The federal government is now following the states in seeking to extort billions from the tobacco industry. Cigarette companies aren't the only targets: gun makers are currently seeking to settle a pack of municipal lawsuits, and alcohol producers, too, could find themselves in lawyers' legal gun sights.
Yet, a new Federal Trade Commission report concludes that when it comes toadvertising, at least, self-regulation is the best means of addressing theproblem of alcohol abuse.
The states' success in using litigation to loot the tobacco industry hasspurred copycat suits. Already, one case has been filed against the alcoholindustry by a Florida group, ''Victory Over Addiction International.'' Theplaintiffs sought $1 billion in restitution, unspecified punitive damages,and severe limits on advertising and marketing.
The latter remedy is a goal of even those who aren't suing. When theAmerican Medical Association hosted an International Alcohol PolicyConference, participants charged alcohol makers with using ''frogs,lizards, dogs and cartoonlike characters that appeal to youth to promotealcoholic beverages.''
Similarly, the Marin Institute, a major federal grantee, promoted effortsto stop Anheuser-Busch from using cartoons in its beer ads. Morethreatening was the short-lived political campaign against liquoradvertising three years ago. When Joseph E. Seagram's & Sons abandoned itsvoluntary ban on broadcast ads, some people reacted as if cocaine merchantshad taken over Madison Avenue. The Federal Trade Commission and FederalCommunications Commission launched investigations. Congressmen introducedlegislation. Commentators fulminated and activists raged.
The protests never made any sense. If products can be legally sold, theycan be advertised. Indeed, at the very moment then-FCC Chairman Reed Hundtwas attacking makers of distilled spirits for planning to advertise, thebeer industry was spending more than $600 million annually on televisionads. Yet, no one, least of all Hundt, complained about the latter.
Moreover, it isn't clear that advertising has a substantial impact on thedemand for alcohol (as opposed to brand preference). More than a decadeago, the FTC admitted that there was ''no reliable basis to conclude thatalcohol advertising significantly affects consumption, let alone abuse,''and that ''absent such evidence, there is no basis for concluding thatrules banning or otherwise limiting alcohol advertising would offersignificant protection to the public.''
However, threats from Congress and the FCC alike to investigate andlegislate made networks reluctant to run any ads. The result has been a defacto advertising ban.
The political furor eventually died down, but not before Congressinstructed the FTC to review the effectiveness of industry self-regulationin preventing alcohol advertising and marketing to those below the age of21. Two years later, the commission has released its report.
The result is a sharp rebuff to industry critics. Concluded the FTC:''Self-regulation is a realistic, responsive and responsible approach tomany of the issues raised by underage drinking. It can deal quickly andflexibly with a wide range of advertising issues and brings the accumulatedexperience and judgment of an industry to bear without the rigidity ofgovernment regulation.''
The commission indicated that such an approach was particularly importantgiven the First Amendment protections afforded advertising. All threealcohol industry associations the Distilled Spirits Council of the UnitedStates, Wine Institute and Beer Institute have voluntary advertising codescovering content and placement. Most individual companies implement similarguidelines.
Despite the lack of government enforcement, the FTC reports that ''for themost part, members of the industry comply with the current standards.''Indeed, adds the commission, ''many individual companies follow their owninternal standards that exceed code requirements.''
The FTC did recommend that the industry tighten its restrictions, such asavoiding advertising in media that reaches even a small percentage ofunderage consumers. The commission also advocated creation of an outside,independent review panel, along the lines of the National AdvertisingReview Board of the Council of Better Business Bureaus.
Nevertheless, the agency's report offers a dramatic contrast to the usualattempt of government agencies to forever expand their power over privateindustry.
When the controversy first arose, the FCC, led by Hundt, seemed eager toregulate alcohol advertising. It only reluctantly concluded that it lackedthe legal authority to do so.
Not so the FTC, which now emphasizes that self-regulation is better thangovernment intervention. The commission's new, responsible stance shouldencourage the networks to accept ads from distillers, thereby treating themlike any other companies.
Litigation is an awful way to make national policy. Almost as bad isregulation or the threat of regulation by largely unaccountablebureaucracies. As the FTC acknowledges, the alcohol industry has shown howprivate companies can cooperate, voluntarily, to better protect the publicinterest.