ANALYSIS OF PROPOSED CONSENT ORDER

TO AID PUBLIC COMMENT

The Federal Trade Commission has accepted an agreement to a proposed consent order from R.J. Reynolds Tobacco Company ("Reynolds").

The proposed consent order has been placed on the public record for sixty (60) days for receipt of comments by interested persons. Comments received during this period will become part of the public record. After sixty (60) days, the Commission will again review the agreement and the comments received, and will decide whether it should withdraw from the agreement or make final the agreement's proposed order.

This matter involves an alleged deceptive representation for Winston cigarettes, that Reynolds has advertised do not contain additives. According to the FTC complaint, through these advertisements, Reynolds represented that smoking Winston cigarettes, because they contain no additives, is less hazardous to a smoker's health than smoking otherwise comparable cigarettes that contain additives. The complaint alleges that Reynolds did not have a reasonable basis for the representation at the time it was made. Among other reasons, according to the complaint, the smoke from Winston cigarettes, like the smoke from all cigarettes, contains numerous carcinogens and toxins.

The proposed consent order contains provisions designed to prevent Reynolds from engaging in similar acts and practices in the future.

Part I of the order requires Reynolds to include the following clear and prominent disclosure in certain advertising for its Winston cigarettes: No additives in our tobacco does NOT mean a safer cigarette. (The order requires a similar disclosure in advertising for other tobacco products Reynolds advertises as having no additives.) The disclosure must be included in all advertising for Winston no-additive cigarettes, regardless of whether that advertising contains a "no additives" claim, for a period of one year beginning no later than July 15, 1999. The disclosure must be included in all Winston advertising that represents (through such phrases as "no additives" or "100% tobacco") that the product has no additives, for the duration of the order. This Part also contains certain exemptions from the disclosure requirement:

• advertisements not required to bear the Surgeon General's health warning;

• certain ads for bona fide events or teams sponsored by Winston which contain neither a "no additives" claim nor any other selling message or product description; and

• if Reynolds possesses scientific evidence demonstrating that its "no additives" cigarette poses materially lower health risks than other cigarettes of the same type.

Part I also specifies the manner in which the disclosure must be made, which is exemplified by two model advertisements attached to the order. In general, the disclosure must be within a rectangular box that is no less than 40% of the size of the box containing the Surgeon General's warning.

Part II of the order requires Reynolds to instruct each of its sales representatives to remove or sticker, with the applicable disclosure, any advertisement displayed in a retail establishment representing that Winston cigarettes have no additives. All such actions must be completed by July 15, 1999.

Part III-VII of the order require Reynolds to keep copies of relevant advertisements and materials substantiating claims made in the advertisements; to provide copies of the order to certain of its personnel; to notify the Commission of changes in the composition or formula of Winston cigarettes that may affect the order; to notify the Commission of changes in corporate structure; and to file compliance reports with the Commission. Part VIII provides that the order will terminate after twenty (20) years under certain circumstances.

The purpose of this analysis is to facilitate public comment on the proposed order, and it is not intended to constitute an official interpretation of the agreement and proposed order or to modify in any way their terms.