DTH licence bidding process annulled

LHC strikes down Pemra rules, regulations that bar broadcasters from participating in bid; petitioner’s counsel Asma argues ban on broadcasters beyond the scope of Section 23 of Pemra Ordinance

LAHORE: A full bench of the Lahore High Court on Wednesday nullified the auction of ‘Direct To Home’ (DTH) licence carried out by Pemra after striking down the rules and regulations which barred broadcasters from applying/participating in the bidding process.

The LHC bench comprising Justice Ayesha A Malik, Justice Shahid Karim and Justice Abid Aziz Sheikh accepted the petition filed by the Independent Newspapers Corporation and allowed broadcasters to apply/participate in bidding, directing Pemra to form rules and regulations for DTH.

In its 35 page judgment, the court ruled that, “Rule 13(3) and (4) of the (Pakistan Electronic Media Regulatory Authority) Rules (2009 )along with Regulation 2.11 and 3.23 of the Pemra [Eligibility Criteria and Bidding Procedure for Direct to Home (DTH) Distribution Service Licensing] Regulations 2016 have gone beyond the authorised mandate of Section 23(2) of the (Pemra) Ordinance and are inconsistent with the intent of the Ordinance, hence declared to be without lawful authority of no legal effect and are hereby struck down.”

“Needless to mention that the Rules and DTH Regulations shall be made as per the intent of the Ordinance and not in conflict with the Ordinance,” the court further ruled.

The Supreme Court on November 23 had conditionally allowed Pemra to initiate the bidding process for DTH licences but subjected awarding that to the final decision of the LHC. Petitioner’s counsel Asma Jahangir argued that Pemra had prohibited broadcast media licence holders from operating distribution service which included DTH.

She pointed out that the prohibition imposed under Rule 13(3) and (4) of the Rules and Regulation 2.11 and 3.23 of the DTH Regulations was unreasonable, discriminatory and beyond the scope of Section 23 of the Pemra Ordinance, 2002. The court held that Section 23(2) of the Pemra Ordinance did not impose any prohibition or restriction upon the aggregation of interests (common ownership).

“It essentially promotes the participation of all media enterprises that is a necessary consequence of open access and fair competition. Preventing concentration from becoming undue does not suggest or mandate a restriction because it recognises the fact that there will be some amount of concentration which if not crossed will not be considered as undue.”

“We are of the opinion that Pemra has failed to put into place a regulatory framework which would enable it to measure, monitor and regulate ownership concentration in the electronic media. In this case, Rule 13(3) and (4) of the Rules and Regulation 2.11 and 3.23 of the DTH Regulations do not serve the public interest by ousting broadcasting media from participating in the DTH licence nor is there any reasonable nexus of the ouster with the intent of Section 23(2) of the Ordinance,” the court explained.

The judgment says Pemra has gone beyond the delegated authority and altered the legal structure by prohibiting broadcast media from integration with distribution services. If the intent of the law was to prohibit vertical integration it would not have required Pemra to define the circumstances which create undue concentration of ownership. The legislature would have prescribed the restriction in the stated Section as it would have seen the wisdom in keeping broadcast media separate from distribution services.

The court remarked that the electronic media was a fast growing sector with regular technological advancements and a growing media market as its basic features. “In these circumstances, Pemra must have due regard for commercial viability and public interest. It must also understand the role technology plays and the need to remain responsive to new technological initiatives.”

On the issue of foreign investment, the court ruled that the presence of foreign investors and the quantity of revenue generation was not the primary objective for Pemra. “It has to achieve diversity and plurality through open access and fair competition allowing all stakeholders to participate in the bid for DTH license so that the viewers get diversity and plurality in content.”

The court held that Pemra had abdicated from its functions as a regulator and instead transgressed into the domain of the legislature which was not permissible under the law.

Pemra was not able to show the mode or manner in which it measured concentration and explain the regulatory framework which balanced the advantages and disadvantages of vertical integration.

“To achieve its regulatory objective a detailed exercise should have been carried out identifying the standards and threshold where ownership concentration would be deemed to have become undue.”

The court said, “Pemra has also denied Independent Newspapers Corporation of the advantages of vertical integration which in turn prejudices its right to do business. The legislature in its wisdom did not deem it necessary to deny vertical integration as it relates to the means and ways in which a lawful business can expand and grow and improve the quality of the services offered in the media market.”