For Release: September
20, 2000 Federal Trade Commission Testifies on the Antitrust
Implications of Entertainment Industry Self-regulation
Chairman Robert Pitofsky presented Federal Trade Commission testimony today before the
Senate Committee on the Judiciary on whether antitrust laws pose potential obstacles to
self-regulatory ratings systems by the entertainment industry. According to the prepared
Commission testimony, antitrust law does not threaten self-regulation by the entertainment
industry and legislation to create an antitrust exemption for the industry is unnecessary.
The Commission testimony states "it is unlikely that the antitrust laws prevent
the entertainment industry from adopting and enforcing effective restraints against the
target marketing to children of violent entertainment products that industry itself labels
or rates with parental advisories."
In its report released on September 11th titled "Marketing Violent
Entertainment Material To Children: A Review of Self-Regulation and Industry Practices in
the Motion Picture, Music Recording & Electronic Game Industries," the Commission
found that self-regulation by the entertainment industry fulfills an important role in
shielding children from material more appropriate for mature audiences. The question
raised by today's hearing is whether a self-regulatory program enforced by the
entertainment industry would raise significant antitrust issues. The Commission takes the
position that no such problem would arise under a ratings system designed to inform
parents as to age-appropriate material. The only situation where antitrust problems would
arise, according to the FTC, would be "if the self-regulatory program was a cloak for
an anticompetitive scheme, and not truly designed to protect young people from
inappropriate exposure to violent material."
The Commission testimony reviews the history behind concern that the antitrust laws may
pose obstacles to self-regulatory efforts. The testimony states that while "[e]arly
enforcement was deeply suspicious of any kind of cooperative undertaking among
competitors," the many benefits of industry self-regulation have become evident.
According to the Commission, in light of such benefits, "prevailing antitrust
doctrine is not inherently antagonistic toward self-regulatory efforts."
However, the Commission states that the Supreme Court "has recognized the
possibility that self-regulatory efforts can be abused," and therefore, "[t]he
role of government enforcers... is not to interdict legitimate industry self-regulation
but to ensure that such efforts are consistent with the operation of competitive
markets."
The Commission's testimony says that since the FTC report found "a continuous
pattern of target marketing to underage users"... "[i]ndustry self-regulation
designed to eliminate this marketing is unlikely to violate the antitrust laws" under
the "rule of reason" set forward by the Supreme Court. The testimony concludes
by stating "an exemption from the antitrust laws is unnecessary for the industry to
establish or expand codes that prohibit target marketing to children and impose sanctions
for noncompliance, increase compliance at the retail level, or increase parental
understanding of the ratings and labels." |