United States v. National Ass'n of Broadcasters

• Citation: 553 F. Supp. 621
• Decision Date: 23 November 1982
• Docket Number: Civ. A. No. 79-1549.
• Parties: UNITED STATES of America, Plaintiff, v. NATIONAL ASSOCIATION OF BROADCASTERS, Defendant.
• Court: U.S. District Court — District of Columbia

553 F. Supp. 621

UNITED STATES of America, Plaintiff, v. NATIONAL ASSOCIATION OF BROADCASTERS, Defendant.

Civ. A. No. 79-1549.

United States District Court, District of Columbia.

November 23, 1982.

William Simon, Keith E. Pugh, Jr., Edward P. Henneberry, Howrey & Simon, Washington, D.C., for plaintiff.

John V. Thomas, Gordon G. Stoner, John Dorsey, Antitrust Div., U.S. Dept. of Justice, Washington, D.C., for defendant.

MEMORANDUM

HAROLD H. GREENE, District Judge.

In this proceeding under the Tunney Act, 15 U.S.C. § 16(b)-(h), the Court must determine whether the entry of a consent decree, terminating an antitrust action brought by the United States, is in the public interest.

The government's complaint, filed July 14, 1979, alleged that the National Association of Broadcasters (NAB) violated Section 1 of the Sherman Act, 15 U.S.C. § 1, by its adoption and enforcement of certain Advertising Standards that regulated television advertising. The advertising provisions were part of NAB's Television Code, subscribed to by most of the nation's commercial television stations.¹ After the filing of the complaint, both parties moved for summary judgment. On March 3, 1982, on the basis of the parties' written submissions and after oral argument, the Court found one of the three sets of Advertising Standards challenged by the government to be unlawful per se. These provisions restricted the number of products an advertiser could promote in a commercial lasting over sixty seconds.² The validity of the remaining provisions, which limited the duration and frequency of commercial interruptions, was to be determined after trial.³ NAB appealed the Court's decision to the Court of Appeals.

Thereafter, on July 16, 1982, while the appeal was pending, the parties submitted a proposed consent decree which, for present purposes, may be summarized as containing two principal provisions. First, NAB agrees to stop disseminating or enforcing all of the three questioned Advertising Standards. Second, the government promises not to object to an order from the Court of Appeals dismissing as moot and vacating this Court's order of March 3 adjudging NAB to be in violation of the Sherman Act.

In accordance with the Tunney Act, the purpose of which is to restrain the injudicious use of consent decrees in government-initiated antitrust cases, the government filed a competitive impact statement, and it received and filed with the Court public comments concerning the proposed decree.⁴ In passing on the question whether the decree is in the public interest, two substantive issues deserve discussion.

I

Under Section 5(a) of the Clayton Act, 15 U.S.C. § 16(a), a final judgment rendered on behalf of the United States in a civil antitrust case becomes prima facie evidence against the defendant in any subsequent private action that might be brought against that defendant. The consent decree proposed in this case would deprive private parties of prima facie evidence in two conceivable ways. First, the termination of this action through settlement precludes a trial and possible judgment in favor of the government on the two sets of Advertising Standards reserved for trial by this Court's summary judgment ruling. Second, the settlement encourages nullification of the Court's order holding the multiple product restrictions in violation of the Sherman Act because, as indicated supra, it is part of the settlement agreement that NAB would seek, and the government would not oppose, the vacating of that order. After fully considering the matter, the Court has decided that these aspects of the settlement do not contravene the public interest.

The purpose of § 5(a) is to contribute to the deterrent effect of the antitrust laws by "upping the stakes" that may follow from anticompetitive practices. At the same time, private parties are aided by being able to take advantage of the government's special capacity for handling large and complex antitrust cases. See, e.g., Emich Motors Corp. v. General Motors Corp., 340 U.S. 558, 71 S.Ct. 408, 95 L.Ed. 534 (1951). Yet the "piggyback" use that private parties may make of prior antitrust judgments is modified by an exception for consent decrees entered "before any testimony has been taken." 15 U.S.C. § 16(a).

Congress apparently enacted this proviso in order to encourage defendants to settle promptly government-initiated antitrust claims and thereby to save the government the time and expense of further litigation. See, e.g., Fleer Corp. v. Topps Chewing Gum, Inc., 415 F.Supp. 176, 184 (E.D.Pa. 1976); Michigan v. Morton Salt, 259 F.Supp. 35, 59 (D.Minn.1966); Homewood Theatre v. Loew's, Inc., 110 F.Supp. 398, 410-11 (D.Minn.1952); Deluxe Theatre Corp. v. Balatan & Katz Corp., 95 F.Supp. 983, 986 (N.D.Ill.1951).

This legislative policy favoring consent decrees is especially furthered by the circumstances that obtain in this case. As to the two sets of provisions reserved for trial, the terms of the decree provide virtually the same relief that the government could have hoped to achieve had it succeeded at trial — yet the uncertainty, delay, and expense of a trial would be avoided. Moreover, no individual or enterprise has commented adversely with respect to the ramifications the decree may have for future private plaintiffs.

Finally, if the provision regarding vacating would be deemed unacceptable by this Court as negating the prima facie evidence effect of its earlier order — by subsuming it within the exception to the prima facie evidence rule for consent decrees "entered before any testimony was taken"⁵ — this would be a hollow gesture. Approval of the decree without this element would be unlikely to yield a different result because under the authority of United States v. Munsingwear, 340 U.S. 36, 39-40, 71 S.Ct. 104, 106-07, 95 L.Ed. 36 (1950), the Court of Appeals could be expected to dismiss for mootness and vacate the Court's order on its own initiative in any event. To the extent, then, that the decree is premised upon NAB's expectation that the government's acquiescence makes vacating certain, the Court would not be justified in jeopardizing an outcome that implements Congress's preference for consent decrees in order to vindicate the speculative interests of hypothetical private plaintiffs.⁶

II

Action for Children's Television (ACT) has submitted comments recommending that the proposed judgment be revised to permit the continued enforcement of the NAB Code provisions that relate to children's advertising. It is ACT's view that the Court should disapprove the proposed judgment insofar as it invalidates those provisions of the Code that limit the number of commercial minutes for children's television and that regulate multiple products advertised in a single commercial.⁷

The Court is certainly sympathetic to ACT's purpose to shield impressionable children from excessive advertising. But the question here does not concern the desirability in the abstract of such a purpose but whether the providers of commercial time (i.e., the networks and individual stations) may band together artificially to limit the supply of their product or to increase the demand therefor in apparent violation of the antitrust laws. As the Court pointed out in its opinion of March 3, 1982, the Supreme Court has made it crystal clear that in areas where the antitrust laws operate, they constitute the congressional determination of the public interest, and lower courts are not free to substitute some other interests or purposes, no matter how worth-while,⁸ for the basic Sherman Act charter.⁹ See National Society of Professional Engineers v. United States, 435 U.S. 679, 98 S.Ct. 1355, 55 L.Ed.2d 637 (1978). That principle applies especially in the present situation where the Court is being asked by ACT, in effect, to refuse to approve a negotiated settlement providing for full and complete antitrust relief on the basis of wholly non-antitrust considerations.

This does not mean, of course, that ACT is without a remedy or that the principles it advocates may not be vindicated. As the Department of Justice has correctly pointed out, individual stations remain free to curtail and regulate children's advertising in a responsible manner, and ACT remains free to urge stations to do just that. Beyond that, the Federal Communications Commission would appear to have the authority to deal with this subject and, as ACT has noted, the FCC has already shown a considerable interest in these matters.¹⁰ But the Court is not empowered to disregard the specific mandate of the antitrust laws when passing upon a settlement submitted by both parties.

The Court finds the proposed decree to be in the public interest, and it has accordingly entered the decree proffered by the parties.

FINAL JUDGMENT

Plaintiff, the United States of America, having filed its Complaint herein on June 14, 1979, and Plaintiff and Defendant, National Association of Broadcasters, by their respective attorneys, having each consented to the entry of this Final Judgment, and without this Final Judgment constituting evidence against or admission by Defendant or Plaintiff with respect to any issue of fact or law herein;

NOW, THEREFORE, before the taking of any testimony, and without trial or any final adjudication of any issue of fact or law herein, and upon the consent of the parties, it is hereby

ORDERED, ADJUDGED, AND DECREED as follows:

I.

This Court has jurisdiction over the subject matter of this action and the parties. The Complaint states a claim upon which relief may be granted against Defendant under Section 1 of the Sherman Act (15 U.S.C. § 1).

II.

As used in this Final Judgment:

"NAB" means the defendant National Association of Broadcasters.

"NAB Television Code" or "Television Code" means the Television Code of the NAB.

"Non-program material" includes, but is not limited to, commercials, promotional announcements, billboards, public service...