Giants in Candy Waging Battle Over a Tiny Toy

For the past several weeks a little-noticed war involving chocolate balls has been raging across the capital's specialized battlefields of regulatory agencies, Congress and consumer organizations.

Although the hollow balls are each only about two inches in diameter, millions of dollars are at stake as two candy superpowers, Nestle and Mars, face each other on opposite sides of the legislative breach. And, as usually occurs in such situations in Washington, each side has deployed legions of lobbyists and lawyers to press its case.

The fight is over a product called Nestle Magic, a chocolate ball covering a plastic shell, inside of which is a small plastic toy in the form of a Disney character. The product is aimed at 3- to 8-year-olds.

Mars, which makes M&M's and Mars Bars, among other sweets, has allied itself with, and is largely subsidizing, consumer groups that are hoping to prevent Nestle from establishing a market for the product in the United States.

A child is supposed to break open the chocolate, separate the two halves of the plastic shell and take out the hard plastic figure. Some consumer groups have complained that the product is dangerous because the toy presents a choking hazard. They argue that it is irresponsible to associate toys with something that goes into the mouth, like candy.

Nestle has insisted that the product is safe and has passed a series of tests, including one by the Consumer Product Safety Commission showing that it is not a choking hazard.

''We would never introduce a product that wasn't safe,'' said Laurie MacDonald, Nestle's vice president for corporate and brand affairs.

Such toy-candy combinations have been highly popular for years in Europe, but candymakers in the United States have been prohibited by law for nearly 60 years from marketing any product in which a small toy is imbedded in candy.

In fact, although the consumer agency ruled that the product was not in violation of its safety regulations, another Federal agency has deemed Nestle Magic illegal. The Food and Drug Administration wrote Nestle in July saying that the product was in violation of the Food and Drug Act, which has prohibited since 1938 the sale of any candy that had imbedded in it a toy or trinket.

Despite that message, Nestle, the giant Swiss-based food conglomerate, began selling Nestle Magic in the United States the next month. The balls come one to a bright, multi-colored box and sell for about a dollar apiece. The company says sales are brisk, but it has declined to disclose precise figures.

F.D.A. officials now say they are even more convinced than before that the product should not be sold in the United States.

''This product is illegal under our act,'' William Hubbard, the associate commissioner for policy of the F.D.A., said in an interview this week.

Mr. Hubbard said the product ''raises a special issue. By imbedding the toy in a food, in fact a candy, are you changing its risk characteristics?''

Representative Rosa DeLauro, Democrat of Connecticut, said the effort to market Nestle Magic in the face of F.D.A. disapproval represented ''corporate arrogance and an abdication of corporate responsibility.''

Ms. DeLauro said that earlier this month lobbyists for Nestle tried to have special language inserted at the last minute into the Agriculture Appropriation bill that would have directed the Food and Drug Administration to issue regulations explicitly allowing products like Nestle Magic.

''They tried to pressure every member of the committee,'' she said. ''We just said no. It's unsafe.'' The effort to insert the language into the bill was initiated by Representative George Nethercutt, a Washington Republican whose district includes a Nestle plant employing 550 people.

Asked why Nestle had marketed the product despite the warning from the F.D.A., Ms. MacDonald said Nestle disagreed with the agency's interpretation of the law. ''The product is marketed in the meanwhile because we believe it's legal,'' she said. ''We believe we have an honest disagreement on a technical issue.''

Nestle also has asked the F.D.A. to consider regulations making such toy-food combinations explicitly legal, a procedure that could take two years.

Officials at the food and drug agency say they are increasingly likely to refuse Nestle's request to formulate new regulations because the law prohibiting such products is clear.

Officials said a group of pediatricians employed by the F.D.A. met informally to evaluate Nestle Magic last week and concluded that it was dangerous.

Nonetheless, the agency has not, so far, sought to force the removal of the product from shelves.

It is fairly typical of such lobbying battles that two commercial behemoths are arrayed against each other, but one has the advantage of being able to recruit to its side traditional public interest groups that bring with them a valuable not-for-profit cachet. As is customary, the public interest groups in this case are in the forefront of the public campaign, while Mars has taken a low-profile role. In fact, Edward J. Stegemann, Mars's general counsel, initially denied that his company was behind the effort, only to later acknowledge it was picking up the tab.

A leader in the fight against Nestle is Carol Tucker Foreman, one of the most prominent lobbyists on consumer issues. Ms. Foreman, an Assistant Secretary of Agriculture in the Carter Administration, is a veteran of battles over food safety and has high credibility among consumer groups in Washington. After Ms. Foreman became involved, the attorneys general of Connecticut and Minnesota criticized the product. Stop and Shop, a major supermarket chain in the Northeast, announced it would not sell Nestle Magic.

Ms. Foreman also visited with several consumer groups, armed with samples of Nestle Magic and repeated her pitch that the product recklessly sends a wrong message to children about putting toys in their mouths. In addition, she has said that the Disney toys, which are made in China, are ''cleverly engineered to barely pass the choke tube test'' of the Consumer Product Safety Commission. The test, using a tube with an opening the size of a child's throat, is designed to weed out toys a child may swallow or on which a child may easily choke.

But officials at the consumer agency say that they put the toys through a more wide-ranging test and can find no safety problems.

Nonetheless, Ms. Foreman has successfully recruited some opponents of the toy, like the Center For Science in the Public Interest. That group's director of legal affairs, Bruce Silverglade, has said that the Government should ban Nestle Magic as a health hazard.

Nestle officials say they were taken aback when they learned of the campaign against the product, but they quickly mounted a counterattack. The company hired Washington lawyers and lobbyists to visit some of the same consumer groups, apparently in hopes of just persuading them to stay neutral in the battle.

In some cases it appears to have worked. Cleo Manuel of the National Consumers League said that officials at the nonprofit group had heard the Nestle pitch and were impressed with the company's good intentions. But Ms. Manuel said her group was dismayed when it learned that Nestle had tried to shortcut the legislative process by asking that language be inserted into the Agriculture Department bill at the last minute.

The Federal Food, Drug and Cosmetic Act of 1938 prohibited the marketing of any candy if it had imbedded in it a ''non-nutritive object'' unless the object had a purpose. The F.D.A. has interpreted that exception to apply to items like the sticks in lollypops. Boxes of Cracker Jack, which have long had small toys next to the snack, are governed by a different regulation because the toy is not imbedded in the food product, but is ''commingled.''