Agency Information Collection Activities; Proposed Collection; Comment Request, 19505-19511 [E7-7375]

Agencies

• FEDERAL TRADE COMMISSION

[Federal Register Volume 72, Number 74 (Wednesday, April 18, 2007)]
[Notices]
[Pages 19505-19511]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-7375]


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FEDERAL TRADE COMMISSION


Agency Information Collection Activities; Proposed Collection; 
Comment Request

AGENCY: Federal Trade Commission (FTC or Commission).

ACTION: Notice.

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SUMMARY: The FTC is submitting the information collection requirements 
described below to the Office of Management and Budget (OMB) for 
review, as required by the Paperwork Reduction Act (PRA). The FTC is 
seeking public comments on proposed information requests to food and 
beverage companies and quick service restaurants. The FTC proposes to 
issue compulsory process orders to major food and beverage 
manufacturers, distributors, and marketers and quick service restaurant 
companies for information concerning, among other things, their 
marketing activities and expenditures targeted toward children and 
adolescents.

DATES: Comments must be filed on or before May 18, 2007.

ADDRESSES: Interested parties are invited to submit written comments. 
Comments should refer to the ``Food Industry Marketing to Children 
Report: Paperwork Comment; FTC File No. P064504'' to facilitate the 
organization of comments. A comment filed in paper form should include 
this reference both in the text and on the envelope, and should be 
mailed or delivered, with two complete copies, to the following 
address: Federal Trade Commission/Office of the Secretary, Room H-135 
(Annex J), 600 Pennsylvania Avenue, NW., Washington, DC 20580. Because 
paper mail in the Washington area and at the Commission is subject to 
delay, please consider submitting your comments in electronic form, as 
prescribed below. However, if the comment contains any material for 
which confidential treatment is requested, it must be filed in paper 
form, and the first page of the document

[[Page 19506]]

must be clearly labeled ``Confidential.''\1\ The FTC is requesting that 
any comment filed in paper form be sent by courier or overnight 
service, if possible.
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    \1\ Commission Rule 4.2(d), 16 CFR 4.2(d). The comment must be 
accompanied by an explicit request for confidential treatment, 
including the factual and legal basis for the request, and must 
identify the specific portions of the comment to be withheld from 
the public record. The request will be granted or denied by the 
Commission's General Counsel, consistent with applicable law and the 
public interest. See Commission Rule 4.9(c), 16 CFR 4.9(c).
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    Comments filed in electronic form should be submitted by using the 
following weblink: https://secure.commentworks.com/
foodmarketingpaperworkcomment (and following the instructions on the 
Web-based form). To ensure that the Commission considers an electronic 
comment, you must file it on the Web-based form at the weblink https://
secure.commentworks.com/foodmarketingpaperworkcomment. If this notice 
appears at https://www.regulations.gov, you may also file an electronic 
comment through that Web site. The Commission will consider all 
comments that regulations.gov forwards to it.
    Comments should also be submitted to: Office of Management and 
Budget, Attention: Desk Officer for the Federal Trade Commission. 
Comments should be submitted via facsimile to (202) 395-6974 because 
U.S. Postal Mail is subject to lengthy delays due to heightened 
security precautions.
    The Federal Trade Commission Act, 15 U.S.C. 42-58 (FTC Act), and 
other laws the Commission administers permit the collection of public 
comments to consider and use as appropriate. All timely and responsive 
public comments, whether filed in paper or electronic form, will be 
considered by the Commission, and will be available to the public on 
the FTC Web site, to the extent practicable, at www.ftc.gov. As a 
matter of discretion, the FTC makes every effort to remove home contact 
information for individuals from the public comments it receives before 
placing those comments on the FTC Web site. More information, including 
routine uses permitted by the Privacy Act, may be found in the FTC's 
privacy policy, at https://www.ftc.gov/ftc/privacy.htm.

FOR FURTHER INFORMATION CONTACT: Requests for additional information 
should be addressed to Carol Jennings, (202) 326-3010, or Sarah Botha, 
(202) 326-2036, Attorneys, Division of Advertising Practices, Bureau of 
Consumer Protection, Federal Trade Commission. The FTC staff contacts 
can be reached by mail at: Federal Trade Commission, 600 Pennsylvania 
Avenue, NW., NJ-3212, Washington, DC 20580.

SUPPLEMENTARY INFORMATION: On November 22, 2005, the President signed a 
bill appropriating funds for the Commission for FY 2006. Public Law No. 
109-108. The Conference Report (H.R. Rep. No. 109-272 (2005)) for this 
law incorporates by reference language from the Senate Report (S. Rep. 
No. 109-88 (2005)), instructing the FTC to prepare a report on food 
industry marketing activities and expenditures targeted to children and 
adolescents.\2\ To prepare the report, the Commission needs relevant 
information, including empirical data, on the nature and extent of 
marketing activities and expenditures targeted to children and 
adolescents.
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    \2\ The Senate Report requests that the FTC's report: Include an 
analysis of commercial advertising time on television, radio, and in 
print media; in-store marketing; direct payments for preferential 
shelf placement; events; promotions on packaging; all Internet 
activities; and product placements in television shows, movies, and 
video games.
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    On March 1, 2006, the FTC published a notice in the Federal 
Register requesting relevant information. 71 FR 10535. In response, the 
Commission received comments from five food industry associations, two 
public health advocacy organizations, a marketing trade organization, 
and one individual.\3\ In general, the comments suggested resources 
from which relevant information may be available and points to consider 
in developing the report. However, the comments presented minimal 
information, especially empirical data, on the nature and extent of 
marketing activities and expenditures targeted to children and 
adolescents. The Commission thus requires additional data and 
information in order to prepare the report.
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    \3\ The comments are available at https://www.ftc.gov/os/
comments/foodmarketingstudy/index.htm.
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    The FTC has the authority to compel production of these data and 
information from food and beverage manufacturers, distributors, and 
marketers and quick service restaurant companies (``industry members'') 
under Section 6(b) of the FTC Act, 15 U.S.C. 46(b). The Commission 
intends to send its information requests to the ultimate parents of 
these types of companies to assure that no relevant data from 
affiliated or subsidiary companies goes unreported. Because the number 
of separately incorporated companies affected by the Commission's 
requests will exceed nine entities, the Commission seeks OMB clearance 
under the PRA, 44 U.S.C. 3501-3520.
    Under the PRA, federal agencies must obtain approval from OMB for 
each collection of information they conduct or sponsor. As required by 
the PRA, the FTC published a Federal Register Notice on October 23, 
2006 seeking comments from the public concerning the proposed 
collection of information from food and beverage companies and quick 
service restaurants. See 71 FR 62109 (October 23 Notice). As discussed 
below, twenty-seven comments were received. Pursuant to the OMB 
regulations that implement the PRA (5 CFR part 1320), the FTC is 
providing this second opportunity for public comment while requesting 
that OMB grant the clearance for the proposed collection of 
information. All comments should be filed as prescribed in the 
ADDRESSES section above, and must be received on or before May 18, 
2007.

A. Public Comments

    The FTC received twenty-seven comments in response to the October 
23 Notice.\4\ Sixteen of the comments were filed by one organization, 
and did not specifically address the proposed data collection.\5\ Eight 
of the comments expressly favored the proposed data collection. These 
were submitted by: (1) the Public Health Institute (PHI) and, 
separately, the Public Health Law Program (PHLP) of the PHI; (2) 
members of the Children's Media Policy Coalition of the Georgetown 
University Law Center Institute for Public Representation (CMPC 
members); \6\ (3) Consumers Union; (4) the California Department of 
Health Services (CDHS); and (5) three individual consumers, including 
one nutrition educator. The remaining three comments did not oppose the 
data collection but made suggestions for enhancing the quality, 
utility, and clarity of the information to be collected and for 
reducing the burden on the companies. These came from the Mercatus 
Center at George Mason University, food and beverage industry member 
Burger King Corporation (BKC), and the Grocery Manufacturers

[[Page 19507]]

Association and Food Products Association (GMA/FPA).
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    \4\ The comments are available at https://www.ftc.gov/os/
comments/foodmktgtokids-pra/index.htm.
    \5\ The sixteen comments were filed by the Loyola of Los Angeles 
Law Review and consisted of sixteen articles published in the Law 
Review in conjunction with a symposium held at Loyola Law School on 
October 21, 2005 on ``Food Marketing to Children and the Law.'' See 
Comments by Loyola of Los Angeles Law Review (Nov. 16, 2006).
    \6\ Specifically, a comment was submitted by the following 
members of the Children's Media Policy Coalition: Action Coalition 
for Media Education, Benton Foundation, Children Now, National PTA, 
and the Office of Communication of the United Church of Christ, Inc.
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1. General Support for the Data Collection

    The Consumers Union comment stated that the proposed information 
collection is essential to the FTC fulfilling its consumer protection 
mandate and to enabling the FTC to provide key information for Congress 
and to meet the recommendation of the Institute of Medicine of the 
National Academies (IOM) to report on the status of food and beverage 
marketing to children. Consumers Union further noted that the 
information collection could provide a basis for sound policy-making in 
the area of food and beverage marketing to children and adolescents. 
The CDHS comment stated that the FTC's report, which will be based on 
information collected in response to the proposed Section 6(b) Orders, 
will guide the CDHS's own program planning, intervention and 
evaluation, and counter-advertising. CDHS stated that the report would 
also level the playing field among industry competitors by requiring 
all companies to disclose their marketing practices and, if necessary, 
would guide the development of state or federal regulatory and 
enforcement actions for food marketing to children.
    One individual consumer commented that the information collection 
process is essential to making any determinations about what government 
action may be needed in the area of food and beverage marketing to 
children.\7\ Another consumer similarly stated that the proposed 
Section 6(b) Orders are necessary for the government to take 
appropriate action in the debate regarding food marketing to 
children.\8\
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    \7\ See Comment by Fred Cantor (Nov. 30, 2006).
    \8\ See Comment by Sheila Fleischhacker (Dec. 27, 2006).
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2. Utility of the Information Collection

    In its October 23 Notice, the FTC stated that it would seek 
relevant information, including empirical data, on the nature and 
extent of marketing activities and expenditures targeted to children 
and adolescents. The FTC invited comments on whether the proposed 
collections of information are necessary for the proper performance of 
the functions of the FTC, including whether the information will have 
practical utility. The Mercatus Center commented that, given the recent 
action by the Children's Advertising Review Unit (CARU) to update its 
self-regulatory guidelines as well as the Better Business Bureau's 
(BBB) Children's Food and Beverage Advertising Initiative entered into 
by eleven major marketers of food and beverage products to children, 
the data requested in the proposed Section 6(b) Orders may be outdated. 
The Mercatus Center suggested that the FTC request copies of new 
marketing plans that would reflect any changes resulting from the 
recent CARU and BBB initiatives. The FTC agrees that any new corporate 
policies and initiatives will enable the agency to report on any 
planned changes in the food and beverage industry's practices in 
marketing to children, and will request copies of such policies and 
initiatives in the proposed Section 6(b) Orders. However, information 
on recent expenditures and activities will allow the agency to present 
a complete and relatively current picture of marketing expenditures and 
activities targeted to children as well as adolescents--which are not 
covered by the CARU and BBB initiatives, and will serve as a benchmark 
for any future measurements of food and beverage marketing to children 
and adolescents. As a result, the proposed information requests will 
also seek these data.
    Consumers Union strongly supported the FTC's proposal to request 
information on advertising expenditures and activities in both measured 
and unmeasured media. Consumers Union noted that use of unmeasured 
media is on the rise and that collection of these data will allow the 
FTC to provide a full picture of the marketing of food products to 
children and adolescents. The CDHS comment stated that the proposed 
information collection is necessary to determine the degree to which 
self-regulatory programs and other voluntary marketing restrictions are 
being implemented.
    The GMA/FPA stated that the need for data is limited when compared 
to the cost of obtaining and compiling it, and noted that food and 
beverage television advertising to children has substantially decreased 
over the last thirty years and is not likely a factor that contributes 
to increasing childhood obesity levels. BKC suggested that the FTC 
limit the scope and substance of the information requests and the 
report to focus on empirical data relating to advertising expenditures 
and practices. BKC noted that Congress has not asked the agency to 
study the link between advertising and obesity. The proposed Section 
6(b) Orders and the FTC's forthcoming report will address marketing 
activities and expenditures by the food and beverage industry that are 
targeted to children and adolescents; the Orders and report will not 
attempt to analyze any purported causal connection between advertising 
and obesity, as this subject is outside the scope of the report 
Congress requested. However, Congress expressly requested that the 
report address expenditures and activities in both measured and 
unmeasured media categories, and the FTC requires empirical data from 
industry members to do so.

3. Accuracy of Estimated Burden of the Information Collection

    In the October 23 Notice, the FTC invited comments on the accuracy 
of the agency's estimate of the burden of the proposed collection of 
information, including the validity of the methodology and assumptions 
used. The GMA/FPA stated that, while the aggregate costs of complying 
with the proposed data requests are difficult to predict, the FTC's 
estimate is likely too low, and some companies may not track marketing 
expenditures and activities in the categories and the format the agency 
will request. The GMA/FPA stated that the cost of hiring financial and 
legal assistants to prepare a response could alone equal $25,000 for 
smaller companies and $50,000 for larger companies. The GMA/FPA 
suggested that the burden on companies is likely to correlate more 
closely to the number of brands a company markets, than the number of 
food categories in which it markets products.
    The FTC cannot, however, determine in advance the number of brands 
for which each company will be required to provide data; this will 
depend on how the companies market their brands. Nor is it likely that 
each company will engage in an equal level of marketing for all brands. 
The FTC believes its ranges for estimated costs, which are separated 
into single-category and multiple-category company ranges, are 
sufficiently wide to account for differences in the number of 
individual brands the companies market in each category and in the 
amount of marketing the companies engage in for each brand.

4. Suggestions for Improvements to Proposed Information Collection

    The FTC invited comments in its October 23 Notice on ways to 
enhance the quality, utility, and clarity of the information to be 
collected. Many of the comments the FTC received offered suggestions 
for enhancing the FTC's proposed collection of marketing data.
    The PHI comments encouraged the collection of in-school marketing 
data, data on pricing strategies and consumer food purchases, and 
expenditures devoted to market research. PHI also recommended that the 
FTC seek information on the companies' product

[[Page 19508]]

portfolios and on any marketing resources devoted to developing, 
packaging, and promoting products that contribute to a healthy 
lifestyle. The Mercatus Center suggested that the FTC research and 
report on the new self-regulatory initiatives being undertaken by food 
and beverage industry members, including the revised CARU guidelines 
and the Children's Food and Beverage Advertising Initiative, as well as 
company-specific initiatives. Consumers Union urged the FTC to seek 
information on school-related marketing activities, request brand-
specific information from companies, and collect marketing data broken 
down by race and ethnicity.
    The CMPC members requested that the FTC include major child-
oriented media companies in the information requests, in order to 
determine the percentage of advertising run in their media that is 
directed to children and promotes food and beverage products or 
companies, the reach of such advertising, and the revenue from such 
advertising. The CMPC members also urged the FTC to seek information on 
all major and emerging types of food marketing directed at children and 
teens, including in-school marketing activities, character licensing, 
celebrity endorsements, Internet, cell phone and other technological 
advertising, and viral and word-of-mouth marketing. The CMPC members 
further requested that the FTC require companies to provide information 
about any market research involving children, advertising exposure 
data, and demographic data for target audiences.
    The GMA/FPA comments recommended that the FTC's information 
requests specify categories and terminology used in the ordinary course 
of business by manufacturers and advertisers, such as the Product 
Category Codes used by Nielsen Media Research. GMA/FPA also asked that 
the FTC not request data on in-store marketing activities, event 
marketing, character licensing, product packaging, or product 
placement, on the grounds that these types of marketing are not likely 
to be targeted to children and adolescents, and because expenditures 
and activities in these categories would be difficult to ascertain. 
GMA/FPA further requested that FTC limit the information requests to a 
discrete time period, such as a single fiscal year.
    BKC recommended that the FTC send information requests regarding: 
the types of food and beverage products marketed to children (defined 
as ``consumers under the age of 13''); the amount of commercial time 
dedicated to advertising to children on television and radio; the types 
of print media, in-store marketing, events, packaging promotions, 
Internet activities, and product placements used to advertise to 
children; and the expenditures for television, radio, and print media 
advertisements directed to children. The PHLP urged the FTC to make its 
reporting requirements similar to those used in the FTC's tobacco 
industry information requests.
    The CDHS encouraged the FTC to seek information on: All of the 
categories of data listed in the Senate Report; \9\ trends for 
unmeasured media promotion, such as product placement, character 
licensing, special events, in-school activities, advergames, and 
promotions using music, cell phones, and sport and entertainment 
venues; price promotions and price points; and promotional and 
educational strategies directed toward particular population segments 
based on income-level, race/ethnicity, or age. CDHS also recommended 
that the FTC collect data by specific name brands, including the 
nutrition or caloric level of the food being advertised for comparison 
purposes, and that the FTC request the marketing portfolios for healthy 
foods as compared to all foods marketed by the companies. Finally, CDHS 
suggested that the FTC collect any qualitative research data studying 
children and youth, as well as scanner or other sales data for food and 
beverage products marketed to children, including cross-promotions.
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    \9\ See note 2, supra.
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    One individual consumer asked that the Commission request data on 
celebrity endorsements, sweepstakes, product placements, and peer-to-
peer advertising, as well as data showing the placement times for 
television advertisements directed to children.\10\ Another consumer 
recommended that the FTC seek information on audience thresholds 
companies use to target particular age groups, and to request any 
market research the companies may have undertaken for particular 
advertising campaigns directed to children.\11\ A third consumer 
suggested that the FTC seek information on: The demographic data 
industry uses to target marketing to particular ethnic or age groups; 
product profiles, to enable the FTC to analyze the amount expended on 
the marketing of items of greater or lower nutritional value; the 
expertise of any nutrition or health professionals who work or consult 
on marketing activities and the expenditures related to the hiring of 
such professionals; quantitative and qualitative assessments of 
marketing practices that emphasize physical activity in comparison to 
dietary choices; criteria for any nutritional icons used; and money 
spent on lobbying Congress on the issue of food marketing to 
children.\12\
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    \10\ See Comment by Jill Pakulski (Oct. 30, 2006).
    \11\ See Comment by Fred Cantor (Nov. 30, 2006).
    \12\ See Comment by Sheila Fleischhacker (Dec. 27, 2006).
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    Many of the proposals for improving the data collection are 
incorporated into the proposed Section 6(b) Orders, whose scope is 
discussed in detail in Part B.1. of this notice. For example, the FTC 
intends to request the companies to provide information regarding any 
new policies or initiatives they have undertaken to improve the 
nutritional profiles of the foods they market to children, and any 
other steps taken in response to the recommendations contained in the 
April 2006 Report on a Joint Workshop of the Federal Trade Commission 
and the Department of Health and Human Services.\13\ In the main, 
however, the FTC believes that to produce a report that is 
comprehensive yet of manageable scope, the proposed Section 6(b) Orders 
should focus on the issues outlined in the Senate Report.
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    \13\ See Federal Trade Commission & Department of Health and 
Human Services, Perspectives on Marketing, Self-Regulation, & 
Childhood Obesity: A Report on a Joint Workshop of the Federal Trade 
Commission & the Department of Health and Human Services 48-54 (Apr. 
2006) (Joint Workshop Report), available at https://www.ftc.gov/os/
2006/05/PerspectivesOnMarketingSelf-
Regulation&ChildhoodObesityFTCandHHSReportonJointWorkshop.pdf.
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5. Suggestions for Minimizing the Burden of the Information Collection

    In the October 23 Notice, the FTC invited comments on ways to 
minimize the burden of the collection of information on those who are 
to respond, including through the use of appropriate automated, 
electronic, mechanical, or other technological collection techniques or 
other forms of information technology, e.g., permitting electronic 
submission of responses. In response, the Mercatus Center stated that 
information on advertising in measured media is collected by various 
market research companies, and that it might be less costly to compel 
production of this information from such companies. However, the FTC 
seeks information on expenditures and activities in both measured and 
unmeasured media categories, and industry members are in the best 
position to provide responsive data. The data gathered by market 
research companies is too limited to provide an adequate substitute. 
The Mercatus Center commented that market research companies may be in 
a better position

[[Page 19509]]

to provide information on advertising time and exposure, but the 
proposed Section 6(b) Orders do not ask companies to provide this 
information.
    The FTC's proposed Section 6(b) Orders seek information on 
expenditures and activities in both measured and unmeasured media 
categories, as further discussed in part B.1. of this notice. The GMA/
FPA stated that the FTC should seek data only on measured media 
expenditures and activities in order to minimize the burden on industry 
members. Although GMA/FPA states that measured media activities account 
for the majority of marketing expenditures targeted to children and 
adolescents, other commenting parties made conflicting 
observations,\14\ and the FTC staff's research found that industry 
members are currently engaged in a wide variety of unmeasured media 
activities to promote food and beverage products to children and 
adolescents. Moreover, Congress expressly requested that the report 
address expenditures and activities in both measured and unmeasured 
media categories, and a substantial number of the media categories for 
which information is sought in the proposed Section 6(b) Orders are 
taken directly from the Senate Report.
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    \14\ See, e.g., Comments by Consumers Union (Dec. 18, 2006), at 
2.
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    GMA/FPA further requested that, if information is sought on 
unmeasured media, the FTC should ask for best estimates of aggregated 
expenditures (rounded to the nearest multiple of $10 or $50 million), 
along with illustrations of the activities. The FTC will seek 
illustrations of unmeasured media activities in the proposed 
information requests. However, limiting reporting of expenditures to 
multiples of $10 or $50 million would not provide a sufficiently 
accurate or complete picture of the amount of unmeasured media activity 
in which the companies are engaged. Many Internet-based promotions, for 
example, are likely to cost the companies relatively little money and 
would not be captured if the reporting limit were set that high. The 
FTC proposes seeking data on expenditures rounded to the nearest 
$1,000.
    The GMA/FPA also asked that the FTC provide a clear definition for 
marketing directed to children and adolescents. The proposed Section 
6(b) Orders provide a detailed list of criteria for marketing 
expenditures and activities that companies must report. The FTC will 
examine reported data and determine which expenditures and activities 
are targeted to children and adolescents, and will report on these in 
the aggregate.
    BKC commented that the information requests should be limited to 
marketing undertaken by companies at the centralized, corporate level, 
and should not include marketing that occurs at the regional, local, or 
individual franchise level. The FTC believes that limiting the requests 
in this fashion could result in the omission of valuable marketing 
data. If a company expends money on or approves activities in 
advertising or other promotional activities that are segmented by 
region, locality, or individual franchise, then the proposed Section 
6(b) Orders would require the company to report these expenditures and 
activities; the company would not, however, be required to gather data 
not already in its possession on expenditures and activities 
independently undertaken by individual franchises.
    The CDHS recommended that data be collected online and that, 
whenever possible, the FTC should use existing industry information 
consistent with conventional commercial measures. The CDHS stated that 
any costs to industry members in responding to the information requests 
were fair and reasonable given that the IOM recently reported that the 
food, beverage, and restaurant industries have approximately $900 
billion in annual sales and spend more than $10 billion per year in 
marketing their products to children and youth. CDHS also pointed to 
the cost to the public and the U.S. health care system due to the 
consequences of physical inactivity, obesity, and overweight, which 
were approximately $28 billion in California alone in 2005. Again, the 
proposed Section 6(b) Orders will seek information consistent with 
commercially measured media, but will also seek information on non-
commercially measured media expenditures and activities, as requested 
by Congress.

6. Other Requests Contained in Comments

    The CDHS requested that information collected from the companies be 
made public and that data collection continue following the publishing 
of the FTC's report. The Mercatus Center also requested that the FTC 
create a publicly available database of any of the information 
collected that is not confidential or does not constitute trade 
secrets, so that other researchers could replicate the FTC's findings. 
The agency anticipates, however, that much of the information collected 
will be protected by law from public disclosure,\15\ and anticipates 
reporting on marketing expenditures and activities in the aggregate.
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    \15\ Section 6(f) of the FTC Act, 15 U.S.C. 46(f), bars the 
Commission from publicly disclosing trade secrets or confidential 
commercial or financial information it receives from persons 
pursuant to, among other methods, special orders authorized by 
Section 6(b) of the FTC Act. Such information also would be exempt 
from disclosure under the Freedom of Information Act. 5 U.S.C. 
552(b)(4).
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    One consumer asked the FTC to provide information on the selection 
process criteria for the targeted companies.\16\ These criteria will be 
outlined in the FTC's final report. The PHLP requested that the FTC 
make reporting an ongoing requirement for food and beverage industry 
members. The FTC plans to complete the current report before 
considering proposals for future research. The agency is committed to 
ongoing monitoring of this subject area, however, and anticipates that 
it will continue to address issues raised by food marketing to 
children.
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    \16\ See Comment by Sheila Fleischhacker (Dec. 27, 2006).
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    The Mercatus Center's comment suggested that the FTC evaluate a 
number of additional issues: the extent to which children and 
adolescents are exposed to and process advertisements targeted toward 
them; other factors that might cause a rise in obesity, such as 
physical inactivity and sedentary activities; and the possible 
beneficial aspects of advertising, such as educational effects. These 
issues, however, are beyond the scope of the report requested by 
Congress, and the FTC will not address them in the current report. The 
goal of the proposed information collection is to conduct a 
comprehensive review of food industry marketing activities and 
expenditures targeted to children and adolescents. The FTC expects that 
focusing its efforts in this manner will facilitate production of a 
high quality study that thoroughly responds to Congress's request.

B. Information Requests to Food and Beverage Industry Members

1. Description of the Collection of Information and Proposed Use

    The FTC proposes to send information requests to forty-four (44) 
food and beverage manufacturers, distributors, and marketers and quick 
service restaurant companies in the United States. The companies that 
will receive these information requests are those marketing and selling 
the categories of food and beverage products that appear to be 
advertised to children and adolescents most frequently. The information 
requests will seek data and

[[Page 19510]]

information regarding, among other things: (a) The types of foods 
marketed to children and adolescents; (b) the types of measured \17\ 
and unmeasured \18\ media techniques used to market food products to 
children and adolescents; (c) the amount spent to communicate marketing 
messages about food products to children and adolescents in measured 
and unmeasured media; (d) the nature of the marketing activities in 
unmeasured media used to market food products to children and 
adolescents; and (e) any marketing policies, initiatives, or research 
in effect or undertaken by the companies relating to the marketing of 
food and beverage products to children and adolescents.
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    \17\ ``Measured media'' includes methods such as television, 
radio, print (magazine and newspaper), and some forms of Internet 
advertising.
    \18\ ``Unmeasured media'' includes methods such as in-store 
marketing (including shelf placement), events, package promotions, 
and product placement in entertainment media (including television 
shows, movies, video games, and music recordings).

    Note: subsequent to this notice, any destruction, removal, 
mutilation, alteration, or falsification of documentary evidence 
that may be responsive to this information collection within the 
possession or control of a person, partnership, or corporation 
subject to the FTC Act may be subject to criminal prosecution. 15 
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U.S.C. 50; see also 18 U.S.C. 1505.

    Confidentiality: Section 6(f) of the FTC Act, 15 U.S.C. 46(f), bars 
the Commission from publicly disclosing trade secrets or confidential 
commercial or financial information it receives from persons pursuant 
to, among other methods, special orders authorized by Section 6(b) of 
the FTC Act. Such information also would be exempt from disclosure 
under the Freedom of Information Act. 5 U.S.C. 552(b)(4). Moreover, 
under Section 21(c) of the FTC Act, 15 U.S.C. 57b-2(c), a submitter who 
designates a submission as confidential is entitled to 10 days' advance 
notice of any anticipated public disclosure by the Commission, assuming 
that the Commission has determined that the information does not, in 
fact, constitute Section 6(f) material. Although materials covered 
under one or more of these various sections are protected by stringent 
confidentiality constraints, the FTC Act and the Commission's rules 
authorize disclosure in limited circumstances (e.g., official requests 
by Congress, requests from other agencies for law enforcement purposes, 
and administrative or judicial proceedings). Even in those limited 
contexts, however, the Commission's rules may afford protections to the 
submitter, such as advance notice to seek a protective order in 
litigation. See 15 U.S.C. 57b-2; 16 CFR 4.9-4.11.
    Finally, the information presented in the report will not reveal 
company-specific data, except data that are public. See 15 U.S.C. 57b-
2(d)(1)(B). Rather, the Commission anticipates providing information on 
an anonymous or aggregated basis, in a manner sufficient to protect 
individual companies' confidential information, to provide a factual 
summary of food industry marketing activities and expenditures targeted 
to children and adolescents.
a. Information About Food Products Marketed to Children and Adolescents
    The proposed Section 6(b) Orders will seek information about the 
categories of food products, the specific brands, and the sub-brands or 
brand variants that the companies market to children and adolescents. 
The Orders will specify eleven (11) food categories for which companies 
will have to report marketing expenditures and activities, and will 
list the corresponding Product Category Codes from Nielsen Media 
Research. In some cases, the FTC's food categories will be more limited 
than Nielsen's Product Category Codes, and the agency will make this 
clear in the Orders.
    The specific categories for which the FTC will request data are: 
Breakfast cereals; snack foods; candy; dairy products, including milk 
and yogurt; baked goods; carbonated beverages; fruit juice and non-
carbonated beverages; prepared foods and meals; frozen and chilled 
desserts; and quick service restaurant items. FTC staff has identified 
these as the categories of food and beverage products that appear to be 
advertised to children and adolescents most frequently. In addition, 
the FTC proposes to collect information from major marketers of fruits 
and vegetables to ensure that data are gathered regarding efforts to 
promote consumption of these foods among children and adolescents.
    The proposed Section 6(b) Orders will also request information on 
whether the companies offer a line of food products bearing a 
nutritional icon, seal, or symbol, or otherwise identified as ``better 
for you,'' healthier, more nutritious, lower calorie, or lower fat than 
other products, and will seek information on how those product lines 
are marketed to children and adolescents. This information will help 
the agency evaluate the variety of foods and beverages that is marketed 
to children and adolescents.
b. Information About Measured and Unmeasured Media Techniques Used To 
Market Food Products to Children and Adolescents
    The proposed Section 6(b) Orders will require the companies to 
provide their marketing activities and expenditures during the calendar 
year 2006 in a number of measured and unmeasured media categories. 
Specifically, the Orders require that data on expenditures and 
activities be broken down into 20 media categories.\19\
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    \19\ These are: Television advertising; radio advertising; print 
advertising; movie theater/video/video game advertising; company-
sponsored Internet sites; other Internet advertising; other digital 
advertising; in-store advertising and promotions; specialty item or 
premium distribution; public entertainment events; product 
placements; character licensing and cross-promotions; sponsorship of 
sports teams or individual athletes; packaging and labeling; word-
of-mouth marketing; viral marketing; celebrity endorsements; in-
school marketing; advertising in conjunction with philanthropic 
endeavors; and other expenditures.
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    Thus, the proposed Section 6(b) Orders seek comprehensive 
information about activities and expenditures to promote food and 
beverages to children and adolescents, including most of the 
information suggested in the comments. This information will allow the 
agency to analyze how industry members allocate their promotional 
activities and expenditures among various measured and unmeasured media 
types for different food products. The categories are carefully defined 
to facilitate compliance with the requests, as are the criteria for 
determining whether particular marketing activities and expenditures 
must be included in the responses.
c. Information About Expenditures in Measured and Unmeasured Media To 
Market Food Products to Children and Adolescents
    The proposed Section 6(b) Orders will require industry members to 
report expenditures in each of the measured and unmeasured media 
categories by food category, by brand,\20\ and, where such advertising 
exists, by sub-brand or brand variant, and to identify expenditures for 
products that are part of a nutritional product line. Expenditures will 
be reported separately for marketing activities directed to children 
ages 2-11 and for those directed to adolescents ages 12-17. This 
information will allow the agency to analyze how industry members 
allocate their promotional expenditures among

[[Page 19511]]

particular food and beverage products and particular media for each age 
group.
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    \20\ For any advertising or other promotional activity for non-
branded fruit, vegetable, or dairy products, expenditures will be 
reported by the individual fruit, vegetable, or dairy product 
varieties; for restaurant items, expenditures will be reported by 
restaurant chain.
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    Total marketing expenditures for each food category, brand, and 
sub-brand or brand variant will also be reported to permit the agency 
to analyze the percentage of marketing expenditures for any product or 
in any media category that is directed to children or adolescents. 
Similarly, the proposed Orders will ask the companies to identify any 
marketing expenditures that are directed to individuals of a specific 
race, ethnicity, or gender.
d. Information About Marketing Activities in Unmeasured Media Used To 
Market Food Products to Children and Adolescents
    The proposed Section 6(b) Orders will require the companies to 
provide samples of (or to describe, if providing samples is not 
practicable) the specific advertising and promotional activities 
undertaken in each of the unmeasured media categories (including all 
Internet advertising) for which qualifying expenditures are reported or 
for which there are qualifying activities for which no expenditures are 
reported.
    In addition to requesting that the FTC report on marketing 
expenditures, Congress expressly instructed the FTC to address food 
industry marketing activities that are targeted to children and 
adolescents. Whereas marketing activities in television, radio, and 
print media are relatively uniform, research by FTC staff indicates 
that industry members employ a wide variety of marketing techniques in 
unmeasured media to promote food and beverage products to children and 
adolescents. In addition, some activities, such as product placements 
and viral and word-of-mouth marketing activities, may occur as cross-
promotions or in another context in which no actual costs are incurred. 
By collecting samples and descriptions of these activities from 
industry members, the agency will be able to provide Congress and the 
public with a complete picture of the types of marketing techniques the 
industry is using to reach children and adolescents.
e. Information About Marketing Policies, Initiatives, and Research
    The proposed Section 6(b) Orders will seek information about any 
company policies pertaining to the marketing of food and beverage 
products to children and adolescents, including any policies or 
programs undertaken or implemented by the companies to encourage 
healthy eating and lifestyle choices by children and adolescents. The 
Orders will also request copies of any market research sponsored or 
undertaken by the companies to measure the appeal of certain food 
products or marketing activities to children and adolescents.
    Responses will enable the companies to show any changes in their 
future marketing plans and policies that might not be reflected in 
their reports of past marketing expenditures and activities. The 
information will also allow the agency's report to address any 
anticipated changes in the marketing of food and beverage products to 
children and adolescents, and will permit the agency to evaluate any 
adoption by the companies of the recommendations contained in the April 
2006 Joint Workshop Report.\21\ Information on market research 
sponsored or undertaken by the companies will enable the agency to 
evaluate the companies' process for selecting food products or 
marketing techniques to reach children and adolescents.
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    \21\ See note 13, supra.
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    2. Estimated Hours Burden: 6,000 hours (rounded to the nearest 
thousand). The FTC staff's estimate of the hours burden is based on the 
time required to respond to each information request. The Commission 
intends to issue the information requests to 44 parent companies of 
food and beverage and quick service restaurant advertisers. Because 
these companies vary in size, in the number of products they market to 
children and adolescents, and in the extent and variety of their 
marketing and advertising, the FTC staff has provided a range of the 
estimated hours burden.
    Based upon its knowledge of the industries, the staff estimates, on 
average, that the time required to gather, organize, format, and 
produce such responses will range between 80-120 hours per information 
request for companies that market a single category of product to 
children and adolescents. The FTC staff estimates that companies that 
market multiple categories of products to children and adolescents 
would spend between 120-300 hours to respond to an information request. 
The total estimated burden per company is based on the following 
assumptions:

Identify, obtain, and organize product information, prepare response: 
15-35 hours
Identify, obtain, and organize information on marketing expenditures, 
prepare response: 15-75 hours
Identify, obtain, and organize information on and samples of marketing 
activities, prepare response: 40-160 hours
Identify, obtain, and organize information regarding marketing policies 
and research, prepare response: 10-30 hours
Total: 80-300 hours

    The Commission intends to send 27 information requests to parent 
companies that market a single category of product to children and 
adolescents. As a result, staff estimates a total burden for these 
companies of approximately 2700 hours (27 companies x 100 average 
burden hours per company). The Commission intends to send 17 
information requests to parent companies that market multiple 
categories of products to children and adolescents. As a result, staff 
estimates a total burden for these companies of approximately 3570 
hours (17 companies x 210 average burden hours per company). Thus, the 
staff's estimate of the total burden is approximately 6270 hours. These 
estimates include any time spent by separately incorporated 
subsidiaries and other entities affiliated with the ultimate parent 
company that has received the information request.
    3. Estimated Cost Burden: $1,568,000 (rounded to the nearest 
thousand)
    It is difficult to calculate with precision the labor costs 
associated with this data production, as they entail varying 
compensation levels of management and/or support staff among companies 
of different sizes. Financial, legal, marketing, and clerical personnel 
may be involved in the information collection process. The FTC staff 
has assumed that professional personnel and outside legal counsel will 
handle most of the tasks involved in gathering and producing responsive 
information, and has applied an average hourly wage of $250/hour for 
their labor. Thus, the staff estimates that the total labor costs for 
the information requests will be approximately $1,567,500 (($250 x 2700 
hours for companies that market a single category) + ($250 x 3570 hours 
for companies that market multiple categories)).
    FTC staff estimates that the capital or other non-labor costs 
associated with the information requests will be minimal. Although the 
information requests may necessitate that industry members maintain the 
requested information provided to the Commission, they should already 
have in place the means to compile and maintain business records.

William Blumenthal,
General Counsel.
[FR Doc. E7-7375 Filed 4-17-07; 8:45 am]
BILLING CODE 6750-01-P