During a recent webinar, Jon Dubrow, Greg Heltzer, Lisa Rumin, and Ryan Tisch provided a comprehensive introduction to the new Hart-Scott-Rodino (HSR) rules and their impact on the US premerger notification filing process. The program concluded with a Q&A moderated by Reese Poncia and featuring Ty Carson, a former Federal Trade Commission Premerger Notification Office lawyer, who shared his insider’s perspective from six years with the agency.
In light of the Federal Trade Commission’s (FTC) 2023 revisions to its Endorsement Guides, it is essential to ensure that your business is compliant. While the alcohol industry is known for product innovation, the industry is also embracing innovation on the marketing and advertising front, most notably with the use of social media. Given the FTC’s recent announcements and enforcement actions, any business marketing their products via social media, influencers or endorsements, including alcohol advertisers, should be aware of basic requirements. Below are recommendations based on that guidance to help ensure your company keeps its social media activity compliant.
Total Wine & More (Total Wine) and the Federal Trade Commission (FTC) are currently clashing in federal court over a civil investigative demand (CID) that the FTC issued to Total Wine, a third party in the FTC’s investigation of Southern Glazer’s Wine & Spirits, LLC (Southern Glazer).
Total Wine has fervently resisted producing certain corporate documents and data in response to the FTC’s subpoena. It is rare that companies challenge the FTC’s authority to compel production and take such a strong stance against complying with agency CIDs for information. This dispute could have wide-ranging implications for third-party CID compliance, regardless of the industry. For companies operating in the alcohol industry and following the FTC’s investigation into Southern Glazer, the court’s decision could have a serious impact on the investigation as it will impact the breadth of documents and data to which the FTC will have access to for its case.
Under Section 20 of the FTC Act, 15 U.S.C. § 57b-1, the FTC is empowered to issue CIDs, a type of administrative subpoena, to require any person—including third parties—to produce documents or other information, file written reports or answers and give oral testimony relating to any FTC enforcement investigation. When third-party companies are issued CIDs, they usually negotiate the scope and comply, albeit reluctantly, with the requests, as refusing to comply typically is not advised. As part of the FTC’s investigation into Southern Glazer’s business practices and, specifically, whether the company has engaged in discriminatory practices in its sales to retailers in violation of the Robinson-Patman Act or engaged in other unfair competition practices in violation of Section 5 of the FTC Act, the agency issued a number of CIDs to third parties, as is customary. However, in a rare turn of events, a third party, Total Wine, and the FTC have ended up in a court battle over the subpoena.
After making limited productions, Total Wine filed an administrative petition with the FTC to limit the CID’s scope. This action is rarely taken by third parties, who often focus on negotiating the scope of the requests and limiting the burden of compliance to the extent possible, as opposed to challenging the CID itself. The FTC outright denied Total Wine’s petition, and in October, after four months of Total Wine’s resistance to comply fully, the FTC filed a petition seeking a federal court order to force Total Wine to comply with the CID.
In its petition to the court, the FTC alleged Total Wine “unilaterally narrowed the scope of the CID in a manner inconsistent with the CID’s specifications and refused to search any employee’s custodial files for responsive documents.” Although Total Wine has produced purchase-related transaction data to the FTC, it has persistently refused to produce information relating to email communications, business strategies and competitor assessments, and it has described the scope of the FTC’s demand as “truly alarming.” Despite FTC staff and Total Wine trying to work cooperatively together, the FTC has deemed Total Wine’s CID response severely [...]
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In this webinar, Alva Mather, Lesli Esposito, Rachel Gartner and Nichole Shustack teamed up to unpack how recent regulatory shifts will significantly affect alcohol companies and distributors. They discussed product innovation in the spirits industry, “zero-proof” beverage options and how companies are leveraging the benefits of artificial intelligence for advertising and marketing.
Top takeaways included:
In a recent webinar, Alva Mather, Jacob Hollinger, Carl Fleming and Parker Lee guided attendees through the unique energy-related challenges and opportunities for alcoholic beverages companies presented by current megatrends relating to environmental, social and governance (ESG), carbon and sustainability.
Some of the significant topics discussed included:
On February 9, 2022, the US Treasury Department (Treasury) released a report with recommendations for how the Tobacco Tax and Trade Bureau (TTB), Federal Trade Commission (FTC) and Department of Justice (DOJ) can help drive competition in the beer, wine and spirits markets by stepping up conduct enforcement, adopting creative and nuanced theories of harm in merger reviews and implementing new regulations to decrease the burden on smaller industry participants.
TREASURY REPORT SUMMARY
TREASURY’S KEY RECOMMENDATIONS
On March 18, 2019, the Washington Court of Appeals upheld a trial court’s decision that three advertising campaigns for 5-Hour Energy® made by Living Essentials, LLP and Innovative Ventures, LLP (collectively, Living Essentials) violated the Washington Consumer Protection Act (CPA) by making deceptive advertising claims.
Living Essentials makes and markets the energy drink 5-Hour Energy®. The three advertising claims at issue involve claims about the efficacy of the drink. Living Essentials claimed or implied that: (1) 5-Hour Energy® was “Superior to Coffee” (Superior to Coffee claim); (2) decaf 5-Hour Energy® was effective “for hours” (Decaf claim); and (3) 73 percent of doctors would recommend 5-Hour Energy® (Ask Your Doctor claim). The trial court found all three advertising claims in violation of the CPA. It also assessed a civil penalty against Living Essentials of $2,183,747 and awarded the State $1,886,866.71 in attorney fees and $209,125.92 in costs. The court of appeals affirmed.
Living Essentials argued on appeal that the trial court (1) erred by adopting the Federal Trade Commission’s (FTC) prior substantiation doctrine; (2) that the prior substantiation doctrine violates article I, section 5 of the Washington State Constitution and the First Amendment to the United States Constitution; (3) that Living Essentials’ claims were mere puffery which did not require substantiation; (4) the trial court applied the wrong standard for necessary substantiation; and (5) the trial court erred in concluding that Living Essentials’ Ask Your Doctor claim was deceptive. Living Essentials also challenged the trial court’s penalty and award of attorney fees. (more…)
Over the past few years, news headlines have been filled with reports of large data security breaches impacting major brand names and affecting millions of people. It seems like with each new day comes a new breach. The reports are alarming for businesses and consumers alike.
No industry is immune from the soaring increase in data security breaches—not even craft brewing. Many small businesses owners erroneously believe they are too small to attract a hacker or fall victim to a breach. Scotty’s Brewhouse, the Indiana-based brewery and restaurant chain, experienced a data breach in January 2017 when an employee emailed 4,000 employee W-2 tax forms to an unknown scammer posing as the brewery’s CEO. Continue Reading.
Originally published in the January/February 2018 issue of The New Brewer.
Arthur DeCelle wrote this bylined article describing how brewers can use product labels, point of sale (POS) advertising, social networks, and other media to tell customers about their environmental responsibility efforts. Such information “must be truthful and substantiated by evidence [and] must not be deceptive to reasonable consumers,” Mr. DeCelle wrote, urging brewers to “carefully consider the language you use and any potential for consumer deception [regarding] false or deceptive environmental claims.”
Originally published in New Brewer, March/April 2017.
On December 22, 2015, the Federal Trade Commission (FTC) published an “Enforcement Policy Statement on Deceptively Formatted Advertisements” (2015 Policy Statement) with unanimous support of the Commissioners.[i] The Policy Statement applies to advertising and promotion of all goods and services, and it supplements prior FTC guidance that advertisers have relied on since the 1960s.[ii] Given the FTC’s longstanding interest in alcohol beverage advertising by large and small suppliers, industry members should pay particular attention to the latest guidance on deception.
The 2015 Policy Statement focuses on so-called “native advertising” or “sponsored content,” which reasonable consumers may perceive to be “non-promotional content” such as news, articles, feature stories or educational information. The FTC provides an example of digital advertising content in a publication that is formatted in the same manner as the publication itself. The deception standard is summarized as follows:
Regardless of the medium in which an advertising or promotional message is disseminated, deception occurs when consumers acting reasonably under the circumstances are misled about its nature or source, and such misleading impression is likely to affect their decisions or conduct regarding the advertised product or the advertising.[iii]
Extensive guidance is provided for advertisers to avoid consumer deception in online and digital placements using fairly straightforward disclosures or other means of distinguishing ad content from the publication in which the ad content appears. Recent enforcement actions are also discussed. The key to compliance and avoiding FTC enforcement actions is to clearly inform consumers that they are viewing or reading advertising content.
The FTC has also prepared further specific guidance with discussions of issues arising in all forms of media and examples of recommended disclosures and formatting. Guidance supplementing the 2015 Policy Statement is titled, “Native Advertising: A Guide for Businesses.”[iv]
Over the last 15 years, several FTC special orders have been issued to beer, wine and spirits manufacturers requiring production of virtually all advertising content for a specified period (e.g., six months or a year). The FTC staff reviewed those materials thoroughly with a focus on (i) voluntary compliance with industry advertising codes and (ii) compliance with federal laws prohibiting deceptive and unfair advertising practices. The 2012 special orders issued to the top 14 beer, wine and spirits suppliers in the U.S. also requested privacy policies and terms and conditions of web sites and social media pages.[v]
Four detailed reports on alcohol beverage advertising have been issued since 1999 summarizing the FTC’s findings on alcohol beverage advertising. The 2014 report was one of the first widely publicized reviews of digital advertising practices by a consumer products industry.[vi]
[i] Full statement is available at https://www.ftc.gov/public-statements/2015/12/commission-enforcement-policy-statement-deceptively-formatted
[ii] See, e.g. Statement in Regard to Advertisements That Appear in Feature Article Format, FTC Release, (Nov. 28, 1967), 73 F.T.C. at 1307 and FTC Statement on Deception, 103 F.T.C. 174, 175 (1984) (appended to Cliffdale Assocs., Inc., 103 F.T.C. 110 (1984)) (“Deception Policy Statement”).
[iii] See, [...]
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