A federal judge yesterday found the National Association of Broadcasters guilty of violating federal antitrust laws, ruling that the NAB's voluntary advertising code is anticompetitive because it limits the number of products that can be promoted in a single commercial.
In a major victory for the Justice Department's antitrust division, U.S. District Judge Harold H. Greene ordered the NAB immediately to stop enforcing its rule that no more than one product can be promoted in any commercial lasting less than 60 seconds. The rule is "an artificial device to enhance the demand for commercial time," Greene said.
"It is apparent from the face of this standard that it has the effect of compelling some, perhaps many, advertisers to purchase more commercial time than their economic interests might dictate," Greene said in deciding part of the government's 3-year-old suit against NAB's advertising code.
The decision was handed down without a trial. Greene set the remaining issues of the government's suit for trial, saying there was not enough evidence at hand to decide whether the rest of NAB's advertising code constitutes antitrust violations.
What remains at issue is the 20-year-old advertising code's limits on the minutes each television station may devote hourly to commercials, its limits on the number of commercials each hour, and its restrictions on the number of consecutive promotions permitted within each commercial interruption.
The Justice Department has argued that these rules limit the supply of commercial television time, driving up advertising prices to the ultimate detriment of consumers.
NAB has contended that this voluntary code was created for the public's best interest to limit overcommercialization in television.
In ordering an end to the limit on the number of products advertised per commercial, Greene dismissed NAB's claim that it was only acting in the public interest, saying it was up to Congress, and not the NAB, to determine the public's interest.