FTC Staff Comment Before the New Mexico Attorney General Concerning Proposal to Repeal or Modify Board of Optometry Rules Restricting Advertising

Dec e.rabe r 	4, 	1 9 8 6
t; .... IUD ST '" us Of ."'''IERIC ..
FEDERAL TRADE CO~~ISSIOS
.... "'SHI"GTO'- DC 	2O<8(
David 	Garcia, 	Esquire
Office 	of 	the 	Attorney 	General
State 	of 	New Mexico
P.O. 	Drawer 	1508
Santa 	F., 	NM 	87504
Dear 	Mr. 	Garcia:
\.iUMMISSION
APPROVED
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We 	are 	pleased 	to 	submit 	this 	letter 	in 	response 	to 	the 	New
Mexico 	Board 	of 	Optometry's 	("Board") 	request 	for 	public 	comments
on 	its 	proposal 	to 	repeal 	or .odify 	Board 	rules 	5 and 	6. 1 	We
understand 	that 	the 	Board 	i. 	considering 	repeal 	of 	rule 	5, 	Which
restricts 	the 	manner 	in which 	optometrists 	aay 	advertise 	in 	the
yellow 	pa~es of 	the 	telephone 	directory, 	and 	we 	endorse 	that
proposal. 	Since 	we 	believe 	that 	several 	other 	of 	the 	Board's
rules 	have 	the 	potential 	to 	harm 	consumers 	by 	impeding 	competi-
tion 	among 	optometrists, 	we 	recommend 	that 	the 	Board 	consider
repealing 	or 	amending 	those 	rules 	as 	well.
The 	Federal 	Trade 	Commission 	is 	empowered 	under 	15 	U.S.C.
Ii 	41 	~ 	~. 	to 	prevent 	unfair 	methods 	of 	competition 	and 	unfair
or 	deceptive 	acts 	or 	practices 	in 	or 	affecting 	commerce. 	Pur-
suant 	to 	this 	statutory 	mandate, 	the 	Commission 	has 	attampted 	to
encourage 	competition 	among 	members 	of 	licensed 	prof ••sions 	to
the 	maximum 	extent 	compatible 	with 	other 	legitiaate 	state 	and
federal 	goals. 	For 	several 	years, 	the 	Commi.sion has 	been 	inves-
tigating 	the 	competitive 	effects 	of 	restrictions 	on 	the 	business
practices 	of 	state-licensed 	profe.sionals, 	including 	optome-
trists, 	dentists, 	lawyers, 	physicians, 	and 	others. 	The 	Commis-
sion's 	goal 	has 	been 	to 	identify 	and 	seek 	removal 	of 	restrictions
that 	impede 	competition, 	increase 	coats, 	and 	harm 	consumers 	with-
out 	providing 	significant 	countervailing 	benefits.
1 	These 	comments 	represent 	the 	views 	of 	the 	Bureaus 	of
Consumer 	Protection, 	Competition, 	and 	Economics 	of 	the 	F.deral
Trade 	Commission 	and 	do 	not 	necessarily 	represent 	the 	views 	of
the 	Commission 	or 	any 	individual 	Commissioner. 	The 	Commission,
however, 	has 	reviewed 	these 	comments 	and 	has 	authorized their
submission.
2 	We 	have 	no 	comments 	regarding 	rule 	6, 	which 	relates 	to
continuing 	education 	requirements.
Bicentennial of the United States Constitution
(1787·1987)

I. 	ADVERTISING 	RESTRICTIONS
As 	a 	part 	of 	the 	Commission'. 	efforts 	to 	fOlter 	competition
among 	licensed 	professionals, 	it 	has 	examined 	the 	effects 	of 	pub-
lic 	and 	private 	restrictions 	that 	limit 	the 	ability 	of 	profes-
aionals 	to 	engage 	in 	nondeceptive 	advertising. 3 	Studies 	have
shown 	that 	prices 	for 	professional 	goods 	and 	services 	are 	lover
where 	advertising 	exists 	than 	where 	it 	is 	restricted 	or 	pro-
hibited. 4 	Studies 	have 	also 	provided 	evidence 	that 	restrictions
on 	advertiaing 	raise 	prices 	but 	do 	not 	increase 	the 	quality 	ot
qoods 	and 	aervices. 5 	Theretore, 	to 	the 	extent 	that 	nondeceptive
3 	~, 	~., 	American Medical 	Aa.ociation, 	94 	F.T.C. 	701
(1979), 	att'd 	638 	F.2d 	443 	(2d 	Cir. 	1980), 	a(tld 	,em. 	by 	an
equally 	divided 	CQurt, 	455 	U.S. 	676 	(1982). 	The 	thrust 	of 	the
AMA 	decision 	-- 	"that 	broad 	bans 	on 	advertising 	and 	soliciting
are 	inconsistent with 	the 	nation's 	public 	policy~ 	(94 	Y.T.C. 	at
1011) 	-- 	is 	consistent 	with 	the 	reasoning 	ot 	recent 	Supreme 	Court
decisions 	involving 	professional 	regulations. 	~, 	~.,
Zauderer 	v. 	Office 	of 	Disciplinary 	Counsel 	of 	the 	Supreme 	Court
of 	Ohio, 	u.s. 	, 	105 	S.Ct. 	2265 	(1985) 	(holding 	that 	an
attorney 	may 	not 	be 	disciplined 	for 	soliciting 	legal 	business
through 	printed 	advertising 	containing 	truthful 	and 	nondeceptive
information 	and 	regarding 	the 	legal 	rights 	of 	potential 	clients
or 	using 	nondeceptive 	illustrations 	or 	pictures): 	Bates 	v. 	State
Bar 	of 	Arizona, 	433 	U.S. 	350 	(1977) 	(holding 	state 	supreme 	court
prohibition 	on 	advertising 	invalid 	under 	the 	First 	Amendment 	and
according 	great 	importance 	to 	the 	role 	of 	advertising 	in 	the
efficient 	functioning 	of 	the 	market 	for 	professional 	services):
and 	Virginia 	State 	Board 	of 	Pharmacy v. 	Virginia 	Citizens 	Con-
sumer 	council, 	425 	U.S. 	748 	(1976) 	(holding 	Virginia 	prohibition
on 	advertising 	by 	pharmacists 	invalid).
4 	Cleveland 	Regional 	Office 	and 	Bureau 	of 	Economics,
Federal 	Trade 	Commission, 	Improving 	Consumer Access 	to 	Legal
Services: 	The 	Case 	for 	Removing 	Restrictions 	on 	Truthtu1
Advertising 	(1984); 	Bureau 	of 	Economics, 	Federal 	Trade 	Com-
mission, 	Effects 	of 	Restrictions 	on 	Advertising 	and 	Commercial
Practice 	in 	the 	Professions: 	The 	Case 	ot 	Optometry 	(1980);
Benham 	and 	Benham, 	Regulating 	Through 	the 	Professions: 	A Per-
,pective 	on 	Information 	Control, 	18 	J.L. 	, 	Econ. 	421 	(1975);
Benham, 	The 	Effects 	of 	Advertising 	on 	the 	Price 	of 	Eyeglasses, 	15
J . L. 	, 	Econ. 	337 	(1972).
5 	Bureau 	of 	Economics, 	Federal 	Trade 	Commission, 	Effects 	of
Restrictions 	on 	Advertising 	and 	Commercial 	Practice 	in 	the 	Pro-
fessions: 	The 	Case 	of 	Optometry 	(1980); 	Muris 	and 	McChesney,
Advertising 	and 	the 	Price 	and 	Quality 	of 	Legal 	Services: 	The
Case 	for 	Legal 	Clinics, 	1979 	Am. 	B. 	Found. 	Research 	J. 	179
(1979). 	See 	also 	Cady, 	Restricted 	Advertising 	and 	Competition:
The 	Case 	of 	Retail 	Drugs 	(1976).
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advertising 	is 	restricted, 	higher 	prices 	and 	a 	decrease 	in 	con-
sumer 	welfare 	may 	result.
The 	Commission 	has 	examined various 	justifications 	that 	have
been 	offered 	for 	restrictions 	on 	advertising 	and 	has 	concluded
that 	these 	arguments 	do 	not 	warrant 	restrictions 	on 	truthful,
nondeceptive 	advertising. 	For 	this 	reason, 	only 	false 	or 	decep-
tive 	advertising 	should 	be 	prohibited. 	Any 	other 	standard 	is
likely 	to 	suppress 	the 	dissemination 	of 	potentially 	useful
information 	and 	contribute 	to 	an 	increase 	in 	prices.
A. 	The 	Board 	is 	correct 	in 	repealing 	the 	content
restrictions 	in 	rule 	5.
We 	support 	the 	Board's 	proposal 	to 	repeal 	rule 	5, 	which 	we
believe 	imposes 	unnecessary 	restrictions 	on 	the 	ability 	of
optometrists 	to 	advertise 	in 	the 	yellow 	pages 	of 	telephone 	direc-
tories. 	The 	rule 	presently 	states 	that 	the 	only 	information
optometrists 	may 	publish 	in 	the 	yellow 	pages 	is 	their 	name,
address, 	telephone 	number, 	and 	a 	specified 	description 	of 	their
practice. 	They 	may 	not 	deviate 	from 	this 	format 	without 	prior
Board 	approval. 	The 	Board's 	proposal 	to 	repeal 	this 	rule 	sug-
gests 	that 	it 	recognizes 	the 	rule's 	potential 	to 	discourage 	the
advertising 	of 	much 	useful 	information 	about 	the 	availability 	and
the 	nature 	of 	optometric 	services. 	Optometrists 	in 	other 	states
commonly 	provide 	additional 	information 	in 	their 	ads, 	such 	as
their 	office 	hours 	and 	their willingness 	to 	accept 	insurance 	pay-
ments. 	Rule 	5 	precludes 	them 	from 	doing 	so 	in 	New Mexico, 	unless
they 	take 	the 	extraordinary 	step 	of 	seeking 	prior 	Board 	approval
for 	their 	ads. 	We 	think 	repeal 	of 	this 	rule 	will 	benefit 	con-
sumers 	by 	allowing 	them 	access 	to 	valuable 	information 	that 	has
not 	been 	available 	in 	the 	past.
B. 	The 	prohibition 	on 	all 	superiority 	claims 	should 	pe
repealed.
We 	also 	urge 	the 	Board 	to 	examine 	rule 	llCH) 's 	prohibition
on 	claims 	of 	professional 	superiority. 	Bans 	on 	superiority
claims 	clearly 	lessen 	competition 	among 	sellers. 	At 	a 	.inimum
they 	restrict 	comparative 	advertising, 	which 	can 	be 	a 	highly
effective 	means 	of 	informing 	and 	attracting 	customers. 	When
sellers 	cannot 	truthfUlly 	compare 	the 	attribute. 	of 	their 	ser-
vices 	to 	those 	of 	their 	competitors, 	the 	incentive 	to 	improve 	or
offer 	different 	products, 	services, 	or 	prices 	i. 	likely 	to 	be
reduced.
Bans 	on 	claims 	of 	superiority 	are 	likely 	to 	injure 	competi-
tion 	and 	consumers 	even 	more 	if 	they 	are 	interpreted 	to 	prohibit
a 	wider 	range 	of 	factual 	statements. 	Virtually 	all 	statements
about 	an 	optometrist's 	qualifications, 	experience, 	or 	performance
can 	be 	considered 	to 	be 	implicit 	claims 	of 	superiority. 	Bans 	on
all 	such 	claims 	would 	make 	it 	very 	difficult 	for 	optometrists 	to
3

provide 	consumers 	with 	truthful 	information 	abo~: the 	differences
between 	their 	aervices 	and 	those 	of 	their 	compe~itors.
We 	recognize 	that 	N.M. 	Stat. 	Ann. 	I 	61-2-13.J(5} 	(1978)
authorizes 	the 	Board 	to 	discipline 	optometriat. 	who 	aaKe 	claims
of 	professional 	superiority 	whether 	or 	not 	they 	are 	true. 	To 	the
extent 	that 	the 	Board 	is 	empowered 	to 	do 	so, 	hovever, 	we 	racom-
.end 	that 	it 	construe 	the 	atatutenarrowly 	to 	~:-mit optolletrists
to 	aaKe 	truthful, 	nondeceptive 	statements 	about 	their 	profes-
.ional 	qualifications 	and 	the 	goods 	and 	aervices 	they 	provide.
We 	also 	urge 	the 	Board 	to 	recommend 	that 	the 	ata~e legialature
amend 	this 	5tatute 	to 	permit 	all 	truthful 	and 	nondeceptive 	claims
of 	.uperiority.
c. 	The 	need 	tor 	disclosure 	requirements 	in 	rules 	13
through 	16 	should 	be 	evaluated.
Because 	truthful, 	nondeceptive 	advertisements 	are 	valuable
to 	consumers, 	other 	restrictions 	contained 	in 	the 	Board 	rules
should 	be 	reconsidered 	as 	well. 	We 	therefore 	recommend 	that 	the
Board 	consider 	relaxing 	the 	disclosure 	obligations 	imposed 	by
rules 	13, 	14, 	15, 	and 	16. 	These 	rules 	forbid 	price
advertisements 	of 	ophthalmic 	products 	and 	aervices 	unless 	the 	ads
contain 	additional 	information, 	much 	of 	which aay 	not 	be
particularly 	helpfUl 	to 	consumers, 	and 	aome 	of which 	may 	actually
obscure 	or 	otherwise 	detract 	from 	the 	message 	co~unicated in 	the
ad.
Rule 	14 	requires, 	for 	example, 	that 	price 	advertisements 	for
lenses 	disclose 	whether 	the 	lens 	is 	"single 	vision, 	bifocal, 	tri-
focal, 	occupational, 	industrial 	safety 	or 	aphakic." 	It 	further
requires 	that 	ads 	for 	aphakic 	lenses 	describe 	the 	lens 	as 	"len-
ticular 	or 	full 	field, 	non 	aspheric, 	aapheric, 	hyper 	aspheric, 	or
other 	single 	vision 	or 	multifocal, 	tinted 	or 	non-tinted." 	Rule
14 	imposes 	additional 	affirmative 	diacloaure 	obligation& 	with
respect 	to 	the 	advertising 	of 	frames, 	including 	for 	example, 	a
requirement 	that 	the 	ad 	.pecify whether 	the 	fra.e 	is 	composed 	of
plastic, 	wood 	or 	metal, 	and 	in 	the 	case 	of meta: 	frames, 	the 	type
of 	metal.
These 	requirements 	and 	others 	contained 	in 	rules 	13, 	15, 	and
16 	embody 	disclosure 	obligations 	that, 	in 	our view 	are 	not 	neces-
sary 	to 	prevent 	deception 	and 	that 	are 	likely 	to 	reduce 	the
amount 	of 	price 	advertising. 	Because 	the 	cost 	of 	advertising 	is
based 	on 	the 	length 	of 	the 	message, 	disclosure 	obligations
increase 	the 	cost 	of 	the 	ads. 	Moreover, 	lengthy 	disclosures
detract 	from 	the 	impact 	of 	the 	ads, 	partiCUlarly 	radio 	and 	tele-
vision 	ads, 	by 	cluttering 	them 	with 	information that 	distorts 	the
primary 	message 	of 	the 	ads 	and 	that 	overwhelms 	consumers 	with 	too
much 	data 	to 	assimiliate 	within 	a 	ahort 	period 	of 	time.
4

We 	recognize 	that, 	in 	general, 	the 	aore 	in!oraation 	avail-
able 	to 	consumers 	the 	better 	prepared 	they 	are 	to 	.ake 	well-
reasoned 	purchases. 	In 	the 	present 	context, 	however, 	we 	believe
that 	disclosures 	such 	as 	those 	required 	by 	Board 	rules 	13 	through
16 	are 	counterproductive. 	The 	Board 	should 	bear 	in .ind 	that
elimination 	of 	these 	requirements 	would 	not 	preclude 	consumers
who 	desire 	such 	information 	from 	requesting 	it 	from 	the 	adver-
tiser. 	Consequently, 	we 	recommend 	that 	the 	Board 	reconsider 	the
need 	for 	the 	disclosure 	requirements 	in 	rules 	13, 	14, 	15, 	and
16. 6
II. 	COMMERCIAL PRACTICE 	RESTRICTIONS '-"".
We 	turn 	now 	to 	two 	Board 	rules 	that 	restrict 	the 	aanner 	in
which 	optometrists 	may do 	business. 	Although 	not 	apecifically
mentioned 	in 	the 	request 	for 	public 	comment, 	these 	rules 	are
aUfficiently 	important 	to 	be 	included 	in 	any 	general 	review 	of
the 	competitive 	implications 	of 	the 	Board's 	rules. 	Rule 	3 pro-
hibits 	optometrists 	from 	locating 	on 	commercial 	premises, 	from
using 	a 	"commercial 	business 	as 	a 	'feeder' 	to 	his 	practice,· 	and
from 	accepting 	employment 	from 	a 	non-optometrist. 	Rule 	11(G)
prohibits 	optometrists 	from 	maintaining 	and 	using 	aore 	than 	two
offices.
These 	provisions 	unnecessarily 	hamper 	opto.etrists 	who 	wiah
to 	market 	their 	services 	in 	a 	cost-effective 	aanner.' 	For
6 	We 	also 	call 	the 	Board's 	attention 	to 	rule 	4, 	which
requires 	that 	optometrists 	practice 	in 	a 	"professional 	manner 	and
in 	conformity 	with 	the 	Code 	of 	Ethics 	of 	the 	American Optometric
Association." 	We 	have 	several 	observations 	about 	this 	provision.
First, 	advertising 	and 	competition were 	once 	considered by .any
as 	antithetical 	to 	"professionalism." 	Thus, 	optometrists .iqht
construe 	this 	provision 	to 	inhibit 	the 	use 	of 	innovative .ar-
keting 	practices 	that 	are 	legal 	and 	desirable. 	Second, 	although
we 	are 	unaware 	of 	unlawful 	restrictions 	in 	the 	AOA's 	Code 	of
Ethics, 	we 	caution 	the 	Board 	that 	insofar 	as 	it 	adopts 	the 	Code
of 	Ethics 	of 	the 	AOA, 	it 	may 	be 	liable 	for 	any 	anticompetitive
restrictions 	presently 	contained 	in 	the 	Code, 	or 	that 	are 	added
in 	the 	future.
7 	On 	January 	4, 	1985, 	the 	Commission 	proposed 	an Ophthalmic
Practices 	Trade 	Regulation 	Rule 	("Eyes 	II") 	that 	would prohibit
state-imposed 	bans 	on 	employment 	or 	other 	business 	relationships
between 	optometrists 	and 	non-optometrists, 	bans 	on 	locating 	in
retail 	centers, 	bans 	on 	nondeceptive 	names, 	and 	bans 	on branch
offices. 	The 	Commission 	stated 	in 	its 	Notice 	of 	Proposed Rule-
making 	that 	public 	restraints 	on 	the 	permissible 	forms 	of 	oph-
thalmic 	practice 	appear 	to 	increase 	consumer 	prices 	for 	ophthal-
mic 	goods 	and 	services, 	but 	do 	not 	appear 	to 	protect 	the 	public
health 	or 	safety. 	See 	50 	Fed. 	Reg. 	598, 	599-600 	(1985).
5

example, 	banning 	the 	practice 	of 	optometry 	on 	the 	premises 	of 	a
commercial 	concern 	prevents 	optometri.ta 	from 	locating 	their
practices 	inside 	retail 	drug 	or 	department 	stores. 	Such 	loca-
tions, 	because 	of 	their 	convenience 	and 	high 	number 	of 	walk-in
customers, 	may 	permit 	an 	optometrist 	to 	service 	a 	high 	volume 	of
patients. 	The 	rule 	thus 	has 	the 	effect 	of 	prohibiting 	the 	reali-
. zation 	of 	Icale 	economies 	that 	may 	be 	passed 	on 	to 	consumers 	in
the 	form 	of 	lo~er prices. 	The 	rule 	aay 	also 	increase 	costa 	for
chain 	optical 	fi~s, 	particularly 	insofar 	as 	it 	forbids 	optome-
trists 	from 	working 	as 	employees 	of 	such 	firms. 	The 	higher 	costs
aay 	then 	decrease 	the 	number 	of 	chain 	firms, 	and 	again 	result 	in
higher 	prices 	for 	consumers.
The 	Commission 	staff 	has 	recently 	published 	its 	report 	on
the 	proposed 	rule. 	The 	staff 	concluded 	that 	"the 	rulemaking
record 	demonstrates 	that 	these 	restrictions 	raise 	prices 	to
consumers 	and, 	by 	reducing 	the 	frequency 	with 	which 	consumers
obtain vision 	care, 	decrease 	the 	quality 	of 	care 	in 	the 	market."
The 	staff 	also 	concluded 	that 	the 	restrictions 	provide 	no
quality-related 	benefits 	to 	consumers. 	The 	staff 	therefore
recommended 	that 	the 	Commission promulgate 	a 	trade 	regulation
rule 	prohibiting 	these 	restrictions. 	Bureau 	of 	Consumer 	Pro-
tection, 	Federal 	Trade 	Commission, 	Ophthalmic 	Practice 	Rules:
State 	Restrictions 	on 	Commercial 	Practice 	(1986).
While 	the 	Presiding 	Officer 	also 	found 	that 	commercial 	prac-
tice 	restrictions 	raise 	prices 	to 	consumers 	and 	limit 	access 	to
eyecare, 	he 	did 	not 	believe 	that 	the 	evidence 	cited 	in 	the 	two
Commission 	studies, 	discussed 	infra 	at 	7-8, 	provided 	an 	adequate
basis 	upon 	which 	conclusions 	about 	the 	quality 	of 	care 	issue
could 	be 	drawn. 	Federal 	Trade 	Commission, 	Report 	of 	the 	Presid-
ing 	Officer 	on 	Proposed 	Trade 	Regulation 	Rule: 	Ophthalmic 	Prac-
tice 	Rules 	(1986).
In 	a 	case 	challenging 	various 	ethical 	code 	provisions
enforced 	by 	the 	American Medical 	Association 	("AKA"), 	the 	Com-
mission 	found 	that 	AHA 	rules 	prohibiting 	physicians 	from 	working
on 	a 	salaried 	basis 	for 	a 	hospital 	or 	other 	lay 	institution, 	and
from 	entering 	into 	partnerships 	or 	similar 	relationships 	with
non-physicians, 	unreasonably 	restrained 	competition 	and 	thereby
violated 	the 	antitrust 	laws. 	American Medical 	Association, 	94
F.T.C. 	701 	(1979), 	atf'd, 	638 	F.2d 	443 	(2d 	Cir. 	1980), 	,tted 	memo
by 	an 	equally 	divided 	court, 	455 	U.S. 	676 	(1982). 	The 	Commission
concluded 	that 	the 	AMA's 	prohibitions 	kept 	physicians 	from 	adopt-
ing 	more 	economically 	efficient 	business 	formats 	and 	that, 	in
particular, 	these 	restrictions 	precluded 	competition 	by 	organiza-
tions 	not 	directly 	and 	completely 	under 	the 	control 	of 	physi-
cians. 	The 	Commission 	also 	found 	that 	there 	were 	no 	counter-
vailing 	procompetitive 	justifications 	for 	these 	restrictions.
6

Similarly, 	the 	rule 	prohibiting 	optometrists 	from 	practicing
in 	more 	than 	two 	offices 	.ay 	harm 	consumers 	in 	a 	number 	of 	ways.
First, 	it 	.ay 	unduly 	deter 	the 	eatablishment 	of 	high-voluae 	prac-
tices 	that 	can 	realize 	significant 	coat 	aavings, 	which 	can 	in
turn 	result 	in 	lower 	prices 	for 	consumers. 	Second, 	it 	aay 	reduce
the 	number 	of 	optometrists 	available 	to 	practice 	in 	any 	parti-
cular 	area 	and 	thus 	may 	decrease 	or 	eliminate 	local 	competition.
Third, 	it 	may 	prevent 	optometrists 	from 	aplitting 	their 	tiae
Among 	a 	number 	of 	locations, 	no 	one 	of 	which 	has 	a 	aufficient
volume 	of 	patients 	to 	aupport 	a 	full-ti.e 	opto.etriat. 	AJ 	a
result, 	consumers 	in 	these 	areas 	aay 	be 	deprived 	or 	local 	optome-
tric 	care 	altogether. 	In 	ahort, 	thia 	restriction 	aeems 	to 	pro-
vide 	no 	benefits 	to 	consumers 	and 	ahould 	be 	eliainated.
Commercial 	practice 	restrictions 	are 	frequently 	derended 	on
the 	grounds 	that 	they 	help 	to 	aaintain 	a 	high 	level 	of 	quality 	in
the 	professional 	aervices .arket. 	Proponenta 	claim, 	tor 	example,
that 	employer-employee 	and 	other 	buainess 	relationships 	between
professionals 	and 	non-professionala 	are 	undesirable 	becauae 	they
permit 	lay 	interference with 	the 	professional 	jUdgment 	or 	licen-
aees. 	They 	also 	allege 	that, 	vhile 	lay 	firms 	.iqht 	otrer 	lower
prices, 	auch 	firms 	might 	also 	encourage 	their 	profesaional
employees 	to 	cut 	corners 	to maintain 	profits.
The 	available 	evidence, 	however, 	including 	comprahenaive
survey 	evidence, 	contradicts 	these 	contentions. 	Two 	studies
conducted 	by 	the 	ataff 	of 	the 	Federal 	Trade 	Com:iasion 	indicate
that, 	rather 	than 	protecting 	consumers, 	restrictions 	on 	commer-
cial 	optometric 	practice, 	inclUding 	auch 	restrictions 	as 	those 	at
issue 	here, 	in 	fact 	harm 	consu~erB by 	increasing 	prices 	without
providing 	any 	quality-related 	benefits.
The 	first 	atudy,8 	conducted 	with 	the 	help 	of 	two 	collegas 	of
optometry 	and 	the 	chief 	optometrist 	of 	the 	Veterans 	Adminiatra-
tion, 	compared 	the 	price 	and 	quality 	of 	eye 	ex~inations and
eyeglasses 	provided 	by 	optometrists 	in 	cities 	with 	a 	variety 	of
regulatory 	environments. 	The 	atudy 	tound 	that 	eye 	examinations
and 	eyeglasses 	cost 	significantly 	aore 	in 	cities without 	chains
and 	advertising 	than 	in 	cities 	vhere 	advertising 	and 	chain 	opti-
cal 	firms 	vere 	present. 	The 	average 	price 	charged 	by 	optoae-
trists 	in 	the 	cities 	vithout 	chains 	and 	advertising 	vas 	33.6\
higher 	than 	in 	the 	cities 	with 	advertising 	and 	chains. 	Eatimates
based 	on 	further 	analysis 	of 	the 	atudy 	data 	shoved 	that 	prices
vere 	17.9\ 	higher 	due 	to 	the 	absence 	of 	Chains: 	the 	remaining
price 	difference 	was 	attributable 	to 	the 	absence 	of 	advertiaing.
8 	Bureau 	of 	Economics, 	Federal 	Trade 	Comnission, 	Effects
of 	Restrictions 	on 	Advertising 	and 	Commercial 	Practice 	in 	the
Professions: 	The 	Case 	of 	Optometry 	(1980).
7

The 	study 	alao 	provided 	evidence 	that 	commercial 	practice
restrictions 	do 	not 	result 	in 	higher 	quality 	eye 	care. 	The
thoroughness 	of 	eye 	exams, 	the 	accuracy 	of 	eyeglass 	preacrip-
tions, 	the 	accuracy 	and 	workmanship 	of 	eyeglasses, 	and 	the 	extent
of 	unnecessary 	prescribing 	were, 	on 	average, 	the 	same 	in 	restric-
tive 	and 	non-restrictive 	markets.
A second 	atud y9 	of 	cosmetic 	contact 	lens 	fitting 	concluded
that, 	on 	average, 	Rcommercial" 	optometrists 	-- 	that 	is, 	tor
example, 	optometrists 	who 	were 	associated 	with 	chain 	optical
firms, 	used 	trade 	names, 	or 	practiced 	in 	commercial 	locations
fitted 	cosmetic 	contact 	lenses 	at 	least 	as 	well 	as 	other 	fitters,
but 	charged 	significantly 	lower 	prices.
Other 	evidence, 	including 	survey 	evidence, 	establishes 	that
state 	restrictions 	on 	commercial 	practice 	actually 	decrease 	the
quality 	of 	care 	in 	the 	market 	by 	decreasing 	the 	frequency 	with
which 	consumers 	obtain 	care. 	As 	a 	result 	of 	the 	higher 	prices
associated 	with 	the 	restrictions, 	consumers 	tend 	to 	purchase
eyecare 	less 	frequently 	and 	may 	even 	torego 	care 	altogether. 10
CONCLUSION
In 	sum, 	the 	evidence 	indicates 	that 	consumers 	are 	not 	helped
by 	restrictions 	on 	truthful, 	nondeceptive 	advertising 	and 	pro-
hibitions 	on 	commercial 	practice 	by 	optometrists. 	Such 	restric-
tions 	raise 	prices 	above 	the 	levels 	that 	would 	otherwise 	prevail,
decrease 	the 	quality 	of 	care, 	and 	do 	not 	provide 	any 	consumer
benefit. 	We 	recommend, 	therefore, 	that 	you 	repeal 	or 	amend 	the
rules 	discussed 	above 	to 	remove 	unnecessary 	constraints 	on 	inno-
vative 	forms 	of 	optometric 	practice 	and 	advertising.
9 	Bureaus 	of 	Consumer 	Protection 	and 	Economics, 	Federal
Trade 	Commission, 	A Comparative 	Analysis 	of 	Cosmetic 	Contact 	Lens
Fitting 	by 	Ophthalmologists, 	Optometrists 	and 	Opticians 	(1983).
This 	study was 	designed 	and 	conducted with 	the 	assistance 	of 	the
major 	national 	professional 	associations 	representing 	ophthal-
~ology, 	optometry 	and 	opticianry.
10 	This 	evidence 	is 	discussed 	in 	more 	detail 	in 	the 	staff's
report 	to 	the 	Commission. 	Bureau 	of 	Consumer 	Protection, 	Federal
Trade 	Commission, 	Ophthalmic 	Practice 	Rules: 	State 	Restrictions
on 	Commercial 	Practice 	(1986).
8

Thank 	you 	for 	co~s:dering our 	comments. 	We 	have 	referred 	to
aeveral 	studies, 	cases, 	and 	other 	materials. 	We 	would 	be 	happy
to 	supply 	copies 	of 	these 	if 	you 	so 	desire, 	or 	to 	provide 	any
other 	assistance.
William 	MacLeod
Director
cc: 	Randy 	Lovato
New 	Mexico 	Board 	of 	optometry
4125 	Carlisle, 	N.!.
Albuquerque, 	New Mexico 	87107
9