Antitrust Law Daily FTC initiates study into e-cigarette sales, advertising, and promotional methods
Thursday, October 3, 2019

FTC initiates study into e-cigarette sales, advertising, and promotional methods

By Stephanie K. Mann, J.D.

To better understand the rapidly growing e-cigarette market, the FTC is seeking information from the six e-cigarette manufacturers.

The FTC is complementing its studies into cigarettes and smokeless products by commencing industry studies into six e-cigarette manufacturers to analyze the companies’ sales, advertising, and promotional methods to better understand the rapidly growing e-cigarette market. The orders were sent to: JUUL Labs, Inc.; R.J. Reynolds Vapor Company; Fontem US, Inc.; Logic Technology Development LLC; Nu Mark LLC; and NJOY, LLC.

According to the FTC press release, the orders will collect information about e-cigarette sales, advertising, and promotional practices in the United States for the calendar years of 2015-2018. Among other things, the Commission is seeking: annual data on the sales and giveaways of e-cigarette products; information about the characteristics of the companies’ e-cigarette products, such as product flavors; annual amounts the companies spent on advertising and promoting e-cigarette products; and information about e-cigarette product placement, the websites and social media accounts used to advertise or sell e-cigarettes, affiliate programs, influencer marketing, and college campus programs.

Each company is required to submit a written report and two electronic datafiles. The written report should answer the questions contained in the order. Datafile No. 1 should contain information about E-Cigarette Product sales and Give-Aways. Data on Advertising and promotional expenditures for E-Cigarette Products are to be reported in Datafile No. 2. The special reports are due January 2, 2020.

FTC 6(b) studies. FTC industry studies pursuant to Section 6(b) of the FTC Act, 15 U.S.C. §46, such as this one, are relatively rare. In the past few years, the agency used this authority to examine the activities and impact on innovation of patent assertion entities or PAEs and suits related to the misuse of IP rights to inflict competitive injuries. Released in October 2016, the FTC’s report following the study observed that that litigation reforms could be helpful. More recently on the consumer protection side, the FTC issued 6(b) orders to several Internet service providers to evaluate their privacy practices in March 2019.

Some have called on the agency to use this tool more frequently. FTC Chairman Joe Simons has hinted recently that the agency might be interested in conducting a formal 6(b) study of the competitive impact of "common ownership," also known as horizontal shareholding.

Companies: Fontem US, Inc.; JUUL Labs, Inc.; Logic Technology Development LLC; Nu Mark LLC; NJOY, LLC; R.J. Reynolds Vapor Co.

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