FTC Moves to Compel Companies to Submit Information on Marketing of Foods to ChildrenMay 25, 2010
By John R. Fleder & Ricardo Carvajal –
The Federal Trade Commission ("FTC") has announced a second opportunity for public comment on its proposed issuance of compulsory process orders to 48 food and beverage firms. If those orders are issued, the FTC will demand information on marketing of food and beverages to children. The FTC is submitting its proposed information collection to the Office of Management and Budget ("OMB"), and is seeking public comment by June 24, 2010 on the proposal. The FTC will collect data on categories of foods involved and their corresponding nutrition information, types of media techniques used, marketing expenditures, targeting by race and ethnicity, and research on psychological factors that make food advertising appealing to youth. Among other objectives, these data will help the FTC “evaluate the impact of self-regulatory efforts on the nutritional profiles of foods marketed to children and adolescents.”
The FTC states that it will issue information demands to those companies whose "marketing and selling the categories of food and beverage products that appear to be advertised to children and adolescents most frequently." Because a number of the recipients of the proposed orders are members of the Council of Better Business Bureaus Children’s Food and Beverage Advertising Initiative, the FTC believes that its current study “will account for significantly more than three-fourths of advertising expenditures directed toward children and adolescents.” Included among the recipients are “several fruit and vegetable producers, distributors and marketers.” The FTC estimates that each company that receives a demand for information from the FTC will be obligated to spend (on average) approximately 600 hours to comply with the FTC's demands.
Of the 48 firms that will receive the proposed orders, 40 received similar orders issued in 2007. The FTC used the responses to those orders to prepare its 2008 report to Congress entitled Marketing Food to Children and Adolescents: A Review of Industry Expenditures, Activities, and Self-Regulation, which made a number of recommendations to food and beverage marketers. The FTC can be expected to use the responses to the proposed orders to assess whether marketers acted on the recommendations made in the 2008 report.
The FTC's Federal Register notice of May 25, 2010 states that potential recipients of the proposed compulsory process orders must retain potentially responsive documents and information. This position seems somewhat bizarre because it is quite unclear which companies will receive the orders. Nevertheless, the FTC is taking the position that potential recipients of the proposed orders should retain potentially responsive information, lest they face potential criminal prosecution, according to the FTC. Although the FTC anticipates that the collected information will become publicly available only in an anonymous or aggregated form, potential recipients should assume that responsive information could nevertheless be disclosed by the FTC (without the company's consent) in a variety of contexts, such as to Congress in response to an official request.
As we have noted in prior postings (here and here), the FTC has repeatedly indicated that it is especially concerned about food advertising directed to children. The data collected by the FTC in response to the proposed orders can be expected to inform the agency’s decision on what types of additional actions are appropriate to address this issue.
The deadline for submission of comments is June 24, 2010.