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Commercial speech

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Description: Communication involving the sale of products or services to a consumer.


Significance: In 1975 the Supreme Court declared that commercial speech is protected under the First Amendment's free speech clause, thus protecting consumers from excessive government interference in their right to know about products and services.


Beginning in the 1970's the Supreme Court recognized that commercial speech was protected under the U.S. Constitution. Declaring that the First Amendment's speech clause included commercial speech, the Court created a systematic approach to commercial speech cases and aggressively used it to overturn federal and state regulations. The Court first recognized commercial speech as protected under the First Amendment in Bigelow v. Virginia (1975). In Bigelow, the Court struck down a state ban on advertising for abortion services. The justices asserted that speech involving the marketplace deserved some protection under the First Amendment. The Court extended its reasoning in Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council (1976). It struck down a state ban on advertising prescription drug prices. The justices reasoned that consumers had a constitutional right to receive information on products and that commercial speech provided a basis for the flow of information necessary for an open economy. Consumers had a strong interest in receiving correct information about products and services. That information would allow them to make economic decisions critical to their personal survival. The Court recognized that misleading or untruthful speech would not aid consumers and thus would not be covered under commercial speech protections.


A Standard Test

The commercial speech doctrine remained undeveloped until 1980. Then in Central Hudson Gas and Electric Corp. v. Public Service Commission of New York, the Court developed a systematic approach to commercial speech cases. In Central Hudson, the Court struck down a ban on utility advertising as a violation of the utility's commercial speech rights. In arriving at this conclusion, the justices used a four-part test. The Central Hudson test requires the justices to determine whether the advertising is misleading or involves an illegal product or service, whether there is a substantial governmental interest in regulating the speech, whether that substantial interest is advanced by the regulation, and whether less restrictive means exist. The justices in Central Hudson found that the state's substantial interest in promoting energy efficiency was not advanced by the advertising ban. With the development of the Central Hudson test, commercial speech was protected under intermediate scrutiny rather than strict scrutiny. Under strict scrutiny, the government must show a compelling interest for limiting speech rights and the law must be narrowly tailored to meet that interest. Intermediate scrutiny requires the government to show a substantial interest in regulating speech. Eventually, though, the test came closer to strict scrutiny.


Liquor and Gambling

After Central Hudson was decided, the justices began looking carefully at two areas of commercial speech restrictions, liquor advertisements and gambling. In Rubin v. Coors (1995), the Court struck down a federal ban on displaying alcohol content on the packaging of certain high-alcohol-content beers. The justices dismissed the government's contention that the ban was linked to limiting strength wars among beer producers and found that consumer information was restricted without advancing the government's interest. In Forty-four Liquormart v. Rhode Island (1996), the justices overturned a forty-year-old state ban on the advertising of liquor prices. Again a restriction on commercial speech ran afoul of the Central Hudson requirement that regulations be related to a substantial state interest, in this case promoting temperance. According to the Court, the ban on price advertising would not necessarily prevent excessive alcohol sales because there was no link between the price of alcohol and the amount consumed. In both cases, the justices warily eyed the ban on consumer information, demanding the government meet a high standard of showing that its regulation advanced its interest. The justices would lower that standard in cases involving gambling advertising. The increasing popularity of state-run gambling presented several cases to the justices involving commercial advertisements for casinos and lotteries. In Posados de Puerto Rico v. Tourism Co. of Puerto Rico (1986), the Court upheld a ban on gambling advertising in Puerto Rico, which allowed legalized gambling. The justices determined that the ban did advance the governmental interest in preventing compulsive gambling among the island's residents and that there were no alternative means to accomplish this end. Likewise in United States v. Edge Broadcasting (1993), the justices upheld a federal ban on advertising gambling in states where gambling was illegal. The Court ignored the third part of the Central Hudson test in stating that the federal interest in protecting nongambling states from such advertising was constitutional and that there was no alternative to the ban. However, in Greater New Orleans Broadcasting Association v. United States (1998), the justices struck down a ban when it applied to states where gambling was legal. The Court noted the exceptions to law including the exemption from the ban for state-run casinos and lotteries that undermined the effort of the federal government to prevent compulsive gambling. This decision called into question the viability of the decision in Edge Broadcasting. The Court's inconsistency in the gambling cases reflected the subjectivity of the Central Hudson test. Whether a restriction on commercial speech advanced a substantial interest required a judgment by justices based on subjective criteria. Under the Rubin, Liquormart, and Greater New Orleans cases, the Court used a stringent definition of whether the government regulation advanced its interest. A less stringent standard was used to uphold speech restrictions in Posados and Edge Broadcasting. The continued use of the Central Hudson test indicates the Court's intention to move it from an intermediate scrutiny type of test to one closer to strict scrutiny and placing commercial speech on par with political speech.



Further Reading

  • Baldwin, Jo Jo. “No Longer the Crazy Aunt in the Basement: Commercial Speech Joins the Family.” University of Arkansas Little Rock Law Review (Fall, 1997).
  • Oliphant, Richard Shawn. “Prohibiting Casinos from Advertising.” Arizona Law Review (Winter, 1996).
  • Siegan, Bernard. Economic Liberties and the Constitution. Chicago: University of Chicago Press, 1980.