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Regulatory Supersizing

July 5, 2011

David Vladeck, the Federal Trade Commission’s Director of the Bureau of Consumer Protection, in a parting shot before the Fourth of July, released a blog post entitled “What’s on the table.”  The blog mocks, disparages, deprecates and dismisses a broad range of serious issues raised by the business community concerning the Interagency Working Group’s (IWG) Proposal on Food Marketed to Children.  The IWG, by the way, is made up of four powerful Federal Agencies: the FTC, the US Department of Agriculture (USDA), the Food and Drug Administration (FDA) and the Centers for Disease Control and Prevention (CDC).

This blog, unfortunately, is extremely disappointing.  By simply labeling the wide range of issues outlined by a broad cross-section of the advertising, media, food, beverage and restaurant communities as “myths,” it signals a striking unwillingness to seriously examine the growing critique of the IWG’s food and marketing recommendations.

The IWG proposal itself makes clear, however, how much is really at stake.  The proposal states that, “The Working Group recognizes that if the proposed nutrition principles were fully implemented by industry a large percentage of food products currently in the marketplace would not meet the principles.”  In fact, of the 100 most advertised food and beverage products in the US, 88 of them would fail to meet the IWG’s proposed nutrition standards.  Bananas, grapes, broccoli and a few other similar fruits and vegetables would be the only food products to make the cut.

The proposal, in a major understatement, notes that efforts to reformulate products to meet the nutritional goals might present “technical difficulties and challenges in maintaining the palatability and consumer acceptance of the product.” Stripped of bureaucratic legalese, this means that the IWG proposals are calling on industry to eliminate virtually all existing food, beverage and restaurant advertising directed to those under 18 years of age. 

During this extremely difficult economic period, this proposal, if acceded to by industry, would have multibillion dollar adverse impacts in the marketplace for the media, food, beverage and restaurant communities.

But not to worry - in an excess of regulatory modesty, the blog maintains that the proposal is “voluntary,” “not a rulemaking proceeding,” and “provides no basis for law enforcement actions by the FTC or any of the other agencies participating in the Group.”  This is a classic example of attempting to deflect criticism of government action and overreaching by claiming that it is so inconsequential as not to be of any concern.

This “Inconsequentiality Defense,” however, falls apart under even the slightest examination.  The four agencies of the Working Group have authority over virtually every aspect of the growing, marketing, labeling and advertising process that is fundamental to the health and well-being of the food, beverage, restaurant and advertising communities. The highly technical, restrictive and detailed IWG proposal was the product of a more than 23 month effort by an interagency task force.

The proposal explicitly states that it covers all media and virtually every theoretical type of marketing from product placement in movies, to point of purchase displays, to word of mouth advertising, to charitable and sporting activities.  In fact, after describing 19 other marketing categories to be covered by the IWG proposals, the final marketing category listed is “other.”

Most significantly, the proposal claims that while its goals are “ambitious” they are “warranted by the urgent need to improve children’s diet and health and address the epidemic of childhood obesity.”   Is it at all plausible under these circumstances that publicly held companies are not having a regulatory “Sword of Damocles” dangled over their head if they fail to “voluntarily” accept the IWG’s stringent marketing proposals?  Could they simply ignore these proposals without fear of government retribution?

Certainly, Martin Redish, a renowned constitutional scholar and law professor at Northwestern University, doesn’t think so.  Redish notes, “Simply as a matter of common sense it is all but inconceivable that the  federal government would incur the burdens and expense involved in establishing the Interagency Working Group and preparing the advertising regulations only  to have the food industry summarily ignore them.”  Redish then concludes, “The voluntary nature of the regulations is therefore appropriately deemed to be nothing more than a precursor to coercive enforcement in the event that the industry fails to comply.”

Therefore, labeling the IWG program as “voluntary” certainly should be considered a violation of truth in labeling laws.  Furthermore, if broadcasters accepted ads for foods, beverages or restaurant offerings that did not meet the IWG standards they would obviously open themselves up to facing challenges to their station licenses for failure, as is required under the Federal Communications Act, to operate in “the public interest.”

Finally, the blog fails to discuss, and barely acknowledges, the most glaring problem with the IWG proposal, which is its failure, despite Congress’ direction for them to do so, to relate or analyze the relationship of their proposals to preventing obesity among children and teens.  While the costs of acceding to the IWG mandates, as already noted, would be in the multibillions of dollars, the proposal is strikingly silent on any estimate of the benefits that the proposal would purportedly provide.

For all of these reasons, the ANA is calling on the IWG to withdraw its proposal as counterproductive, potentially seriously economically damaging and not responsive to Congress’ direction to the Interagency Working Group to focus on the evidence on how to combat obesity among our children in the United States.

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