General Mills Fun Group, Inc

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IN THE MATTER OF GENERAL MILLS FUN GROUP, INC.

MODIFYING ORDER IN REGARD TO ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docket C-2965. Consent Order, May 1979-Modifying Order, Dec. , 1985 The Federal Trade Commission has released General Mills, Inc. from its responsibilities under a 1979 consent order that prohibited misrepresentations in advertising by its toy producing subsidiary, but has said the order remains binding on the subsidiary s successor (93 F. C. 749). General Mils intends to spin off its toyproducing subsidiary, General Mills Fun Group, Inc., as an independent company called Kenner Parker Toys, Inc., and hab no intention of reentering the toy business following the corporate action.

ORDER REOPENING THE PROCEEDING AND MODIFYING CEASE AND DESIST ORDER On September 20, 1985, General Mils, Inc.'s (Petitioner) request to reopen and modify the consent order entered against General Mils Fun Group, Inc. (respondent) by the Commission on May 15, 1979 (93 C. 749), in the above-captioned matter was placed on the public record for 30 days pursuant to Rule 2.51(c) ofthe Commission s Procedures and Rules of Practice. That order proscribes representing the performance, operation, use, size, or appearance of toys or related products which (1) cannot be duplicated by children in ordinary use; or (2) through the use of any commercial production technique misrepresents to children these characteristics, or (3) fails to disclose the need for human or mechanical assistance, when such failure, in the context of the advertisement as a whole, misrepresents to children such toy s performance or operation. Part III of that order applies the same proscriptions against Petitioner ifit should engage in the advertising of toys, directly or through a subsidiary other than respondent. A second provision of Part II would make Petitioner liable for any penalties or other legal or equitable relief under the order if for any reason respondent or other subsidiary advertising toys while owned by Petitioner is not amenable to suit or execution of full judgment. The respondent, General Mils Fun Group, Inc., through a series of name changes has become Kenner Parker Toys Inc. (Kenner Parker or respondent). On November 7, 1985, Petitioner spun-off Kenner Parker as a free-standing corporate entity that is now independent of Petitioner through a distribution of Kenner Parker s stock to Petitioner s stockholders of record. The newly independent Kenner Park- Modifying Order 106 F. , with fiscal 1985 sales of $638 milion and assets of $499 milion will be one of the largest toy companies in the world. As a result of this spin-off, Petitioner wil no longer be engaged in the toy business and has stated that it has no present intent to reenter that business in the future. In addition, Petitioner is not in a position to oversee either the management or advertising of respondent Kenner Parker formerly General Mils Fun Group, Inc. As a consequence of the foregoing, Petitioner requests that it be relieved of its responsibilities under the order by the setting aside of Part III. Upon consideration of Petitioner s request and supporting materials, and other relevant information, the Commission finds pursuant to Rule 2.51 ofthe Commission s Procedures and Rules of Practice, 16 R. 2.5I that changed conditions of fact and the public interest warrants reopening and modification of the order in the manner requested. In doing so, the Commission notes that Kenner Parker, as a successor corporation, remains bound by the terms of the order and that a specific covenant to that effect was contained in the transfer documents between Petitioner, General Mils, Inc., and Kenner Parker.

It is therefore ordered That the proceeding is hereby reopened and the order issued May 15, 1979 in Docket No. C-2965 as hereby modified by setting aside Part II thereof.

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609 Modifying Order