FTC Staff Comment Before the Department of Agriculture Food Safety Inspection Service Concerning Meat and Poultry Labeling

l'~JTE[, STA'ib OF AMERICA
FEDERAL TRADE COMMISSIO~
CHkAGO l\EGIO~AL OFFICE
SUIte t437
55 East Monroe Slree~
ChlCllgO. IlImo,s 6060J
(312) 353·815£
December 12, 1990
Ms. Linda Carey
PSIS Hearing Clerk
Food Safety and Inspection Service
United States Department of Agriculture
Washington, D.C. 	20230
V910001
COMMISSION AUTHORIZED
Re: 	Processing, 	Distribution, 	Storage, 	and
Retail Handling of Ready-To-Eat, Uncured,
Perishable Meat 	and 	Poultry Products
Packaged in Sealed Containers
9 c.F.R. Parts 308, 318, 320 and 381
[Docket No. 89-007N]
Dear Ms. Carey:
The staff of the Federal Trade Commission's Chicago Regional Office, Bureau of
Consumer Protection, and Bureau of Economics ("the staff") are pleased to comment on
whether the Food Safety and Inspection Service of the Department of Agriculture ("PSIS")
should propose new regulations regarding chilled, ready-to-eat, perishable meat and poultry
products which are packaged in a variety of sealed containers bearing label statements such
as "Perishable, Keep-Refrigerated."! 	In the Advance Notice of Proposed Rulemaking
(ANPR) the PSIS notes that many regulatory and public health officials believe that these
products may pose certain unique risks to consumers.I The staff understands that the PSIS
intends to use the information developed during the comment period to determine whether
additional regulatory actions, such as formal rulemakings, might be warranted.
According to the ANPR the PSIS is considering two general issues: 	(1) whether
measures should be taken to further ensure that these products are microbiologically safe
when sold to consumers; and (2) whether the potential health risks that arise when
consumers mishandle these 	products after furchase warrant regulatory action. 	This
comment addresses only the second question.
Regulatory alternatives currently being considered by the PSIS for dealing with
potential mishandling by consumers include (1) requiring appropriate labeling to inform
consumers of steps that they must take to ensure product safety, and/or (2) banning the use
1 	These comments are the views of the staff of the Chicago Regional Office, Bureau
of Consumer Protection, and Bureau of Economics of the Federal Trade Commission.
They are not necessarily the views of the Commission or any individual Commissioner.
2 	55 Fed. Reg. 19888 (May 14, 1990).
3 	By implication, this comment assumes throughout that the products are safe when
sold to consumers.

Ms. Linda Carey
United States Department of Agriculture
Page -2-
of certain packaging (such as glass or rigid metal containers) that consumers may associate
with nonrefrigerated shelf stable products.
The staff believes that, if the FSIS finds significant evidence that consumers are not
aware of the proper handling needs of these products, the FSIS should consider taking
steps 	to 	help ensure that appropriate information reaches consumers 	(U, labeling
disclosures). 	In the staffs view, labeling disclosures providing consumers with adequate
information about the appropriate handling of products are typically the least costly way
to protect consumers from misuse. 	The alternative approach suggested in the ANPR --
banning certain packaging materials altogether -- in our view should be avoided unless FSIS
finds a basis for concluding that (1) the packaging material itself is a major or significant
cause leading consumers to misunderstand proper handling instructions and (2) revised
labeling disclosures (and other informational remedies such as advertising disclosures and
in-store displays) are insufficient to correct these misunderstandings or impose costs on
consumers and sellers greater than those that might be expected from banning certain
packaging 	materials. 	In considering whether 	to 	ban certain 	packaging alternatives,
therefore, the staff recommends that information be collected that would help resolve these
questions. The staffs concern is that if categories of packaging are banned without support
of this type, sellers might be forced to forego packaging options that are more efficient
than the alternatives that remain available to them. This in turn could result in consumers
paying higher prices for these products without receiving compensating benefits since
equally high safety levels presumably could be achieved through the alternative of labeling
disclosures.
l 	INTERFSf AND EXPERIENCE OF 1HE STAFF OF 1HE FEDERAL TRADE
COMMISSION
The staff of the FTC has a longstanding interest in food standards and labeling
stemming from the Federal Trade Commission's general statutory obligations to promote
competition and to prevent false and deceptive advertising. 	Under Sections 5 and 12 of
the Federal Trade Commission Act," which prohibit false, deceptive or unfair practices in
or affecting commerce, the FTC has jurisdiction over the advertising of food, and has
concurrent jurisdiction with FDA and USDA over the labeling of food. The FTC also has
statutory authority to enforce a number of laws that mandate disclosure.f and has itself
15 U.S.c. §§ 41 ~
S 	E.g., the Federal Cigarette Labeling and Advertising Act, 15 U.S.c. If 1331 et~,
the Truth in 	Lending Act, 15 U.S.C. §§ 1601 et ~, and 	the Energy Policy and
Conservation Act, 42 U.S.C. §§ 6201 et ~, see Rules for Using Energy Costs and
Consumption Information Used in Labeling and Advertising for Consumer Appliances
under the Energy Policy and Conservation Act 	("appliance labeling"), 16 C.F.R. Part 305.

Ms. Linda Carey
United States Department of Agriculture
Page -3-
promulgated disclosure rules.' 	Furthermore, the FTC enforces several laws relating to
standard-setting,' and has developed expertise on the possible anticompetitive effects of
standard-setting.' 	The 	staff 	of 	the 	FTC 	has 	developed 	considerable 	expertise 	in
understanding the roles of advertising and labeling in providing consumers with reliable
product information and in the roles that might be played by disclosure standards in
situations where an unregulated market may fail to provide adequate information.' In 1987,
the FTC staff submitted comments when the FSIS was considering amending its standard
of identity for frankfurters and similar cooked sausagcs.P In 1988, the FTC staff submitted
comments to the FSIS on a proposal to except certain processed meat products from the
requirement that the common or usual names of all ingredients be on the products'
labels.ll In 1990, the FTC staff submitted comments to the Food and Drug Administration
("FDA"l regarding a proposal to allow truthful, substantiated health claim messages on food
labels. 1
, 	E.g., Octane Posting and Certification, 16 C.F.R. Part 306, Labeling and Advertising
of Horne Insulation ("R-value Rule"), 16 c.F.R. Part 460, and Care Labeling of Textile
Wearing Apparel and Certain Piece Goods as amended, 16 c.F.R. Part 423.
, 	E.g., the Wool Products Labeling Act, 15 U.S.c. §§ 68 et ~, and the Magnuson-
Moss Warranty - FTC Improvement Act, 15 U.S.c. §§ 2301 et ~
, 	J. Mooney, R. Schroeder, D. Graybill, W. Lovejoy, "Standards and Certification:
Proposed Rule and Staff Report" (1978).
, 	Research conducted by the staff of the FTC includes: P. Ippolito & A Mathios,
"Health Claims in Advertising and Labeling: A Study of the Cereal Market" (1989); J.
Calfee & J. Pappalardo, "How Should Health Claims for Food Products be Regulated? An
Economic Perspective" (1989); and W. Jacobs et al., "Improving Consumer Access to Legal
Services: The Case for Removing Restrictions on Truthful Advertising" (1984).
10 	Comments of the staff of the Bureaus of Economics, Consumer Protection, and
Competition of the Federal Trade Commission on Proposal to amend the Cooked Sausage
Standard, submitted to the Food Safety and Inspection service, U.S. Department of
Agriculture, Docket No. 85-009F, June 22, 1987, [Final Rule, 9 c.F.R. Part 319] (Comment
of June 22, 1987).
11 Comments of the staff of the Bureau of Economics on the Labeling of Meat Food
Products, Under Certain Circumstances, That Contain Mechanically Separated (Species),
submitted to the Food Safety and Inspection Service, U.S. Department of Agriculture, 9
C.F.R. Part 317 [Docket No. 86-049P] (Comment of November 8, 1988).
12 Comments of the staff of the Bureaus of Consumer Protection and Economics
submitted to the Food and Drug Administration, 54 Fed. Reg. 32610 [Docket No. 89N-
0226] (Comment of January 5, 1990).

Ms. linda Carey
United States Department of Agriculture
Page -4-
n. 	CONSIDERATIONS FOR a-mJED MEAT AND POUL1RY PRODUcrs
The products covered by this request for comment consist of or contain perishable
meat or poultry products. 	They are commonly pasteurized, hermetically sealed in the
packaging for sale to consumers and require additional refrigeration after purchase to
prevent spoilage. 	These products include soups, sauces, pastas, salads and entrees.P 	As
the PSIS recognizes, the market for these kinds of chilled food products is growing.l"
Published reports have estimated that demand is expected to increase by 60% per year over
the next decade. 15 We understand that some of the larger food corporations are entering
this market.
These chilled food products bear labels containing statements such as "Perishable,
Keep Refrigerated." 	Unlike nonrefrigerated shelf stable packaged foods, these foods are
processed in a way that does not destroy certain heat resistant bacteria. 	Nonetheless, they
are generally processed and packaged in a manner that extends the products' refrigerated
shelf life. 	Even when these products are safe when purchased, safety concerns would be
raised if consumers fail to treat them so as to ensure that the food remains safe until
consumed. 	For example, consumers may store the products at room temperature rather
than refrigerate them.
In light of the potential health risks from mishandling these products, consumers
need adequate, truthful handling information. 	The staff believes, therefore, that the key
issues for this proceeding are whether consumers currently have such information, and, if
not, what additional regulatory actions might be warranted.
The staff believes it would be useful for the PSIS to determine first whether current
sellers of these products provide adequate handling information absent a regulatory mandate
to do so. 	Quite apart from duties arising from regulations, sellers have significant
incentives 	to 	provide 	consumers with 	adequate 	information about 	proper 	handling
procedures. 	Among other things, sellers rely to a great extent on repeat purchases and
value highly their reputations. With new products, particularly ones that require treatment
different from more familiar shelf stable products, a supplier jeopardizes both its reputation
for producing quality products and its ability to sustain business through repeat purchases
if consumers are not provided with adequate care information.
13 Spaghetti sauce, for instance, has traditionally been heat treated, packaged in cans
or glass jars, and placed on grocery shelves at room temperature. 	Alternatively, tbe sauce
could be pasteurized, hermetically sealed, and displayed in a refrigerated section at the
grocery instead. 	Products of this latter type are tbe concern of this proceeding.
14 55 Fed. Reg. 19888 (May 14, 1990).
15 See "New Trends Make Food A Challenging Game," 35 Packaging. p. 44 (January
1990).

Ms. Linda Carey
United States Department of Agriculture
Page -5-
The staff recognizes that private incentives might be insufficient to ensure provision
of adequate information to consumers .P 	If, for example, the need for refrigeration is not
disclosed, or if disclosures are not sufficiently prominent to bring them to the attention of
the purchaser, it might be reasonable to conclude that the potential for health risks does
exist and is significant. Alternatively, potential health risks may exist if disclosures cannot
prevent consumers from mistakenly concluding that products, either chilled or shelf stable,
sold in a particular type of packaging (U, glass jars) can be handled identically.
To determine whether the information currently available to consumers is adequate,
the staff recommends that the 	PSIS gather information on whether consumers have
mishandled perishable, ready to eat, uncured meat and poultry products. 	Although the
ANPR does not discuss documented instances of health risks resulting from improper usage
or handling of these products, hopefulI y the comments submitted wilI help form a base for
determining whether health hazards have been created in the past, how likely thfl are to
occur again , and whether regulatory action would effectively address those risks. 1
In the event that the PSIS finds that a significant risk of improper handling has
arisen or is likely to arise and is likely to continue, several alternatives are available to
address those problems. 	Two are posed in the ANPR: 	labeling disclosures and banning
types of packaging, such as glass or rigid metal containers, that consumers may normally
16 The Commission reached this conclusion in some of its own regulatory proceedings.
See, ~, supra, note 6. 	In the case of these products private incentives to provide
complete handling information might be diminished if it were difficult for consumers to
determine whether the product had spoiled or to determine whether one of these food
products, or some other, was responsible for a particular episode of gastrointestinal
irritation.
17 PSIS staff indicated informalIy 	to 	us that 	they were 	aware 	that consumers
sometimes purchase food items that are shelf stable and then refrigerate them . 	They
suggested that the converse was also a possibility -- that consumers may purchase
refrigerated items but store them at room temperature. 	PSIS staff, however, were not
aware of any documented instances of this type of consumer conduct. In addition, a recent
report on 	this 	issue 	states that: 	"Evidence 	suggests 	that consumers have 	difficulty
distinguishing the differences between various food label instructions and their relationship
to product safety.- See Recommendations of the Meat and Poultry Working Group of the
National Advisory Committee on Microbiological Criteria for Foods for Refrigerated Foods
Containing Cooked, Uncured Meat or Poultry Products that are Packaged for Extended
Refrigerated Shelf Life and that are Ready-To-Eat or Prepared with Little or No Additional
Heat Treatment (Adopted January 1990) rMPWG Report") at 19. 	The MPWG Report
does not indicate, however, whether it is referring to labels for the products at issue here.
No citation to this evidence is provided.

Ms . Linda Carey
United States Department of Agriculture
Page -6-
associate with nonrefrigerated shelf stable goods.l lI 	In the remainder of this comment, we
consider these alternatives, and then pose some questions that may assist the FSIS in
gathering and weighing evidence.l?
A Labeling
One alternative suggested by the FSIS for addressing problems from improper
consumer handling is to require adequate labeling for products of this type. 	Along these
lines, the MPWG Report suggests that "packages carry a uniform standardized label
statement and corresponding logo" providing:
• IMPORTANT •
MUST BE KEPT
REFRIGERATED
Several questions would need to be addressed in formulating a labeling proposal.
First, what is known about any deficiencies in current labeling? 	As noted, this would
include an analysis of the current state of disclosure and, hopefully, evidence about how
consumers respond to it.20 	Second, how can current labels be revised to ensure that
important safety information is sufficiently conspicuous that consumers will notice it and
react appropriately?
Third, and finally, how can a mandatory labeling proposal account for the variety
in packaging types and shapes? 	This variety suggests that labeling regulations need to be
flexible 	to accommodate these various packaging options. 	The staff believes that a
requirement that any mandatory disclosures be "clear and conspicuous" would provide
consumers with the information they need without unduly limiting the sellers' packaging
options.
B. Banning Certain Types of Packaging
The second alternative identified in the ANPR is aimed to reduce consumer
confusion about proper handling of these products by banning certain types of packaging
that consumers traditionally assodate with non refrigerated shelf stable products. 	This is
one of the recommendations contained in the MPWG Report. 	Such a measure might
III Both of these options are also suggested in the MPWG Report cited in the ANPR.
19 The MPWG Report also recommends an additional avenue for addressing potential
consumer confusion: 	consumer education . 	See MPWG Report at 20.
~ 	It seems likely that consumers would draw some conclusions about the need to
refrigerate a product from tbe fact tbat it is chilled when purchased. 	On the otber band,
busy or distracted shoppers may not focus on this characteristic at the time of purchase and
the product may be at or near room temperature by the time it is unpacked at borne.

Ms. Linda Carey
United States Department of Agriculture
Page -7-
include banning the use of glass and rigid metal containers, as well as certain other
containers, for packaging these products.
As noted above, one method of addressing information shortfalls is to ensure that
labels contain appropriate storage and handling information. 	If labeling disclosures are
effective remedies, no other action would seem necessary. 	Thus before concluding that a
ban on particular packaging materials is called for , the staff believes FSIS should gather
information sufficient to demonstrate that (1) consumers mistakenly believe that all
products distributed 	in certain 	types of packaging (U, glass jars) can 	be 	bandied
identically, notwithstanding differences in how the products are displayed at the store (i.e.,
some of these products are refrigerated, others are at room temperature) and in the
handling instructions currently contained on labels ; and (2) revisions in the handling
instructions on product labels would fail to correct these mistaken beliefs.
The staff does not know whether studies have been done that provide empirical
evidence that packaging materials alone create significant consumer confusion. Consumers
undoubtedly draw on several different signals in deciding how to handle a product. 	This
would include (I) the material used for packaging and consumer knowledge about how
products packaged in the material can generally be treated; (2) whether the product is
purchased from a refrigerated unit at the retail outlet; and (3) information about proper
handling communicated in advertising, on any in-store displays, and on labels .
Some inferences might be drawn from other markets in which both nonrefrigerated
and refrigerated items are available. 	For example, salad dressings have traditionally been
sold in nonrefrigerated shelf stable glass containers. 	Newer varieties of salad dressings,
however, can be found in the refrigerated produce sections of many grocery stores. These
are not shelf stable and may require refrigeration. 	If evidence indicates that consumers
have not mishandled chilled salad dressings (or other relevant examples), less reason would
exist to conclude that certain types of packages for chilled meat and poultry products with
shelf-stable alternatives should be banned.
Packaging bears some resemblance to advertising in the sense that both may convey
express and implied information to consumers. Before banning packaging, therefore, FSIS
may find it useful to determine what messages consumers are receiving from packaging
materials. 	In the advertising context, the FTC attempts to determine what messages
consumers could reasonably draw from an advertisement by looking at the overall, net
impression made by an ad.ll 	The FTC will examine the advertisement itself, evidence
about how consumers interpret the advertisement, or both . 	A similar analysis could be
used to examine whether particular packaging can reasonably be interpreted to convey a
message that a food product is shelf stable, even if the product's label states that the
21 Thompson Medical Company, 104 F.T.C. 648 (1984), aff'd, 791 F.2d 189 (D.c. CiT.
1986), cefl. denied, 479 U.S. 1086 (1987).

Ms. Linda Carey
United States Department of Agriculture
Page -8-
product is perishable and must be kept refrigerated. 	The staff believes that evidence, such
as consumer surveys and copy tests, might be a valuable tool in determining what messages
the type of packaging conveys to consumers.P
Finally, from the standpoint of consumers and competition, banning certain types
of packaging could have important implications. 	The total cost of supplying a product
includes the costs from production, packaging, distribution, and marketing. 	For various
packaging alternatives, these costs will vary, perhaps significantly for some products. 	If
certain packaging alternatives are unnecessarily banned from the chilled meat and poultry
market, some sellers could be forced to use less efficient, more costly packaging alternatives.
These costs would likely be passed on as higher prices to consumers who, in this instance,
would not receive any additional benefits in return for a higher price. In addition, if future
cost-saving innovations are developed for the banned packaging alternatives, these savings
could not be incorporated into the costs of supplying chilled meat and poultry products.
Once again, consumers could be forced to pay higher prices for these products without
receiving any offsetting benefits.
C. Factual Issues Pertinent to tlili; Proceeding
The FSIS might find it useful to obtain additional information about consumer
understanding about the post-purchase handling needs of the food products at issue. The
FSIS may wish to explore several questions before determining whether action is necessary
to provide consumers with additional or particular label information or to ban the use of
particular packaging materials. 	Among these questions are:
1. 	Do 	the 	products at 	issue currently 	have labels 	containmg 	handling
information which, if followed, are sufficient to avoid health risks? 	Is the
label information clear and conspicuous? 	To what extent are consumers
aware of the potential health risks from not following these labels?
2. 	What do consumers understand "ready-to-eat" and similar label statements
to mean?
zz The FSIS has the regulatory authority to prohibit the use of containers the size or
form of which is false or misleading. 	9 c.F.R. § 381.130.
Although the issue in this proceeding is not framed as one involving whether
certain types of packaging are or can be deceptive, false or misleading, this comment
suggests an analysis that considers 	this question. 	In analyzing deception, the FTC
determines what representations (both express and implied) are being made, whether the
representations are likely to mislead consumers acting reasonably in the circumstances, and
whether the representations are material. 	See FTC Policy Statement on Deception,
appended to the Commission's decision in Cliffdale Associates, Inc., 103 F.T.C. 110,
statement beginning at 174 (1984).

Ms. Linda Carey
United States Department of Agriculture
Page -9-
3. 	Do consumers confuse shelf stable food products with similar food products
that are perishable because of the packaging materials used? 	Could any
confusion be remedied by appropriate revisions in labeling?
4. 	To what 	extent 	do 	consumers 	fail 	to 	store and 	to 	prepare chilled
refrigerated foods properly? To determine whether consumers understand
that chilled perishable products should be handled differently from shelf
stable products, it may be useful to examine the experiences of domestic
markets in which both shelf stable and chilled products currently exist ~,
salad dressings) and foreign markets in which chilled meat and poultry
products are already available.
If information helpful to answering these questions is not contained in the comments filed
in this proceeding, the PSIS may wish to consider obtaining this information through the
use of cop y tests, consumer surveys, and examination of relevant domestic and foreign
markets . 	The PSIS should then be in a better position to determine whether consumers
currently have the information they need to treat refrigerated perishable meat and poultry
products appropriately, or whether particular regulatory action is appropriate .
N. 	CONCLUSION
The staff of the FTC share the PSIS's concern about the potential health risks that
consumers may face from chilled, perishable meat and poultry products. 	This comment
identifies information that we believe would assist the PSIS in deciding how to address this
concern . 	The staff suggests that PSIS consider market and consumer survey information
to determine what information consumers currently receive concerning the proper handling
of these products. 	This would provide a basis for deciding whether additional steps are
needed to ensure that consumers are provided with adequate information on how to handle
and store chilled meat and poultry products of this type, and in light of the information
gathered, whether banning certain packaging would be a useful course.
since1lY, 	~\
(, 	~ L s" -, ( v , \ L--
C. Steven Baker,
Regional Director
Ch icago Regional Office