Deceptive Advertising. Kraft, Inc's individually wrapped cheese slices, or "Singles Slices," which are made from real cheese, cost more than the imitation cheese slices on the market. In the early 1980s, Kraft began losing its market share to an

Question

increasing number of pro-ducers of imitation cheese slices. Kraft responded with a series of advertisements, collectively known as the "Five Ounces of Milk" campaign. The ads claimed that Kraft Singles cost more than imitation slices because they were made from five ounces of milk rather than less expen-sive ingredients. The ads also implied that because each slice contained five ounces of milk, Kraft Singles contained a higher calcium content than imitation cheese slices. The Federal Trade Commission (FTC) filed a complaint against Kraft, charging that Kraft had materially mis-represented the calcium content and relative calcium benefit of Kraft Singles. Was Kraft's ad-vertising campaign deceptive and likely to mislead consumers?

Answer 1

Deceptive advertising
The administrative law judge (ALJ) ruled that Kraft was misleading consumers because, although Kraft did use five ounces of milk in making each Kraft Single, roughly 30 percent of the calcium contained in the milk was lost during processing—and Kraft had neglected to inform consumers of this fact. Furthermore, the ALJ found that the vast majority of imitation cheese slices sold in the United States contained approximately the same amount of calcium as Kraft Singles. The ALJ therefore ordered Kraft to cease and desist from making these claims. The FTC commissioners affirmed the order, with some modifications, and Kraft appealed. The U.S. Court of Appeals for the Seventh Circuit upheld the FTC's ruling. Kraft's principal argument on appeal was that the FTC erred as a matter of law by not requiring actual evidence that Kraft's advertising had, in fact, misled consumers. In response to this argument, the court stated that the "[c]ourts, including the Supreme Court, have uniformly rejected imposing such a requirement on the FTC." The court also disagreed with Kraft's allegations that "implied claims are inescapably subjective and unpredictable." On the contrary, held the court, "[t]he implied claims Kraft made are reasonably clear from the face of the advertisements, and hence the Commission was not required to utilize consumer surveys in reaching its decision." The court emphasized that although "[t]he Commissioners' personal experiences quite obviously affect their perceptions, * * * it does not follow that they are incapable of pre-dicting whether a particular claim is likely [to mislead] a reasonable number of consumers."