Antitrust Law Daily Wrap Up, ADVERTISING NEWS: FTC targets deceptive environmental marketing claims, (Oct 29, 2013)

By Tobias J. Gillett, J.D., LL.M.

The FTC has brought six enforcement actions against companies that allegedly made false and misleading environmental claims in their marketing, the agency announced today. The FTC’s actions seek to ensure compliance with the Green Guides, its guidance intended to help businesses make environmental claims that do not violate Section 5 of the FTC Act.

In its administrative complaint against Ohio-based ECM Biofilms, Inc., the FTC alleges that the company advertised its plastics additive, marketed under the name MasterBatch Pellets, as making plastic products biodegradable (In the Matter of ECM BioFilms, Inc., FTC File No. 122 3118). ECM made these claims in advertising materials that included a website, fliers, and brochures. The FTC alleges that scientific tests relied on by ECM did not show that ECM Plastics would completely decompose in a reasonably short period of time or in ECM’s stated timeframes of nine months to five years, and did not replicate the physical conditions of either landfills, where most trash is disposed, or other disposal facilities stated in ECM’s claims.

The complaint asserts that ECM violated the FTC Act by misrepresenting that (1) plastics made with ECM’s additives are biodegradable and will completely break down within a reasonably short period of time after customary disposal; (2) ECM plastics are biodegradable in a landfill; (3) ECM plastics are biodegradable in a stated qualified timeframe; and (4) that various scientific tests prove ECM’s biodegradability claims. Finally, the complaint charges ECM with providing its customers and independent distributors with promotional materials that permitted them to deceive consumers. The FTC’s case against ECM is scheduled to be heard before an administrative judge on June 18, 2014.

The FTC’s administrative complaint against former ECM customer American Plastic Manufacturing, Inc. (APM), a Washington manufacturer of plastic shopping bags, alleges that the company advertised its bags as biodegradable and sold them to distributors nationwide (In the Matter of American Plastic Manufacturing, Inc., FTC File No. 122 3291). APM based these claims on its use of EPM’s additives. A proposed consent order would bar APM for 20 years from representing that a product is biodegradable, unless (1) “the entire item will completely decompose into elements found in nature within one year after customary disposal; or (2) the representation is clearly qualified by (1) either “the time to complete decomposition into elements found in nature” or “the rate and extent of decomposition into elements found in nature,” and (2) if the product will not decompose in a customary disposal facility or by a customary method of disposal, both “the type of non-customary disposal facility or method” and “the availability of such disposal facility or method to consumers where the product or package is marketed or sold.” The order would also prohibit APM from making any claim that a product offers an environmental benefit unless the claim is true and supported by competent and reliable evidence.

The FTC’s administrative complaint against former ECM customer MacNeill Engineering Company, doing business as CHAMP, a Massachusetts manufacturer of plastic golf tees, alleges that the company advertised on its website that its tees were biodegradable due to its use of ECM’s additives (In the Matter of MacNeill Engineering Company, FTC File No. 122 3292). A proposed consent order would impose substantively the same conditions on MacNeill as on APM.

The FTC’s administrative complaint against Clear Choice Housewares, Inc., a Massachusetts manufacturer of FarberwareEcoFresh reusable plastic food storage containers, alleges that the company advertised its containers as biodegradable due to its use of an additive manufactured by Bio-Tec Environmental (In the Matter of Clear Choice Housewares, Inc., FTC File No. 122 3288). A proposed consent order would impose substantively the same conditions on Clear Choice as on APM and MacNeill.

The FTC’s administrative complaint against Carnie Cap, Inc., an Illinois manufacturer of plastic rebar cap covers, alleges that the company advertised its cap covers as “100% biodegradable” due to the use of Eco-One, an additive produced by Ecologic (In the Matter of Carnie Cap, Inc., FTC File No. 122 3290). A proposed consent order would impose substantively the same conditions on Carnie Cap as on Clear Choice, APM, and MacNeill.

The FTC notes that the consent orders in all cases make clear that companies must have evidence that the entire plastic product will completely decompose into elements found in nature within one year after customary disposal (defined as disposal in a landfill, incinerator, or recycling facility) before making any unqualified biodegradable claim. For qualified claims, the companies must state the time required for compete biodegradation in a landfill or the time to degrade in a disposal environment near where consumers who buy the product live. Alternatively, the companies may state the rate and extent of degradation in a landfill or other disposal facility accompanied by an additional disclosure that the stated rate and extent do not mean that the product will continue to decompose. The proposed consent orders also make clear that ASTM D5511 (a test standard commonly used in the additive industry) cannot substantiate unqualified biodegradable claims or claims beyond the results and parameters of the test, and that any testing protocol used to substantiate degradable claims must simulate the conditions found in the stated disposal environment.

Finally, the FTC’s complaint against AJM Packaging Corp., filed on September 30 in the federal district court in Washington, D.C., alleges that the company violated a July 19, 1994 Commission consent order barring it from representing that its products are degradable, biodegradable, or photodegradable unless it had competent and reliable scientific evidence to support those claims (FTC v. AJM Packaging Corp., FTC Docket No. C-3508, Case No. 1:13-cv-1510). AJM, a Michigan manufacturer of paper products such as plates, cups, bowls, napkins, and bags, allegedly began claiming that its products were “biodegradable,” “compostable,” and/or “recyclable” without competent and reliable evidence to support those claims. A stipulated order filed on October 1 would vacate the previous consent order and impose new conditions reflecting updates to the Green Guides. The order would bar AJM from making unsubstantiated claims that a product is biodegradable, compostable, recyclable, or offers an environmental benefit, and require AJM to disclose information necessary to qualify certain claims in order to avoid consumer deception. The order also requires AJM to pay a $450,000 civil penalty for violating the 1994 order, and enjoins the company from violating the new order.

The FTC will accept public comments on the APM, MacNeill, Clear Choice, and Carnie Cap consent agreements until November 29. Comments can be mailed to Federal Trade Commission, Office of the Secretary, Room H-11, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. Comments may also be filed on the APM matter here, on the MacNeill matter here, on the Clear Choice matter here, and on the Carnie Cap matter here.

Companies: ECM Biofilms, Inc.; American Plastic Manufacturing, Inc.; MacNeill Engineering Company, Inc.; Clear Choice Housewares, Inc.; Carnie Cap, Inc.; AJM Packaging Corp.

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