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Weil, Gotshal & Manges LLP
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Fast-Food Companies Lawsuits
Maskin, Arvin
(June 25, 2003, Interview - CNBC)
BILL GRIFFETH, anchor: It would
appear that Americans are losing the battle of the bulge at a rather alarming
rate. The Centers For Disease Control estimates that the obesity related
treatment costs topped $90 billion last year, second only to smoking related
health costs. Fast-food and snack companies are caught at the center of
this controversy over obesity,feeling the pressure now in court and increasingly
from corporate America, which often foots the insurance bills to treat
that problem. CNBC's Bertha Coombs has more.
BERTHA COOMBS reporting: Fast-food
companies are caught in the cross-hairs. The same lawyers who took to on
Big Tobacco have now set their sights on Big Food. With a new assault on
McDonald's,suing the fast-food giant for deceptive marketing of its goods,
they argue these lawsuits are already bringing positive changes.
Professor JOHN BARIZHAL (George
Washington University): Here in the United states McDonald's, Burger King
have already put on far more healthier items on their menu. In Great Britain
they're actually going to be telling people right at the store what the
fat and calorie content of their meals are.
COOMBS: The food lobby counters
lawsuits are aimed mostly at fat payouts. A new ad campaign argues obesity
litigation turns everyone, even the girl scout who sold you butter cookies,
into a target, making a mockery of a serious health issue.
Mr. ARVIN MASKIN (Weil, Gotshal
and Manges): The problem is that these lawsuits are being brought against
individual companies, in a way that really implicates individual choice.
The fact of the matter is individual moderation, common sense, parental
and individual responsibility would address the very issues that are the
subject of these lawsuits.
COOMBS: While debate in the court
may go on for years, the business community is opening up a new front in
the battle against the bulge. Nearly 200 companies, including Ford and
Pepsico, have joined together in a program to try to cut obesity related
health costs, which they estimate is adding $12 billion a year to American
corporate expenses.
Ms. BEVERLY DARLING (Washington
Business Group on Health): Employers are in this, whether they know it
or not, and they can do a lot of things to help make it easier for their
employees and their families.
COOMBS: They are taking a page
from school districts, like New York City and many in California, which
are pushing vendors to provide healthier alternatives to junk food snacks
in vending machines and cutting the fat in their cafeteria offerings with
a focus on education and choice rather than punishment.
Ms. DARLING: Years ago they said
the American people would never wear seat belts and most of them would
never quit smoking and we've seen what's happened. So, we know that people
will choose to have a better life, when they have the information and the
options.
COOMBS: Analysts at UBS Warburg
believe that it's lower sales and that public pressure, changes in food
buying, that could really have a bigger impact, immediately, on snack food
companies than the lawsuits. They estimate that just a 3 percent reduction
in cash growth could translate into an 18 percent fall in value for those
companies and it's not-- It's the companies they say that adjust quickly
to changing public taste that are the ones who are going to win out in
this growing battle.
GRIFFETH: I mean, it is clear that
the--what we saw happen to the tobacco companies with the litigation involved
there is probably going to start happening now with some of the companies
that make this fast-food.
COOMBS: Well, that's exactly what
those lawyers are doing. They met last week, they had a conference last
week to strategize on how to approach this way. And, they argue that they
are doing public good by getting these companies to pay out and these companies
to change. But there's also a lot of public pressure on the other side,
like Tommy Thompson. A lot of health officials have really concentrated
on this and they want food companies and others to really take a good luck
at this because it is such a huge burden on our economy and on our life
style.
GRIFFETH: Maybe they will once
they've seen what happened to tobacco companies with the litigation pressures
there.
Bertha thanks.
Bertha Coombs with that story.
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