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FTC INFANT FORMULA SUIT CHARGING ABBOTT WITH RESTRICTING CONSUMER ADVERTISING

This article was originally published in The Tan Sheet

Executive Summary

FTC INFANT FORMULA SUIT CHARGING ABBOTT WITH RESTRICTING CONSUMER ADVERTISING has been settled and a consent agreement will be published "shortly" in the Federal Register, the Federal Trade Commission said in an Oct. 28 press release. FTC had announced a preliminary agreement with Abbott to settle the suit in September ("The Tan Sheet" Sept. 20, In Brief). In June 1992, FTC had filed the anti-trust lawsuit charging Abbott with colluding with other infant formula manufacturers to prevent consumer advertising of infant formula products. A related lawsuit charging Abbott with bid-rigging for the federal Special Supplemental Food Program for Women, Infants and Children (WIC) is scheduled to go to trial in February 1994. The commission voted 5-0 in support of announcing the Abbott advertising settlement for public comment. Following Federal Register publication, the consent agreement will be subject to a 60-day public comment period. The settlement is a cease and desist order, FIC explained, and does not require Abbott to provide any financial retribution. Nestle filed suit in California in May alleging that Abbott and Bristol-Myers Squibb's Mead Johnson subsidiary conspired with the American Academy of Pediatrics "to eliminate direct advertising to consumers of infant formula and to implement a code of marketing practices . . . in order to prohibit infant formula companies, including Nestle, from engaging in consumer advertising" ("The Tan Sheet" June 14, In Brief). The aim of the conspiracy, the suit charges, was to "foreclose or limit Nestle's entry into the infant formula market in the U.S." Nestle also specifically charged Abbott with attempting to monopolize the U.S. infant formula market. That suit is currently pending in Los Angeles federal court. Under the FTC settlement, Abbott has agreed not to "work with competitors to restrict mass media advertising of infant formula directly to consumers," FTC said. The settlement also would prohibit Abbott from "soliciting its competitors to adopt or adhere to restrictions against consumer advertising . . . except to the extent that they prohibit false or deceptive advertising," FTC reported. FTC said the agreement also would prohibit Abbott from: "intentionally exchanging" information relating to mass media advertising with other infant formula manufacturers; arranging with another infant formula manufacturer to "refrain from or restrict legal marketing practices" including asking third parties to request a "competitor of Abbott Labs to refrain from or restrict legal marketing practices"; and "soliciting competitors to adopt or adhere to any provision restricting consumer mass media advertising." The proposed consent agreement does not restrict Abbott's right to lobby governmental bodies; exchange technical, scientific or safety information; or license proprietary information or technology, FTC added. The settlement also contains various provisions designed to assist the FTC in monitoring the firm's compliance, the commission said. American Home Products and Mead Johnson also were named in the June 1992 complaints filed by the FTC; however, both companies agreed to settle under consent decrees. As part of this agreement, the companies concurred to settle related charges by providing 3.6 mil. pounds of infant formula at no cost to the WIC program.
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