concerning the adequacy of present laws to prevent oleomargarine and ice cream made with coconut oil from being passed off as dairy products.

Oleomargarine : Section 407, enacted in 1950 as an amendment to the Federal Food, Drug, and Cosmetic Act, sets forth specific requirements for the marketing of colored oleomargarine both in package form and as served in public eating places.

We believe that the requirements of this section of the statute are adequate to result in consumers being informed that the colored oleomargarine offered in either of these ways is not a dairy product. The labeling of packages of uncolored oleomargarine is dealt with under the general provisions of the Federal Food, Drug, and Cosmetic Act and the standard of identity for oleomargarine as promulgated thereunder. These requirements call for clear-cut labeling of the article as “Oleomargarine” or “Margarine.”

We do not believe that the terms of this law will prevent the retail sale of packages of colored margarine, which themselves are properly labeled, from display cases containing dairy products. No doubt, however, the Federal Trade Commission will comment on this point in the light of the amendment to section 15 of the Federal Trade Commission Act which was enacted with section 407 of the Federal Food, Drug, and Cosmetic Act in 1950 (Public Law 459, 81st Cong.).

Ice cream: No formal standard of identity for ice cream has yet been established under the terms of the Federal Food, Drug, and Cosmetic Act, although such a standard is currently under consideration following a public hearing which was held some time ago to take testimony on which to base such a standard. This testimony clearly confirmed the position which has been held here for many years that ice cream is a dairy product and not one made with coconut oil or other nonmilk fats. For many years we advised inquirers that we regarded a product simulating ice cream, but made with fats other than milk fat, to be an article illegal for shipment in interstate commerce on the grounds that ice cream was well recognized as a dairy product and that the substitution of vegetable fats for milk fat in that article would constitute adulteration under section 402 (b) of the Federal Food, Drug, and Cosmetic Act. See the policy statement of April 13, 1950.

Subsequently, as a result of the Supreme Court decision in the so-called imitation Jam case, we concluded that we would no longer be able to maintain that position with or without a formal standard under the act. At that time we encountered an interstate shipment of a product made in imitation or semblance of ice cream and proceeded agains this on the grounds that it was an imitation ice cream and failed to be so labeled as called for by section 403 (c) of the act.

This action was contested by the owner of the goods and the Federal District Court for the Northern District of New York upheld the Government's allegations. To clarify the matter, we then issued the statement of policy as attached in the Federal Register of April 22, 1955.

Methods of analysis are available to detect the presence of any significant amount of coconut oil in a product which simulates ice cream and the policy of requiring the Imitation Ice Cream legend is believed to be satisfactory to inform prospective purchasers of the nature of the coconut oil product where the article is sold in consumer-sized packages, properly labeled. We can, however, visualize difficulties where the vegetable fat product is sold in bulk packages for resale at soda fountains, since this would offer substantial opportunity for misrepresentation of the article as "true" ice cream.

The Federal Filled Milk Act, which we enforce, prohibits interstate and foreign commerce in most mixtures of dairy products with fats other than milk fat, which are in imitation or semblance of milk or cream. This law, however, does not cover products which are in imitation or semblance of ice cream.

We hope this supplies the information desired, but if you need further details, do not hesitate to let us know. Sincerely yours,

GEO. P. LARRICK,

Commissioner of Food and Drugs. [Published in Federal Register April 22, 1955; 20 F. R. 2687]

TITLE 21—FOOD AND DRUGS CHAPTER 1-FOOD AND DRUG ADMINISTRATION, DEPARTMENT OF HEALTH,

EDUCATION, AND WELFARE PART 3-STATEMENTS OF GENERAL POLICY OR INTERPRETATION Use of Vegetable Fat in Products Which Are Imitations of Ice Cream Under the authority vested in the Secretary of Health, Education, and Welfare by the provisions of the Federal Food, Drug, and Cosmetic Act (sec. 701, 52 Stat. 1055; 21 U. S. C. 371) and delegated to the Commissioner of Food and Drugs by the Secretary (20 F. R. 1996), and pursuant to the provisions of the Administrative Procedure Act (sec. 3, 60 Stat. 237, 238; 5 U. S. C. 1002), the statement of interpretation contained in g 3.18 Use of vegetable fat in ice cream, published in the FEDERAL REGISTER April 13, 1950 (15 F. R. 2082) is hereby revoked, and the following statement of interpretation is hereby issued :

8 3.39 Use of vegetable fat in products which are imitations of ice cream. There is currently being marketed in interstate commerce a frozen product made in semblance of ice cream, but containing vegetable fats in complete or partial substitution for milk fat. In some cases the product is marketed under a fanciful designation. Such a product is now regarded as an imitation of ice cream, and thus amenable to the provision of the Federal Food, Drug, and Cosmetic Act requiring the label to bear the name "Imitation Ice Cream," with all these words in type of uniform size and prominence, regardless of whether a fanciful designation is used. (Sec. 701, 52 Stat. 1055 ; 21 U. S. C. 371. Interprets or applies secs. 402, 403; 52 Stat. 1047 ; 21 U. S. C. 342, 343 Dated: April 18, 1955.

GEO. P. LARRICK,

Commissioner of Food and Drugs. [F. R. Doc. 55–3298; Filed, Apr. 21, 1955; 8:47 a. m.]

[Published in Federal Register April 13, 1950; 15 F. R. 2082]

TITLE 21—FOOD AND DRUGS CHAPTER 1-FOOD AND DRUG ADMINISTRATION, FEDERAL SECURITY AGENCY PART 3-STATEMENTS OF GENERAL POLICY OR INTERPRETATION

Use of Vegetable Fat in Ice Cream Pursuant to section 3 of the Administrative Procedure Act (60 Stat. 237, 238, 5 U. S. C. 1002), the following statement of interpretation is issued :

8 3.18 Use of vegetable fat in ice cream. The Federal Security Agency has received a number of inquiries regarding proposals to market in interstate commerce a frozen product made in semblance of ice cream, but containing vegetable fats in complete or partial substitution for milk fat. It has been stated that the product is being currently manufactured in several States for distribution wholly within the borders of the State in which it is made.

This Agency regards products of this type, in which any vegetable fat is used as an ingredient, as adulterated within the meaning of the Federal Food, Drug, and Cosmetic Act, and therefore subject to action under the law. (Sec. 701, 52 Stat. 1055 ; 21 U. S. C. 371. Interprets or applies Sec. 402, 52 Stat. 1046 ; 21 U. S. Č. 342)

Dated: April 6, 1950.

OSCAB R. EWING, Administrator. (F. R. Doc. 50–3123; Filed, Apr. 12, 1950; 8: 47 a. m.]

FEDERAL TRADE COMMISSION,

Washington 25, December 16, 1955. HARKER T. STANTON, Esq., Counsel, Committee on Agriculture and Forestry,

United States Senate, Washington, D. C. DEAR MR. STANTON: In your letter of December 9, 1955, you asked to be advised whether present laws are adequate to prevent oleomargarine and ice cream made with coconut oil from being sold as a dairy product. I am giving you herewith a statement concerning the jurisdiction this agency has under existing law with respect to the question presented.

Section 5 (a) (1) of the Federal Trade Commission Act (66 Stat. 632; 15 U. S. C. 45 (a) (1) declares that “Unfair methods of competition in commerce, and unfair or deceptive acts or practices in commerce" are unlawful.

Section 5 (a) (6) of the act (66 Stat. 633; 15 U. S. C. 45 (a) (6) empowers and directs the Commission to prevent anyone from using unfair methods of competition in commerce and unfair or deceptive acts or practices in commerce.

Section 5 (b) of the act (52 Stat. 113; 15 U. S. C. 45 (b)) provides that if the Commission has reason to believe that any one “has been or is using any unfair method of competition or unfair or deceptive act or practice in commerce, and if it shall appear to the Commission that a proceeding by it in respect thereof would be to the interest of the public, * * *" the Commission shall issue its complaint.

Section 12 (a) of the act (52 Stat. 114-115 ; 15 U. S. C. 52 (a)) makes it unlawful for anyone “to disseminate, or cause to be disseminated, any false advertisement (1) by United States mails, or in commerce by any means for the purpose of inducing, or which is likely to induce, directly or indirectly the purchase of food, drugs, devices, or cosmetics; or (2) by any means for the purpose of inducing, or which is likely to induce, directly or indirectly, the purchase in commerce of food, drugs, devices, or cosmetics." Section (12) (b) then declares that “The dissemination or the causing to be disseminated of any false advertisement within the provision of subsection (a) of this section shall be an unfair or deceptive act or practice in commerce within the meaning of section 5" of the Federal Trade Commission Act.

Section 15 (a) (1) of the act (52 Stat. 116; 15 U. S. C. 55 (a) '(1)) provides that for the purpose of section 12 “the term 'false advertisement' means an advertisement, other than labeling, which is misleading in a material respect; and in determining whether any advertisement is misleading, there shall be taken into account (among other things) not only representations made or suggested by statement, word, design, device, sound, or any combination thereof, but also the extent to which the advertisement fails to reveal facts material in the light of such representations or material with respect to consequences which may result from the use of the commodity to which the advertisement relates under the conditions prescribed in said advertisement, or under such conditions as are customary or usual. * * *"

Under the provisions of the above sections of the Federal Trade Commission Act the Commission, in a proper case, is authorized to proceed against anyone subject to that act. If any person engaged in the manufacture of ice cream, using coconut oil instead of butter fat, disseminates or causes to be disseminated, any advertisement, which represents such product to be a dairy product, by the United States mails, or in commerce by any means, for the purpose of inducing, or which is likely to induce, directly or indirectly the purchase thereof, or disseminates or causes to be disseminated any such advertisement

by any means for the purpose of inducing, or which is likely to induce, directly or indirectly, the purchase in interstate commerce of such product, the Commission could proceed against such person by complaint. However, before the Commission could sustain an order to cease and desist it would be necessary to establish by evidence that such advertisements are false and had the tendency and capacity to mislead and deceive the public into the erroneous belief that the product is a dairy product and because of such erroneous and mistaken belief into the purchase thereof.

The Food and Drug Administration has held several hearings looking toward the establishment of standards of indentity for ice cream but up to the present time no such standard has been promulgated. Many States have adopted standards for ice cream and these vary in many ways. The Commission has no record of any complaints that anyone is or has been selling ice cream containing coconut oil and representing it as a dairy product.

When Congress passed the Oleomargarine Act, Public Law 459, 81st Congress, chapter 61, 2d session, H. R. 2023 (64 Stat. 20) it amended section 15 (a) of the Federal Trade Commission Act by adding thereto a new paragraph as subsection (a) (2). This amendment lifted from subsection (a) (1) of section 15 the requirement as to what should be taken into consideration to determine whether advertisements for oleomargarine were misleading. By this amendment Congress itself declared that "in the case of oleomargarine or margarine an advertisement shall be deemed misleading in a material respect if in such advertisement representations are made or suggested by statement, word, grade designation, design, device, symbol, sound or any combination thereof, that such oleomarga. rine or margarine is a dairy product, except that nothing contained herein shall prevent a truthful, accurate, and full statement in any such advertisement of all the ingredients contained in such oleomargarine or margarine."

Since the enactment of the above amendment to section 15 of the Federal Trade Commission Act the Commission has issued eight complaints charging a violation of this section. Under the provisions of this section the Commission has interpreted the language to mean that all that is necessary to be alleged and proved is that an oleomargarine or margarine advertisement represents or suggests that the oleomargarine or margarine is a dairy product. Two of the complaints resulted in orders to cease and desist against the respondents and both appealed. One appeal is now pending in the United States Court of Appeals for the Second Circuit and the other is pending in the United States Court of Appeals for the Third Circuit. One of the complaints was closed without prejudice. In another complaint an agreement was entered into which enabled the Commission to issue a consent order. Three of the complaints are now in various stages of administrative procedure before the Federal Trade Commission.

To sum up very briefly, the difference as the law now stands is that in proceeding against anyone selling ice cream made with cocoanut oil and representing it to be a dairy product, the Commission must allege and prove that the advertisements complained of are false and misleading and because of that have the tendency and capacity to induce the purchase of their product under the belief that it is a dairy product. In the case of oleomargarine or margarine the only thing the Commission has to allege and prove is that such advertisements represent or suggest that such product is a dairy product.

As requested, the transcript of testimony which accompanied your letter is returned herewith. Very truly yours,

ROBERT M. PARRISH,

Secretary.

STAFF NOTE It should be noted that the provisions of the Federal Trade Commission Act are applicable only to transactions in interstate commerce. While there are no decisions under section 12 in this respect, it appears probable, therefore, that retailers displaying oleomargarine in show cases labeled "dairy products" would not be subject to the Federal Trade Commission Act. Ward Baking Coinpany v. Federal Trade Commission (264 F. 330); Wagner v. City of Covington (251 U. S. 95); Memphis Steam Laundry v. Stone (342 U. S. 389), except possibly in special fact situations. Ford Motor Company v. Federal Trade Commission (120 F. 2d 175). However, since the margarine is required to be clearly labeled as such under section 407 of the Federal Food, Drug, and Cosmetic Act, there seems little possibility that purchasers might be deceived.

The CHAIRMAN. I was just talking to Senator Aiken a minute about the matter of getting on the statute books laws to tell what it is, that that matter would not come before our committee. That is a matter of the Department of Justice and the Judiciary Committee would probably cover that I am going to furnish to the Department of Justice, as well as to the Judiciary Committee, the problem.

If you have any specific cases, we should like to have them. You do not have to send them in today, but if you have any to offer, in which there has been a violation, either through advertising or labeling, anything like that, I wish you would make a note of that and give it to us. That applies not only to you, but to the other witnesses. We should like to have that, so as to point up what the problem is, and that we might work out some solution. I think it is wrong for anybody to label any commodity being a dairy product when it might be cocoanut oil from the Philippine Islands or somewhere else. We do not believe in that. It ought to be sold for what it is.

We have laws on the statute books to provide for that, and as to whether it covers the situation that you are complaining of we will look into.

Thank you.
Are there any further questions?

Senator HOLLAND. While you were chatting with Senator Aiken I made the request that counsel be requested to file in the record at this point a statement as to the adequacy of the present law, to go beyond the mere requirement of labeling, and to meet the two situations which have been mentioned by this witness. I hope that request may be in order.

The CHAIRMAN. Mr. Stanton will do that for us. (The prepared statement of Mr. Griggs is as follows:) Mr. name is L. E. Griggs. I am a dairy farmer from Morrisville, Vt., producing milk for the Boston market. I am president of Northern Farms Cooperative, Inc., with a membership of approximately 2,000 milk producers located in 10 counties of Vermont and 3 counties in New Hampshire. We work jointly with the Maine Dairymen's Association in representing the interest of producers in northern New England delivering milk to proprietary handlers who supply Boston and secondary markets in southern New England.

There is one phase of our dairy problem that I would like to present for the consideration of this committee that of honest labeling, advertising, and merchandising of substitutes for dairy products. In order to facilitate the hearing, I am limiting myself to this one subject.

Competition between dairy products and their substitutes in interstate commerce falls within the scope of the jurisdiction of the Federal Trade Commission to prevent unfair methods of competition and unfair or deceptive acts or practices. Section 5 (a) of the Federal Trade Commission Act states: “Unfair methods of competition in commerce, and unfair or deceptive acts or practices in commerce, are hereby declared unlawful.” Thus we can see that misrepresentation of oleomargarine as butter; or vegetable fat, frozen dessert as ice cream; or other imitations as specific dairy products are prohibited by this section and in the past the Federal Trade Commission has proceeded against labeling and advertising practices which were deceptive in confusing the substitutes with the real dairy products.

It appears that the Federal Trade Commission has taken a firm stand in opposition to the use of dairy terms by oleomargarine manufacturers. In a recent complaint against Armour & Co. it objected strenuously to the use of the words "churn" or "freshly churned” on the package and in its advertising of oleomargarine. The Federal Trade Commission bases its action on the fact that the act of 1950 prohibits any representation or suggestion that oleomargarine is a dairy product by statement, word, device, or sound. Armour maintains that it actually does use a churn as a part of its equipment in the manufacturing operation. The use of the words "churned" or "fresh churned” on the oleo

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