not all of the terms. We can usually get them on the omission theory, that they are leaving out material terms.

They, again, often will run an ad for a car that they do not have in stock. It is true that there is that car and it is sold at that price, but they haven't had any on the lot for the last 2 months. And so, it is hard to know what they are advertising. It is either just an announcement that there is such a car or they are most likely trying to convince people to come on in and try that particular car, and once they get there, find out that there is no car available.

If you have got a court that is willing to take deception in a very broad term, or you have rules under a State or Federal level that describe deception very broadly to include those omissions—and I was intrigued with the suggestion that any beer advertising should include the risks of drinking alcohol as perhaps a good way to protect consumers that one of the advertising representatives gave earlier.

Mr. LUKEN. Would you say that that would be a requirement? Otherwise, it would be unfair advertising if it was not included? Ms. IGNATIUS. Well, I would never have gone that far, but I am willing to live with it if the people want to set that as a term.

Mr. LUKEN. You know, what you are saying kind of bothers me. If we leave this up to the 50 attorneys general, for example, and they are interpreting it—and people will interpret it that way, won't they? In fact, that is the reason we got this prohibition in the first place, because of the children's advertising rule and other similar rules, which at the time a few years ago caused people to be repulsed, really. And that is where the FTC got the reputation as being a nanny. And it seems to me that you have ticked off here certain abuses which you think are wrong, but if you had the authority or the FTC had the broad authority and they simply substitute their judgment, then why won't we be in the situation 1 year or so from now, if we put that law into effect, where the advertisers and the businesses come in and they say, we advertised the tires statewide and a couple of stores ran out of them and the attorney general or the FTC prosecuted us just because they didn't have one available at the time. Then we would get complaints about those abuses.

It seems to me that what we have to do is to get a standard that is really workable and fair all around that is not going to applyas I listen to your testimony, it seems to me, you know, what I would be concerned about is that what you are saying is, well, it is very broad, it is what is right and what is wrong. In fact, you used those words at one point. What is right and what is wrong, in your judgment?

Ms. IGNATIUS. Mr. Chairman, I think I have two responses to that.

One, in a situation as you described, it turned out there were no tires available, that is a very different situation. The State and the Government should never be a guarantor that every single commercial transaction works out the way-the ideal situation. A lot of things don't happen the way people might have liked. And I don't for a second suggest that the Government should be demanding that everybody who wants to buy something be able to buy it.

But that is a very different situation than an advertising program that goes out to 1 million people with one item in stock, and they intended that all along. It is not that they ran out. They never intended to carry that product.

That, to me, crosses the line and, as the court

Mr. LUKEN. And is deceptive.

Ms. IGNATIUS. Well, if you can construe that as deceptive, that is good, and there are some courts that will. There are some which will not, and certainly it is unfair.

Mr. LUKEN. For the airline hearing last week, Mr. Sikorski was here, and he took the ads which we had copies of and he held them up and he pointed out to the airline representative that there weren't any seats to be filled or there were only one or two, and he said, that is lying, isn't it, that is lying, isn't it. And I think everybody said, yes, that was lying.

So, if it is lying, then it is false and it is deceptive.

Ms. IGNATIUS. I agree that if-and I hate to keep coming back to this. But there are courts that will construe deceptive much more narrowly than that, and they will look at a yes or a no on the question of the truth of the statement, that there is one seat out there, so it is not a false statement, although the reality of the market is that there are many fewer than what is required.

Mr. LUKEN. Of course, there will be the FTC and some attorneys general that might construe it more broadly than others. I am picking on you, and I think Mr. Gardner wants to get involved. Mr. GARDNER. You saw me fidgeting.

Mr. LUKEN. Yes.

Mr. GARDNER. I think the solution to the perceived problem is best answered by looking at what has happened in the past.

Ms. Ignatius' State has unfairness authority. I don't think we have any instances of abuse to that authority to date, or at least none that she or I would admit to.

In terms of the fear of multi-State perceptions and that New Hampshire might take one action, Texas another, New York another, California yet another, and subject the advertiser or the business to a multiple of judgments as to what was deceptive or unfair, I think the best answer is to look at what the States have been doing, again in the recent past, in terms of cooperating to ensure that whatever we do is applied uniformly.

The work with AAMCO Transmissions is a good example. In that one, 14 States joined together and obtained 14 separate consent decrees against AAMCO. That was a consent decree. It certainly would have been made easier if we could have filed that in one Federal court, just from a paperwork basis alone.

New York, California, and Texas joined together to notify McDonald's that we believed their advertising was deceptive.

We do this on a continuing basis and we do this to ensure that either the advertisers or other businesses, such as AAMCO, are not subjected to multifarious State interpretations of their laws, one of the reasons the national association exist.

Mr. LUKEN. I am running out of time, but I presume that you and Mr. Mattox, or organizations like Mr. Silbergeld's, have been to the Texas Legislature and asked for that authority for the attorney general that you now seek from the Congress. Is that right?

Mr. GARDNER. Quite honestly, sir, I don't think that we have asked for unfair. The law-we only got a full-fledged deceptive trade practice-

Mr. LUKEN. Then wouldn't it be logical that you do go to the Texas Legislature first?

Mr. GARDNER. We would be happy to get it from any source we can. The Texas Legislature cannot give us the authority, which is very important in our view, to go into Federal district court. That would simplify it.

Mr. LUKEN. Well, you did mention that you are not authorized under Texas law, did you not?

Mr. GARDNER. Yes, sir.

Mr. LUKEN. Or didn't I hear you correctly?

Mr. GARDNER. Yes, Mr. Luken.

Mr. LUKEN. Texas law does not extend to unfair practices?

Mr. GARDNER. No, sir.

Mr. LUKEN. I think that might give some of our Texas brethren here a problem in perhaps feeling that they would be preempting the Texas State Legislature, perhaps.

Mr. GARDNER. That would be a judgment I would have to leave up to them. We would welcome it from whatever source

Mr. LUKEN. I can think of one or two of them that might perceive it that way.

Thank you very much. I will leave Mr. Silbergeld to the tender mercies of the gentleman from Kansas, Mr. Whittaker.

Mr. WHITTAKER. Thank you, Mr. Chairman.

Mr. Gardner, in your opening statement did you state that the National Association of Attorneys General support the provision requiring the FTC to study insurance? And if so, have you consulted the National Association of Insurance Commissioners to determine whether they agree with your position? And if you haven't, why? And if so, what is their position?

Mr. GARDNER. If I said the national association supports it, I would retract that. I don't think I did. I support it on behalf of the State of Texas.

The national association has taken the position favoring repeal of the McCarron-Ferguson Act. I think it follows from that that the Federal Trade Commission, should it so desire, should be allowed to study the insurance industry.

And no, I have not consulted with the insurance commissioners. Mr. WHITTAKER. Do you know if they have taken a position on a national basis within their association?

Mr. GARDNER. I am not aware, no, sir.

Mr. WHITTAKER. Mr. Gardner and Ms. Ignatius, how many States currently have the authority to police unfair and deceptive acts or practices under State statutory law?

Mr. GARDNER. Unfair and deceptive?

Mr. WHITTAKER. Yes.

Mr. GARDNER. Almost every State, if not every State, has deceptive authority. I believe around 29 or 30 of the States have unfair and deceptive authority.

Mr. WHITTAKER. If some States have not granted State enforcement authorities jurisdiction over unfairness and deception, should Congress appropriately preempt those State legislatures, then?

Mr. GARDNER. That is, I think, much the same question Mr. Luken was asking me. We would welcome the authority from whatever source it comes. Whether or not Congress should-I don't believe it would be technically preemption, giving us authority. Taking it away would be preemption. But giving the State additional authority to combat consumer fraud in whatever guide it may arise would well be in the interest of this country.

Mr. WHITTAKER. Ms. Ignatious and Mr. Gardner, I understand that one of your arguments is that many State consumer protection acts and State FTC acts are based on the Federal Trade Commission Act and that in some cases incorporate by reference the Federal FTC Act.

Therefore, defining the term in the Federal act affects State authority. If this is so and the States do not agree with the Federal definition, can't the States simply amend their laws? Don't the States inherently assume some risk in their laws, that it will be changed in a manner that they may not agree with when they incorporate by reference the Federal statute?

MS. IGNATIUS. Yes, sir, I think there is that risk. And there is always the chance to go back to the legislature if there is a problem.

But I think, importantly, if State courts looks to Federal Trade Commission rulings and look to opinions of the Federal courts in guiding their own decisions, then the consistency of what the statutory scope of the two acts are is very important.

And to change by removing the unfair trade practice standard on the Federal level would greatly disrupt the ability of our State courts to rely on Federal court decisions in determining whether or not they should be guided in their own State court decisions. Judges ultimately will do whatever they want to do, regardless of what another judge has done.

But it has a greater effect than merely curtailing what the FTC's scope is, if you make that change. And I just wanted to make certain that the committee understand that there are many States which harken back to the Federal Trade Commission's structure in construing their own acts.

Mr. WHITTAKER. Mr. Silbergeld, on page 9 of your testimony you advocate restoration of the FTC's authority to conduct economic studies of the insurance industry. Isn't this inconsistent with the McCarron-Ferguson Act, which delegates regulation of insurance to the States?

Mr. SILBERGELD. No, Mr. Whittaker, I do not believe that it is inconsistent. Enforcement, there is abstention under McCarron-Ferguson with respect to enforcement of Federal antitrust laws, but I do not see that studying the performance of the industry is inconsistent with it.

In fact, I would say that it is consistent with congressional responsibility to monitor the effects of that abstention and to assess from time to time whether it is working or whether it requires some further congressional attention.

Mr. WHITTAKER. I am confident that you are aware that one of the provisions of the McCarron-Ferguson Act does provide for actuarial data collection, which then is made available to virtually the entire industry.

You have already indicated in questioning earlier that you felt that the McCarron-Ferguson Act should be repealed. If that were the case, and that data for the small insurers was not then available, wouldn't competition among insurers be lessened? And, in particular, wouldn't the small insurance businessman's ability to compete be seriously impaired?

Mr. SILBERGELD. If both of those things were true, then your conclusion would be correct. But it does not follow from repeal that the data wouldn't be collected, because the provision for repeal could provide for the collection and continued dissemination of that data.

Mr. WHITTAKER. How would that be administered? On the part of the fee for service basis? Obviously, the large competitors would have no inclination, in fact would be very much disinclined to share the information that they had acquired. And unless it was a Federal authority or a State authority, who else would then verify whether the major's data was, in fact, correct?

Mr. SILBERGELD. Mr. Whittaker, that would be a legislative question for the Congress to decide, and I am sure if the repeal legislation comes to hearings, we will have some suggestions to offer. But the method by which it is collected is the question. There are any number of possibilities, including there is a Federal insurance authority within the Department of Housing and Urban Development. There is the possibility of the Federal Trade Commission doing that, if the purpose is to promote competition. And there are any number of places in which that function could be appropriately placed and any number of possibilities with respect to financing the cost of it, which are, as I say, legislative questions.

But there is certainly no lack of options.

Mr. WHITTAKER. Thank you, Mr. Chairman.

Mr. LUKEN. Thank you, Mr. Whittaker.

And thanks to the panel. You have responded very well and been very helpful to us.

Ms. IGNATIUS. Thank you.

Mr. LUKEN. We will now call upon the next panel.

Mr. Randall, Mr. Wagner, Mr. Quarles.

Mr. Randall.

STATEMENTS OF DONALD A. RANDALL, EXECUTIVE VICE PRESIDENT, NATIONAL INDEPENDENT DAIRY-FOODS ASSOCIATION; AND GLEN WAGNER, ON BEHALF OF NATIONAL COUNCIL OF FARMER COOPERATIVES, ACCOMPANIED BY WILLIAM K. QUARLES, VICE PRESIDENT FOR GOVERNMENT AFFAIRS, SUNKIST GROWERS

Mr. RANDALL. Mr. Chairman and members of the committee, thank you for the opportunity to be here and to present this testimony. I have accompanying me, Mr. Harry G. Shupe who is counsel to the National Independent Dairy-Foods Association.

We view these hearings and the reauthorization of the Federal Trade Commission to be one of the most important actions that Congress is undertaking today. The FTC is not only the vital traffic cop in our superhighway of commerce; it is the essential advocate of small business who otherwise might be trampled by the multi