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BEFORE THE FEDERAL TRADE COMMISSION COMMENTS OF THE OUTDOOR ) ADVERTISING ASSOCIATION ) OF ~ERICA REGARDING THE ) STAFF REPORT ON ) CIGARETTE ADVERTISING ) ) FILE NO. 792-3204 THE OUTDOOR ADVERTISING ASSOCIATION OF AMERICA 1899 L Street, N.W. Suite 403 Washington, D.C.. RUBIN, WINSTON & DIERCKS 1737 H Street, N.W. Washington, D.C. 20006 Couns~ to the Outdoor Advertising Association of America TI05390074

BEFORE THE FEDERAL TRADE COMMISSION COMMENTS OF THE OUTDOOR ) ADVERTISING ASSOCIATION OF ) AMERICA REGARDING THE STAFF ) REPORT ON CIGARETTE ADVERTISING ) ) FILE NO. 7~2-3204 I. THE INTEREST OF THE OUTDOOR ADVERTISING INDUSTRY IN THE STAFF REPORT These comments are submitted by the Outdoor Advertising Association of America (OAAA), which is the trade association of the standardized outdoor advertising industry. The OAAA is comprised of one hundred and seventy member-companies that serve 7,900 distinct local advertising markets throughout the United States. The OAAA's members are. principally small, locallyLbased, family-owned businesses operating in a single locality, or in several contiguous areas within a particular state. Other OAAA members are relatively large companigs whi6h operate on a regional or national basis. Like all other media, outdoor advertising is purchased .by both national and local advertisers for the dissemination of all types of commerciil, political and socia~l messages. In 19~@, outdoor advertising represented 16.64% of media expenditures for. advertising of the 15 leading cigarette brands.~/ These communications are presented in two basic standard-sized billboard formats. The "poster panel" is a 12 foot by 24 foot sign upon which a pre-printed message is posted. A "p@.inted bulletin" is a 14 foot by 48 foot ~/ Leading National Advertisers Media Decisions, October, 1981, Page 174. Ti05390075

sign which contains a handpainted message. Posters are maintained in one location and advertising copy is periodically pasted onto the surface of the sign. The bulletin sign face is hand painted at a central production facility and is then transported in sections and affixed to a permanently installed support framework. A bulletin will remain in one location for a period of time, usually one month, and will then be disassembled and replaced by anothe~ message while the first message is relocated to another billboard structure. In this way, the same hand-painted message is moved to a series of different sites in a metropolitan area over a six-month or twelve-month period. The OAAA strongly opposes the Staff Report and urges the Commission to reject the staff's recommendations with respect to the dissemination of the cigarette health warning on billboards. This aspect of the Report was effectively rendered moot when, one month after its publication the Commission filed five companion consent judgments in United States District Court which adopt a completely new format for displaying the cigarette disclosure in outdoor advertising. The new format as~ur@s that the warning will be clear and conspicuous to viewers as required by the Commission's 1972 Consent Order and thus meets the concerns raised by the staff regarding the visibility of the current rectangle format advertising. The alternative billboard proposals advanced by the staff are not well thought out and would, in effect, result in the de-facto ban of cigarette advertising in the outdoor medium. Ti05390076

The OAAA's comments will treat these issues directly. However, the Association's objections to the Report extend well beyond these immediate concerns. In our-view, the Staff Report presents an essentially perverse view of the role of. affirmative disclosure in advertising. Implementation of the staff's recommendations would lead the Commission to a policy of intervention in advertising that has been expressly rejected by the Commission and Congress and which is unsupported by the Federal Trade Commission Act. iI. THE STAFF REPORT FAILS TO DEMONSTRATE ANY COMPELLING REASON FOR ABANDONING THE SURGEON GENERAL'S WARNING A. Current Cigarette Advertising Is Not Deceptive As A Matter Of Law. Current cigarette advertising does not constitute a deceptive .act or practice within the meaning of Section 5 of the Federal Trade Commission Act. The staff's contention that the form and substance of the current health warning illegally fails to d'isclose material facts overlooks the basic fact that the warning is required by the Federal TradeCommission in consent orders negotiated with the cigarette companies in 1972. The staff recommendation amounts to urging the Commission to find that c~nduct mandated by its own order is a violation of the Act. Instead of'addressing the difficult policy questions which must be answered before an order is modified pursuant to Section 5(b), the staff has approached the question of whether to replace the current health warning in advertising -3- T105390077

as though they were simply prosecuting a deceptive advertising case of first impression. Inevitably, they box themselves. The staff concedes that the public in fact fully understands the nature of the general health hazard of cigarette smoking. Although it is impossible to tell precisely how much the current warning has contributed to that understanding, it is clear that the warning on packages and in advertising has played a significant role in establishing the public's pervasive awareness of the hazard. Confronted by vi~tually universal recognition of the facts disclosed in every cigarette advertisement, the staff argues that such ads are nonetheless deceptive because many Americans continue to smoke. The staff finds its theory in survey data which purport to show that all consumers may not be aware of the relationshipof smoking to specific diseases, or that they may want to be apprised of this type of specific information. From this, the staff concludes that the failure to disclgse these additional material facts regarding specific hazards renders the current advertising deceptive. In effect, the staff uses consumer behavior rather than cognition as the test for whether a cigarette advertisement is deceptive. Their position boils down to the argument that the current ads are deceptive because if people really understood all the facts about smoking and health in the disclosure, they wouldn't smoke. -4- TI05390078

B. The Staff Report Fails To Provide Any Compelling Policy Or Factual Consideration In Support of A Change In The Current Warning. While the staff's per se approach may have some attraction to lawyers, it doesn't help the Commission to re~olve the central policy issue posed by the Report, of whether the FTC should become involved further in an effort to reduce cigarette smoking. The Staff is really playing philosopher king and has already decided that people shouldn't smoke. In essence, their argument .amounts to a claim that "it is unfair to advertise cigarettes because cigarettes are bad for people." But the staff obviously felt uncomfortable basing its recommendations on unfairness analysis, apparently believing that their recommendations would be more palatable to the Commission and the Congress if presented as~nothing more than a traditional Section 5 case. Al£hough the Report prescribes a.scheme for advertising disclosure intended to impact directly on cigarette consumption, it fails to provide even a superficial analysis of the fa6tors which shape that consumer demand for these products. Yet it is precisely those factors that woulddetermine the success of the staff's recommendations. Thus, the staff never assesses the extent to which advertising affects cigarette consumption. Moreover, they fail to undertake any analysis of whether consumers now rely, or would ever rely, on advertising for more than the type of general information contained in the current warning. The closest they come to this is the assertion, based on general opinion surveys, that consumers say they "would like more -5- TI05390079

information regarding smoking." The staff simply presumes that new and more specific advertising disclosures would accomplish what has not been achieved by the plethora of detailed product information generally availablein the marketplace. In the final analysis, the issues confronting the Commission with respect to the Staff Report involve questions of prac.tic~lity and common sense. It seems incongruous that the very complex and emotionally laden.question of how far government should ~go in attempting to curb cigarette smoking should be played out within the narrowcontext of advertising regulation. In a real sense, the staff has resurrected an issue which time has passed by. The question of whether the warning textshould berevised has been largely eclipsed by the public's universal recognition of the import of the Surgeon General's warning. The Staff Report simply is not convincing in its assertion that there are significant issues remaining for the Commission in this area. This is reflected in the very narrowness of the position they have a~tempted to carve out. Beyond this, the answers to £he central policy questions raised by the staff simply will not be found in the context of advertising regulation. Perhaps, the Commission itself best articulated the limitations of what it can reasonably attempt to achieve in the Statement of Basis and Purpose that acc0mpan~e~ i~ original Rulemaking proposal. "The Commission's jurisdiction is limited to unfair or deceptive trade practices. It has -6- T105390080

no general jurisdiction of public health or morals. In attempting to fulfill its statutory responsibilities to prevent unfair or deceptive cigarette advertising and labeling, the Commission should not be understood as attempting, a comprehensive solution to the problem. Labeling and advertising restrictions could not, in any event, provide a complete answer to the social, moral, medical and economic issues raised by the widespread incidence of the smoking habit, especially among young people."~/ The staff does not want people to smoke because-they believe it may adversely affect their health. In that conclusion they find an open-ended rationale for imposing an increasingly severe, and perhaps endless series of restrictions on cigarette advertising. In order to accept their reasoning, one must don blinders and view cigarette consumption and health information solely in terms of cigarette advertising. They have provided nothing to show that further regulation will appreciably affect the public'sunderstanding or, applying the staff's own test, its b~havior. When we look at the smoking issue, we see nothing more for the Commission to do. The single and most compellling conclusion of the Staff Report is that people smoke for complex reasons even though they understand the potential hazard involved. The staff's proposals are not going to significantly change tha£ fact. III. ;THE IMPACT OF THE REPORT RECOMMENDATIONS ON CIGARETTE ADVERTISING IN THE OUTDOOR MEDIUM A. The 1981 Consent Judgement Format The Federal Register Notice solicits specific comments on the staff's recommendations concerning the dissemination of Statement of Basis and Purpose, Trade Regulation Rule For The Prevention of Unfair Or Deceptive Advertising And Labeling Of Cigarettes, June 24, 1964 p. 7. -7- TI05390081

the health warning on billboards. The Notice emphasizes thai in initiating its civil penalty action against the cigarette manufacturers in U.S.v.R.J. Reynolds, the Commission had determined that the size of the warning rectangle on billboards was not clearly and conspicuously visible to the average viewer of a billboard advertisement. On July 13, 1981, one month after publication of the Notice, the Commission. filed five companion consent judgments ~n the U.S. District Court which terminated this litigation against all parties except R.J. Reynolds.3_/ The judgments are of immediate significance because they implement a fundamental change in the manner in which the cigarette warning is disseminated inoutdoor advertising. As such, the judgments represent a specific determination .by the Commission - albeit in a settlement context - of a format that presents a clear and conspicuous billboard disclosure. The revised requirements establish an entirely new and unique warning format tha~ is to be used solely for billboards. The consent judgments abandon the tightly contained warning rectangle and in its stead require that a greatly enlarged Surgeon General's warning must be displayed within a segregated banner that extends across the entire length of the base of each sign. Unlike the original format, the warning must now conform to specific size requ~remen£s and 3--/ See United States of America v. Philip Morris, Inc., Consent Judgment 76 Civ. 815 (JMC); U.S. District Court for the Southern District of New York, July 13, 1981. -8- T!05390082

must be display~d agains~ a background which contrasts with the remaining advertising copy on the sign. The commissioh's order also requires that the warning must be.printed in a specific type style that maximizes the visibilit~ of messages on billboards. The billboard provisions of the consent judgments are not simply technical adjustments but rather represent a basic revision in Commission policy. Indeed, they are the end product of precisely the type of remedial analysis urged on the Commission by the Staff Report. In essence, they moot the staff's recommendation for a reevaluation of the manner in which the cigarette disclosure is disseminated in Outdoor Advertising. B. The Staff Report Recommendations Would Result In A De Facto Prohibition Of Cigarette Advertising In The Outdoor Medium.. For reasons that are unclear to us, the staff completely ignores the new consent judgment format, although they must have been aware of the Commission's determination prior to the time their Report was published. Instead, the staff poses a series of alternative schemes for disseminating the cigarette disclosure in the outdoor medium. On one hand, the staff suggests that it might not be possible to provide an effective disclosure on billboards and proposes that one option might be simply to waive the dis$1osur~ requirement for outdoor advertising. In the alternative, they suggest requiring cigarette advertisers to dedicate a specific number of billboards solely -9- TI05390083