FTC Announces Settlements Requiring Disclosure of Cigar Health Risks

The seven largest U.S. cigar companies have agreed to include warnings about significant adverse health risks of cigar use in their advertising and packaging in a settlement announced today by Federal Trade Commission Chairman Robert Pitofsky at a joint press conference with Surgeon General David Satcher and California Attorney General Bill Lockyer. According to FTC allegations, the failure of cigar companies to disclose the health risks of cigar smoking has been deceptive and unfair, in violation of the FTC Act.

The landmark settlements represent the first national requirements for health warnings on cigar products, and follow a report by the National Cancer Institute detailing the health risks of cigar smoking. The Commission efforts were assisted by the Office of the Surgeon General of the United States and the California Attorney General's Office.

Chairman Pitofsky said: "Cigar smoking is considered by many consumers to be a harmless alternative to cigarette smoking. According to the Surgeon General and scientific evidence to the contrary, they are dead wrong. These settlements will help end that misperception and ensure that consumers receive clear and prominent warnings about the risk of indulging in cigars."

The agreements announced today build on the work of the state attorneys general, particularly that of the California Attorney General, and provide warnings of the serious health risks of cigar smoking to all consumers.

The seven companies, which comprise about 95 percent of the U.S. cigar market, are Swisher International, Inc., Consolidated Cigar Corporation, Havatampa, Inc., General Cigar Holdings, Inc., John Middleton, Inc., Lane Limited, Inc. and Swedish Match North America, Inc.

Under the agreements, which the Commission has accepted for public comment, virtually every cigar package and advertisement will be required to clearly and conspicuously display one of the following warnings on a rotating basis:

SURGEON GENERAL WARNING: Cigar Smoking Can Cause Cancers Of The Mouth And Throat, Even If You Do Not Inhale.

SURGEON GENERAL WARNING: Cigar Smoking Can Cause Lung Cancer And Heart Disease.

SURGEON GENERAL WARNING: Tobacco Use Increases The Risk Of Infertility, Stillbirth And Low Birth Weight.

SURGEON GENERAL WARNING: Cigars Are Not A Safe Alternative To Cigarettes.

SURGEON GENERAL WARNING: Tobacco Smoke Increases The Risk Of Lung Cancer And Heart Disease, Even In Nonsmokers.

The settlements set out specific format requirements that are designed to ensure that the warnings are visible and readable. Under the settlements, the warning statements must appear in black print on a solid white background. For advertising, the warning statements also must be centered in a black-ruled rectangular box. The orders also set out specific requirements for location and size of the warnings.

For cigar packages, the warnings must appear on the principal display panel in order to ensure that the warnings appears in the most noticeable location. For most cigar boxes, this will require that the warnings appear on the larger of the top or front panel of the package. The orders also set out requirements for the distribution and display of the warnings on cigar packages. For each cigar brand, the companies must display each of the five required warnings randomly and an equal number of times. These requirements will ensure that all consumers see each of the five warnings.

For cigar advertising, the orders specify how to calculate the size of the warning and where to place it on various types of advertising, including magazines and other periodicals, point-of-purchase displays, functional items such as clocks or other items in retail stores, catalogues, audio and video advertisements and utilitarian items. The orders also require that for most advertising, the warnings shall rotate every three months.

The consent orders require that the cigar companies submit to the Commission plans for the rotation and display of the warnings on cigar packages and advertisements, and to comply with the plans as approved. The orders also provide that in the event that the Federal Cigarette Labeling and Advertising Act, the Comprehensive Smokeless Tobacco Health Education Act, or the Commission's Smokeless Tobacco Regulations are amended or modified to change the size or formats for the cigarette or smokeless tobacco warnings, the cigar orders may be reopened to determine whether the size or formats of the cigar warnings should be modified to conform to such changes.

The orders are intended to create a uniform national system of rotating health warnings. Thus, the orders contain provisions narrowly preempting state laws requiring different health warnings on cigar products. Recognizing the important role that states play in consumer protection and tobacco control, this provision does not affect any other state or local requirements such as restrictions on advertisement placement or youth access to tobacco products.

The Commission vote to accept the consent agreements for public comment was 5-0. Announcements regarding the proposed consent agreements will be published in the Federal Register shortly. The agreements will be subject to public comment for 30 days (until July 26, 2000) after which the Commission will decide whether to make them final. Comments should be addressed to the FTC, Office of the Secretary, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580.

NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $11,000.

Copies of the complaints, proposed consent agreements and analyses of the proposed orders to aid public comment are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 877-FTC-HELP (877-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

(FTC File Nos.0023199-00023205)