Public Statement of Chairman Pitofsky, Commissioner Anthony and Commissioner Thompson

In Shell Oil Company
Docket No. C-3912

We conclude that there is ample evidence to find reason to believe that the consent agreement with Shell Oil Company ("Shell") should be accepted. The facts show that Shell provided promotional materials to its customers that contained unsubstantiated claims that ultimately appeared in its customers' ads. There is also evidence that Shell actively encouraged its customers to repeat the claims contained in its promotional materials and actively supported customers' efforts to do so. In fact, the similarities between promotional materials used by Shell and its customers are quite striking. Finally, we do not find that Shell used a disclaimer -- either clearly or conspicuously. Accordingly, we conclude that Shell was properly alleged to have violated Section 5 because it "put into the hands of others the means by which they may mislead the public." Waltham Watch Co v. FTC, 318 F.2d 28, 32 (7th Cir. 1963).

It is true, as the Complaint alleges, that Shell provided its product to sophisticated trade customers, who then incorporated Shell's product into a subsequent product. But we do not believe that this sequence of events allows Shell to escape liability. We believe that all would agree that the interposition of a "sophisticated" party between the originator of deceptive claims and the consumer is not necessarily a defense to "means and instrumentalities" liability. Indeed, the means and instrumentalities doctrine is intended to apply in cases like this one where the originator of the unlawful material is not in privity with consumers, and does not control the actions of those (sophisticated or not) who will make the final decisions as to the message conveyed to consumers. It is well settled law that the originator is liable if it passes on a false or misleading representation with knowledge or reason to expect that consumers may possibly be deceived as a result. See Regina Corp. v. FTC, 322 F.2d 765, 768 (3rd Cir. 1963). Based on the facts, we have reason to believe that standard is met in this case and, accordingly, have voted to finalize the consent agreement.