Federal Trade Commission Testifies on the Antitrust Implications of Entertainment Industry Self-regulation

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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."

The views expressed in the written testimony represent those of the Federal Trade Commission. The oral presentation and responses to questions do not necessarily reflect the views of the Commission or any individual Commissioner.

Copies of the FTC's testimony and its report "Marketing Violent Entertainment Material to Children," are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; toll-free: 877-FTC-HELP (877-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

Media Contact:

Eric London,
Office of Public Affairs

(FTC Matter No. P859910)

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