## Facts

- Kraft marketed Kraft Singles, a regulated “process cheese food” slice product made from milk and containing at least 51% natural cheese.
- Kraft competed in an individually wrapped slice market that included process cheese food slices, “imitation” slices (often fortified), and “substitute” slices.
- As imitation slices gained market share by advertising lower cost and comparable nutrition, Kraft launched the “Five Ounces of Milk” advertising campaign.
- The campaign featured statements and imagery that each slice was “made from five ounces of milk” and emphasized calcium.
- The FTC found the campaign conveyed two implied messages: (1) a slice of Singles had the same calcium as five ounces of milk (“milk equivalency”), and (2) Singles had more calcium than most imitation slices (“imitation superiority”).
- Evidence showed that processing milk into Singles resulted in a loss of about 30% of the calcium contained in five ounces of milk.
- Evidence also showed many imitation slices were fortified to contain calcium amounts similar to Singles, undermining any general superiority claim.
- The FTC concluded the implied messages were false or misleading, material to purchasing decisions, and violated §§ 5 and 12 of the Federal Trade Commission Act, then entered a cease-and-desist order restricting misrepresentations about calcium and other nutrients in Kraft’s cheese advertising.
- Kraft petitioned for review, challenging both the liability findings and the scope and constitutionality of the order.

## Issues

1. Whether the FTC could find that advertising conveyed deceptive implied claims based on the advertisements’ overall net impression, without consumer survey or other extrinsic evidence.
2. Whether substantial evidence supported the FTC’s findings that the implied calcium claims were false or misleading and material.
3. Whether the cease-and-desist order was impermissibly broad or violated First Amendment protections for commercial speech.

## Decision

- The court enforced the FTC’s cease-and-desist order.
- The court held the FTC could determine that reasonably clear implied claims were conveyed from the face of the advertisements, without extrinsic evidence.
- The court held substantial evidence supported findings that the ads implied false or misleading calcium comparisons to milk and to “most” imitation slices and that the claims were material.
- The court upheld the breadth of the remedy as rationally related to preventing recurrence of similar deception across Kraft’s cheese advertising.
- The court rejected Kraft’s First Amendment challenge because the order targeted deceptive commercial speech.

## Legal Principles

- Deceptive advertising under the FTC Act includes implied claims conveyed by the “overall net impression” of an advertisement’s text, imagery, and context.
- The FTC may find implied deception without consumer surveys when the implied message is reasonably clear from the advertisement itself.
- Findings of deception and materiality must be supported by substantial evidence; health-related nutrient claims are commonly material because they are likely to influence purchasing decisions.
- Remedies may extend beyond the specific advertisements at issue when they are rationally related to preventing similar future misrepresentations by the same advertiser.
- Deceptive commercial speech is not protected in the same manner as truthful commercial speech, and orders aimed at preventing deception generally do not violate the First Amendment.

## Conclusion

The court upheld the FTC’s determination that Kraft’s “Five Ounces of Milk” campaign deceptively implied false calcium equivalence and superiority claims and enforced a broad cease-and-desist order, recognizing the FTC’s ability to infer clear implied messages from an advertisement’s net impression and to craft remedies aimed at preventing repeat deception.


Kraft, Inc. v. Fed. Trade Comm'n, 970 F.2d 311 (7th Cir. 1992)