Department of Telecommunication - Michigan State University - Bauer - Fall 2003LAW AND POLICY OF THE MEDIACommercial Speech: A PrimerI. Regulation of Commercial Speech1. Federal Trade Commission (FTC, <http://www.ftc.gov>) established 1914 by Federal Trade Commission Act. At the same time, Congress enacted the Clayton Antitrust Act of 1914, banning price discrimination, exclusive sales contracts, corporate mergers, inter-corporate stock and other practices whose effect was to significantly decrease competition or create a monopoly.- Empowered to prevent the use of “unfair methods of competition in commerce.”- Independent regulatory agency, five commissioners, three Bureaus (Competition, Economics, Consumer Protection), several regional offices.2. FTC mandates- Deceptive advertising- Interpreted by FTC as form of unfair competition.- Upheld by U.S.S.C. in FTC v. Winstead Hosiery (1922).- In FTC v. Raladam Co. (1930) the U.S.S.C. found that “unfair trade methods are not per se unfair methods of competition.”- Wheeler-Lea Amendments to FTC Act (1938) gave Commission broad power over “unfair or deceptive acts of practices of commerce.” (In 1938, Congress also established Food and Drug Administration.)- 1975 Magnuson-Ross Act includes “unfair or deceptive acts or practices in or affecting commerce.” Are defined as practices that cause or a re “likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition.”3. FTC means of enforcementa. Prohibitive measures- Investigations- Cease-and Desist-Orders- Assurance of Voluntary Compliance (AVC)- Consent Decrees- Trade Regulation Rules (TRR), which have the force of law. Since the FTC Improvement Act of 1980, TRRs can only be promulgated when there is a “pattern of deceptiveness.”1- Non-judiciary procedures (Advisory Opinions, Industry Guides, and Consumer Education)b. Corrective measures- Corrective advertising- Affirmative disclosure- Substantiation4. Other government agencies- Federal Communications Commission (ongoing joint initiative to address Truth-in-Advertising of long distance services, next meeting November 4, 1999, 9:30 a.m. - 4:30 p.m., available at http://www.fcc.gov/realaudio/)- U.S. Postal Service- Food and Drug Administration (FDA)- Securities and Exchange Commission (SEC)5. Self-regulation- National Advertising Review Council (NARC) established by American Advertising Association (ANA, <http://www.ana.net>), American Association of Advertising Agencies (AAAA, <http://www.aaaa.org>), American Advertising Foundation (AAF), and the Council of Better Business Bureaus (CBBB) to “foster truth and accuracy in national advertising through voluntary self-regulation.”- NARC sets up rules for National Advertising Division (NAD), Children’s Advertising Review Unit (CARU), and the National Advertising Review Board (NARB).6. Advertising ethics- Puffery- Testimonials- Program-length TV commercials- Health-oriented advertising- Tobacco and alcohol advertisingII. First Amendment issues1. Commercial Speech Doctrine- Valentine v. Chrestensen (1942). “We are equally clear that the Constitution imposes no such restraint on government as respects purely commercial advertising.”2- Jamison v. Texas (1943).- Murdock V. Pennsylvania (1943)- Martin v. City of Struthers (1943)2. Media corporations- New York Times v. Sullivan (1942)- Pittsburgh Press v. Pittsburgh Commission on Human Relations (1973)- Bigelow v. Virginia (1975)- City of Cincinnati v. Discovery Network, Inc. (1993)3. Non-media corporations- Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council (1976)- Linmark Associates, Inc. v. Willingboro (1977)- Hugh Carey v. Population Services International (1977)- Consolidated Edison Co. v. Public Service Commission of New York (1980)- Central Hudson Gas and Electric Corp. v. Public Service Commission of NewYork (1980). Develops four-part test:- Is expression protected by First Amendment (commercial speech must concern lawful activity and not be misleading)?- Is asserted government interest substantial?- Does regulation directly advance the asserted government interest?- Is the regulation more extensive than necessary to serve that interest?- Bolger v. Youngs Drug Products Corp. (1983)4. Professional advertising- Bates v. State Bar of Arizona (1977) broadened price advertising from Virginia Board of Pharmacy to lawyers.5. Truthful commercial speech- Posadas de Puerto Rico Associates v. Tourism Company of Puerto Rico (1986) (lost much of its impacts since but was never formally overturned)- Rubin v. Coors Brewing (1995)- 44 Liqourmart v. Racine (1996)- Greater New Orleans Broadcasting Association, Inc., et. al. v. United States et. al.,