Dannon Agrees to Settle Advertising Dispute with the FTC

Dec 20, 2010   

The Federal Trade Commission (FTC) has announced that Dannon, the makers of Activia and DanActive, has agreed to stop making certain claims about its products. In addition to its settlement with the FTC, Dannon has agreed to pay $21 million to resolve state-led investigations pertaining to its advertising.

Dannons troubles with the FTC began in October, when the Agency filed a complaint against the company. The Complaint specifically alleged that Dannon violated the FTC Act by making certain unsubstantiated claims about its probiotic products. The substance of these claims was that: (1) “drinking DanActive reduces the likelihood of getting a cold or the flu,” and (2) “eating one serving of Activia daily relieves temporary irregularity and helps with slow intestinal transit time.”

The Settlement prohibits Dannon from advertising that its probiotic products reduce the likelihood of cold or flu unless these health claims are first approved by the U.S. Food and Drug Administration (FDA). While the FTCs Announcement notes that “companies usually do not need FDA approval of their health claims in order to comply with the FTC Act,” the Agency insisted on this as a term of the settlement to ensure Dannons compliance with the agreement. In addition, Dannon may not advertise that its probiotic products relieve temporary irregularity or slow intestinal transit unless the company possesses two well-controlled human clinical studies that substantiate these claims.

While the terms of this settlement may be stringent, they are becoming more common as the FTC has targeted other makers of probiotic drinks this year. For instance, the FTC entered into a settlement with Nestle HealthCare Nutrition, Inc., the makers of BOOST Kid Essentials, in May of this year. Although the claims that Nestle made about its product differed from those made by Dannon, namely that BOOST reduced the duration of acute diarrhea in children, the terms of the companys settlement with the FTC were essentially the same. Found here, the Agreement prohibits Nestle from making these types of claims about its products unless otherwise approved by the FDA and backed by two well-controlled human clinical studies.

In addition to targeting advertisements of probiotic drinks, the FTC has launched an attack against claims touting the efficacy of pomegranate in its battle with POM Wonderful. In September, the FTC filed a complaint against the pomegranate juice maker for allegedly making several false and unsubstantiated claims in advertising. Found here, the Complaint sets forth various claims that offended the FTC, including that the pomegranate juice was effective in decreasing blood pressure and the risk of heart disease. Additionally, the Complaint contains a proposed order that contains essentially the same terms as the Dannon and Nestle Agreements. However, POM Wonderful has yet to reach a settlement with the Agency, and as POM has brought its own suit against the FTC, in a matter previously reported in our blog, it is likely that this embroiled battle will continue well into the New Year.

For more information regarding the FTC regulations and substantiation requirements for advertising, please contact us at contact@fidjlaw.com.