Ad Groups Fume in Tobacco War

FDA to Have Power Over Marketing; Altria Fiddles While Free Speech Burns

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WASHINGTON ( -- Someone just got burned.

After years of taking the unpopular stance of defending tobacco marketers in fight after fight, leading ad groups are being dragged into a monumental free-commercial-speech battle around the pernicious weed. A big push is on to give the FDA regulatory power over not just tobacco, but all its marketing and packaging -- a precedent-setting prospect that sits very uneasy with food and alcoholic beverage marketers.

Ironically, Altria Group's Philip Morris, often (if sometimes reluctantly) defended by the free-speech-advocating ad groups, is actually endorsing the proposed legislation. (As a completely dominant player, Philip Morris is now happy to see marketing-based battles over market share outlawed.)

Sen. Ted Kennedy, D-Mass., is trying to rush through Congress legislation that would let the Food and Drug Administration regulate tobacco and allow the FDA to immediately impose the draconian marketing curbs offered by former FDA Commissioner David Kessler in 1996.

The regulations are broad. They limit tobacco makers to tombstone black-and-white text ads in most magazine ads and store signs, bar outdoor ads within 1,000 feet of schools or playgrounds, ban giveaways of promotional items like hats or T-shirts, and limit sponsorships of athletic, musical or social events to corporate names only.

Two choices
So ad groups have two choices: do nothing and risk watching tobacco ad curbs set precedent for similar ad limits on alcohol and high-fat food; or start an expensive and long fight that could wind up in a Supreme Court battle over commercial speech rights.

Mr. Kennedy unveiled his plan Feb. 15, joining with co-sponsors Sen. John Cornyn, R-Texas; Reps. Henry Waxman, D-Calif., and Tom Davis, D-Va., and said he would act with unusual speed -- a hearing in the Senate is set for Feb. 27 and one in the House is planned for March. Mr. Kennedy also said he and Mr. Waxman had an extensive and bipartisan list of co-sponsors.

The 11-year-old regulations are back because a court battle over their constitutionality never materialized when they were first proposed. Instead, the Supreme Court set the regulations aside when it ruled that the FDA had no authority to regulate tobacco.

Ironically, now that the rules are being proposed again, tobacco marketers seem to be the least worried because they've enacted many of the marketing curbs.

Good news for No. 1
In a statement, Altria Group and Philip Morris USA executives sounded almost ecstatic. "We wholeheartedly support the FDA legislation introduced today. ... This thoughtful legislative approach offers the best way to advance real solutions to the many complex issues involving tobacco," said Steven C. Parrish, senior VP-corporate affairs for the Altria Group. Stricter curbs on marketing would likely further cement Philip Morris' hold on the No. 1 spot.

However, not all players are happy about it.

R.J. Reynolds Tobacco Co., arguing from its place as a challenger brand, said imposing additional limits would make it difficult to differentiate brands and would take away brand share.

"We continue to oppose any bill that conveys an unfair advantage or disadvantage to any manufacturer," a company spokesman said.

Advertising groups, which challenged the 1996 regulations, are most worried about the effects on other product categories and the precedent of the government unilaterally imposing broad ad curbs.

"We have no objection to regulation of the tobacco industry," said Jeff Perlman, exec VP of the American Advertising Federation. "The question is not who but how. We are concerned about the implications this would have for other products" that are out of favor.

Constitutional questions
Dan Jaffe, exec VP of the Association of National Advertisers, said that during the 1996 debate, top legal scholars questioned the rules' constitutionality and whether the government had the authority to impose dramatic limits on advertising for a legal product sold to adults.

"What is clear is that there are serious constitutional questions," he said, adding that the ad groups are also worried about the potential precedent.

"What the Supreme Court has said is: What you can do in one category of advertising you can do in others. So the issue could have impacts beyond one sector."

Adonis Hoffman, exec VP-general counsel of the American Association of Advertising Agencies, said the ad groups' first task is to try to convey the constitutional issues.

"For better or worse, it falls to the advertising industry to remind policymakers and industry that advertising legal products lies at the very core of American law and the Constitution, and the Supreme Court consistently upholds this rule," he said.

Mr. Kennedy said his legislation does not present constitutional issues or favor one tobacco maker at the expense of others.

"These are two of oldest chestnuts in the arguments about the bill," he said. "We have had extensive presentations on the constitutionality of the provisions that are included and the constitutional authority, and they overwhelming support the constitutionality."
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