Al Wakeelo
Your Digital Lawyer, Always on Duty
Initializing Secure Chambers
Your Digital Lawyer, Always on Duty
Initializing Secure Chambers
Petitioner: Independent Newspapers Corporation (Pvt.) Ltd etc. VS Respondent: Federation of Pakistan etc.
Court Name: Lahore High Court Judge(s): Ayesha A. Malik, Abid Aziz Sheikh, Shahid Karim Title:Independent Newspapers Corporation (Pvt.) Ltd etc. vs Federation of
Pakistan etc. Case No.: WP No.25317/2016 Date of Judgment:2016-12-28 Reported As: 2016 LHC 3689 Result: Petition allowed Judgment Ayesha A. Malik J: Through this Petition the Petitioner has challenged the vires of Rule 13(3) and (4) of the Pakistan Electronic Media Regulatory Authority Rules, 2009 ("Rules" ) and Regulations 2.5, 2.11 and 3.23 of the PEMRA (Eligibility Criteria and Biddi ng Procedure for Direct to Home (DTH) Distribution Service Licensing) Regulations, 2016 ("DTH Regulations" ) notified on 20.8.2016. The Petitioner has also challenged Regulation 12(3) of the PEMRA (Radio Broadcast Stations Operations) Regulations, 2012 ( "2012 Regulations" ). The Dispute 2. The Petitioner is in the electronic media business and holds a Broadcast Media License issued by PEMRA. The Petitioner wants to apply for a Direct To Home license ("DTH license "), which essentially is a distribution service within the electronic media. Through the impugned Rules and DTH Regulations PEMRA has prohibited broadcast media license holders from operating distribution service licenses which includes the DTH license. It is the Petitioner?s case that the prohibition imposed under Rule 13(3) and (4) of the Rules and Regulation 2.11 and 3.23 of the DTH Regulations is unreasonable, discriminatory and beyond the scope of Section 23 of the Pakistan Electronic Media Regulatory Authority Ordinance, 2002 ("Ordinance"). It was explained that the challenge to Rule 12(3) of the 2012 Regulations is on the same grounds as the same restriction is placed on radio broadcasters, however the DTH license is only for the electronic media. 3. The dispute relates to the award of DTH licenses which is a license to operate a distribution service. PEMRA has offered three DTH licenses by way of which a DTH license holder will be able to deliver television transmission directly via satellite into the home of the viewer. The DTH technology enables a license holder to collect a bouquet of television channels in digital and encrypted form and uplink the entire bouquet through a DTH satellite. The bouquet is received by the subscriber directly from the satellite through a top box set which decodes and decrypts the DTH signal. In this way, the DTH license holder can transmit to remote areas which are not covered by terrestrial
---
## Page 2
transmission or cable networks. Each licensee will be allowed, other than the live channels, five thematic channels on which the licensee can relay content of its own choosing as regulated by PEMRA. In this way the DTH license holder can beam any programme of its choice directly into the house of the viewer on the thematic channels. The DTH licensing initiative in Pakistan commenced in the year 2003 however, PEMRA was not able to successfully launch the DTH technology due to various reasons including litigation, which is stated to be still pending before the august Supreme Court of Pakistan. It was also stated that Pakistan is lagging behind other countries so far as DTH technology is concerned as DTH technology is used world over and once functional in Pakistan will provide connectivity in remote areas especially where there is no cable or internet transmission due to lack of infrastructure to support television viewage. 4. On 1 June 2016 PEMRA issued SRO No.551(1)/2016 which sets out the eligibility criteria and bidding procedure for the DTH license. Regulation 2.11 of the stated SRO provides that the maximum shareholding of broadcast media or landing rights permission in the applicant company shall not exceed a total of 20% and that broadcast media cannot have its management or control over the applicant company. On 12 August 2016 SRO No.774(1)/2016 was issued by PEMRA amending the earlier SRO No. 551(1)/2016. Consequently Regulation 2.11 and 3.23 was amended and now the stated regulation contains a total prohibition on broadcast media from applying for the DTH license. It was argued that this amendment was introduced to mirror the restriction contained in Rule 13(4) of the Rules which was earlier overlooked in SRO of 1.6.2016. The Arguments 5. Counsel for the Petitioner Ms. Asma Jaha ngir, argued that the Rules and the DTH Regulations being subordinate legislation have travelled beyond the mandate granted to PEMRA under the Ordinance. While relying on Section 23 of the Ordinance, she explained that the Ordinance does not impose any restriction whatsoever on vertical integration between media enterprises and that PEMRA has travelled beyond its delegated realm by prohibiting vertical integration. Resultantly , the Petitioner is at a disadvantage as it cannot distribute its own content and is denied the ability to expand its business. She argued that the DTH Regulations impose an unreasonable restriction on the right of the Petitioner to enter into lawful business, to apply for the DTH license and to enter into fair competition as provided for under the Ordinance. She further argued that the Rules and the DTH Regulations prohibit broadcast media license holders from obtaining a DTH license for which there is no reasonable or rational explanation and it offends the fundamental rights of the Petitioner . It is also her case that the restriction violates Article 25 of the Constitution of Islamic Republic of Pakistan, 1973 ("Constitution") as the Petitioner is being discriminated against. The restriction is only on broadcast media whilst all other media enterprises can apply for the DTH license. Furthermore foreign companies have been allowed to bid for the DTH license irrespective of whether they are in broadcast media or not. However local broadcast media is prohibited from operating a DTH license which is discriminatory. She stated that there was no legitimate or lawful reason to separate broadcast media from distribution services. It is her case that no objective criteria was defined by PEMRA on the basis of which it decided that the integration of broadcast media with distribution service tantamounts to undue concentration of media ownership. In support of her arguments, she submitted a plethora of judgments including judgments from foreign jurisdiction such as India, USA and Australia. 6. Report and parawise comments have been filed by all the Respondents. Learned DAG stated that the Federal Government relies upon the parawise comments and arguments made on behalf of Respondent No.2, PEMRA. He clarified that the Federal Government only approves the regulations or amendments proposed by PEMRA and that PEMRA being the regulator is authorized to regulate the distribution of foreign and local television channels. 7. The case of PEMRA, as argued by Mr. Salman Akram Raja is that PEMRA as the front line regulator has the power to restrict broadcast media license holders from operating distribution services which includes the DTH license in order to avoid undue concentration of media ownership. This restriction has been imposed keeping in view the mandate of the Ordinance which specifically requires PEMRA to prevent concentration of market power within the electronic media. Hence PEMRA deemed it necessary to restrict broad cast media license holders from obtaining distribution licenses as the integration of the two media enterprises would lead to undue concentration of media ownership which in turn adversely affects diversity and plurality of content in the electronic media. He furtherst th
---
## Page 3
argued that the mandate of Section 23 of the Ordinance is to prevent concentration of media ownership at the time of grant of license and thereby encourage diversity and plurality of content. He further argued that in terms of the delegated authority under Section 39 of the Ordinance PEMRA is to define undue concentration of media ownership and regulate media ownership accordingly . It is his case that the legislature left it to PEMRA to decide how to regulate and control concentration in media ownership. Accordingly PEMRA made the Rules in the year 2009 and restricted broadcast media from the grant of a distribution license and vice versa because as per its understanding cross ownership in media enterprises leads to undue concentration of media ownership. He further argued that the restriction imposed in the Rules and 2012 Regulations does not violate any fundamental right of the Petitioner nor is it discriminatory in any manner whatsoever . He contended that it is common in licensing regimes to prohibit a person engaged in one activity from simultaneously engaging in another activity . It is also his case that Section 23(2) of the Ordinance necessitates both competition regulation and ownership regulation by PEMRA. He argued that the use of the word and? in Section 23(2) of the Ordinance wherein it is provided that the Authority shall ensure open and fair competition and that undue concentration is not created, is disjunctive creating two distinct regulatory objectives for PEMRA. As per his contentions the first objective is to ensure fair competition. Generally competition regulation is ex post as it seeks to prohibit anticompetitive behaviour after it has happened and thereby punish entities that have indulged in such behaviour after the fact. The second objective is to regulate media ownership which regulation requires control before the grant of license. Therefore ownership restrictions are ex ante and do not punish a particular action after the event. It is a restriction that is to be applied before the grant of the license, meaning that PEMRA is not to grant a license which would ultimately result in undue concentration of media ownership. As to the DTH Regulations they simply give effect to Rule 13(3) and 13(4) of the Rules which have separated ownership control between broadcast media and distribution service. He argued that this separation has been accepted by the electronic media sector since 2009 and as such does not call for interference on account of the alleged grievances of the Petitioner . So far as the 2012 Regulations are concerned, they relate to radio broadcasters and envision the same restriction as contained in the Rules impugned by the Petitioner . In support of his arguments, the learned counsel submitted a plethora of judgments including judgments from foreign jurisdiction such as India and the USA. The Issue 8. The case before the Court questions the legality of Rule 13(3) and 13(4) of the Rules as well as Regulation 2.11 and 3.23 of the DTH Regulations which have ousted the Petitioner from operating in distribution services. Consequently the Petitioner cannot bid for or operate a DTH license, hence this Petition. The issue before us is whether PEMRA has acted within its statutory authority as mandated under Section 23 read with Section 39(2)(e) of the Ordinance while promulgating Rule 13(3) and 13(4) of the Rules or whethe r PEMRA has gone beyond the statutory mandate by promulgating the stated Rules which oust broadcast media from distribution services and vice versa. Since the case before us was argued with reference to the DTH license which is available for the electronic media therefore we will confine ourselves to the legality of Rule 13(3) and 13(4) of the Rules and the impugned clauses of the DTH Regulations. Since the challenge to the 2012 Regulations was not argued before us, we deem it appropriate to leave that issue for some other appropriate case where the challenge is specifically related to the radio market and radio broadcasters. After hearing both the counsels it transpires that the first question before us is the intent of the Ordinance and specifically the intent of Section 23(2) read with Section 39(2)(e) of the Ordinance wherein the authority to define the circumstances which cause undue concentration of ownership has been delegated to PEMRA. Thereafter the next question we will address in our judgment is whether Rule 13(3) and (4) of the Rules are consistent with the mandate of Section 23(2) of the Ordinance or whether PEMRA has gone beyond the prescribed mandate and exceeded its delegated authority by promulgating Rule 13(4) and (5) of the Rules and Regulation 2.1 1 and 3.23 of the DTH Regulations. The Regulatory Objective 9. Under the Ordinance PEMRA is the regulatory authority for the electronic media and its objectives are clearly elucidated in the Preamble to the Ordinance stating therein that the Authority , PEMRA is to ensure a free and diverse electronic media giving an accurate and fair representation of information to the public. The importance of
---
## Page 4
diversity and plurality of content within the electronic media is contained in clause (ii) of the Preamble wherein it is stated that PEMRA must enlarge the choice available to the people of Pakistan in the media for news, current affairs, religious knowledge, art, culture, science, technology , economic development, social sector , music, sports, drama and all subjects of pubic and national interest. The Preamble also requires that PEMRA ensure accountability , transparency and good governance by optimizing the free flow of information . The emphasis on choice and free flow of information is to encourage divergent viewpoints in the content so that the electronic media is representative of all segments of society , be it demographic, ethnic, gender or otherwise. At the same time the electronic media is required to present a variety of viewpoints and ideas maintaining plurality in its content. Hence the purpose of the Ordinance is to ensure diversity and plurality in content and information which is an integral part of the right to freedom of speech and expression. 10. The fundamental right to freedom of speech and expression as enshrined in Article 19 of the Constitution means the right to express one?s own convictions and opinions in any form or mode through all available mediums. This fundamental right is the catalyst of a democratic process wher e all citizens have the right to participate in the affairs of the country and is essential for guaranteeing the rule of law. Participation becomes meaningless where the citizen is not well informed on all sides of the issues,thr ough a variety of opinions and outlooks. Therefore the widest possible dissemination of information from diverse and opposed sources is essential for the welfare of the public and the existence of a democratic society . This right has been explained in the case titled Pakistan Broadcasters Association and others v. Pakistan Electronic Media Regulatory Authority and others (PLD 2016 SC 692 ) wherein it was held that:- 11. No doubt freedom of speech goes to the very heart of a natural right of a civilized society to impart and acquire information about their common interests. It helps an individual in self accomplishment, and leads to discovery of truth, it strengthens and enlarges the capacity of an individual to participate in decision making, and provides a mechanism to facilitate achieving a reasonable balance between stability and social change. 12. The concept of freedom of media is based on the premise that the widest possible dissemination of information from diverse and antagonistic sources is sine quo non to the welfare of the people. Such freedom is the foundation of a free government of a free people. Any attempt to impede, stifle or contravene such right would certainly fall foul of the freedom guaranteed under Article 19 of the Constitution of Islamic Republic of Pakistan. Freedom of expression and speech requires a free media to disseminate ideas and information through diverse and antagonistic sources. Through a range of programmes involving diverse social actors the electronic media disseminates information and ideas offering a wide variety of content based on need and public interest. The information and content plays a significan t role in shaping public opinion and expression, which is why the media is recognized as an essential constituent of the democratic process. The role of a free media is critical in the democratic process since it is the primary medium through which information, ideologies, ideas and related content is made available to the viewer , which content will ultimately influence public opinion and decision making. In any democratic system it is therefore imperative that the media provide the public with information and the platform through which the freedom of expression can be exercised. 11. The electronic media uses three mediums for dissemination of information being broadcast, distribution and publication. For each of the mediums to effectively provide information, education and entertainment to the public a legal framework conducive to freedom of expression, ensuring diversity and pluralism of information has been set out under the Ordinance. The purpose of the Ordinance is to create a legal framework which will guarantee diversity and plurality in content and information and ensure the free flow of information. This is the underlying objective which PEMRA must achieve while regulating the electronic media. The Ordinance requires healthy competition and open access for the grant of licenses to operate in any given medium. Resultantly the ownership of media entities which are to become licensed operators under the Ordinance becomes relevant. Ownership of entities which operate within the electronic media is a cause of concern for the regulator as ownership concentration is considered to be a threat to diversity and pluralism of information which in turn can influence public opinion. The advancement of technology within the electronic media means that the viewer is given access to information and content through various different mediums and services which may interplay and enable media
---
## Page 5
entities to communicate with the viewer through multiple channels. Consequently the interplay of technology and public need gives rise to issues of convergence in ownership as media owners look to expanding their business interest horizontally in all segments of broadcast, distribution or publication and at the same time expand their business interests vertically , across different mediums so that broadcasters enter into publication and distribution and distributors into publication or broadcasting and so on. Not only is the vertical and horizontal integration economically efficient and desirable but it also means reaching a larger number of viewers by improving the quality of services and use of technological advancements. Hence the regulatory landsca pe is complex and demanding, requiring regulatory intervention at multiple levels. 12. Media ownership and its concentration are perceived as a direct threat to the elements of diversity and plurality of information. Concentration reduces the number of participants and creates larger economic units within the media market. Concentration also has a political dimension as it can promote certain interest groups over others and prevent the entry of new competitors in the market. It suggests that fewer people will dominate the electronic media thereby reducing variety and choice in content for the viewers. If the media is controlled by fewer individuals it adversely affects plurality since it will reduce the variety in ideas, debate and discussion. When the source of the information is reduced it will weaken the democratic processes because the circulation of ideas and opinions will become concentrated. Hence regulating media ownership becomes vital and in the public interest because it guarantees freedom of expression and speech through the dissemination of information. Undue concentration is considered as the negation of diversity and plurality which is the hallmark of freedom of expression and speech. The existence of monopolies and oligopolies in media ownership will impede the communication and circulation of ideas and opinions. Therefore the regulator is required to harmoniously balance the open access safeguards with the concentration controls to achieve an efficient media market. Regulating media ownership and anticompetitive practices essentially mean to prevent a lesser number of independent owners of media enterprise from dominating and controlling the relevant media market. Therefore in the context of both ownership regulation and competition regulation the control factor and the relevant market are significant. 13. In the case before us the issue revolves around ownership regulation that is on cross ownership of media enterprises. PEMRA has restricted vertical integration by prohibiting cross ownership such that a broadcaster cannot operate distribution services and vice versa. PEMRA is of the opinion that a common entity having control in broadcast media and distribution services in the same market will destroy the element of plurality and diversity of information. It was argued by the counsel for PEMRA that the Rules and DTH Regulations ensure that there is no concentration of ownership in the media market. He further argued that broadcasters can distribute their own content, hence their business is not adversely affected nor are they denied the right to expand their business by separating them from distribution services. By excluding broadcasters from the grant of DTH licenses, PEMRA has ensured that the broadcasters will not control the media market because if broadcast media owns distribution services it will cause undue concentratio n in media ownership and a few hands will end up influencing public opinion and choice. The question therefore arises as to whether PEMRA could exclude broadcasters from distribution services or whether it has to regulate the sector and prevent undue concentration of media ownership within the relevant market. The Legal Landscape 14. For ease of reference the legal framework on the subject is reproduced hereunder:- Section 23 of the Ordinance provides as follows:- Exclusion of monopolies (1) No person shall be entitled to the benefit of any monopoly or exclusivity in the matter of broadcasting or the establishment and operation of broadcast media or distribution service or in the supply to or purchase from, a national broadcaster of air time, programmes or advertising material and all existing agreements and contracts to the extent of conferring a monopoly or containing an exclusivity clause are, to the extent of exclusivity , hereby declared to be inoperative and of no legal ef fect. (2) In granting a licence, the Authorit y shall ensure that open and fair competition is facilitated in the operation of more than one media enterprise in any given unit of area or subject and that undue concentration of media
---
## Page 6
ownership is not created in any city , town or area and the country as a whole: Provided that if a licensee owns, controls or operates more than one media enterprise, he shall not indulge in any practice which may impede fair competition and provision of level playing field. Section 39 of the Ordinance reads as follows:- Power to make rules (1) The Authority may, with the approval of the Government, by notification in the official Gazette, make rules to carry out the purposes of this Ordinance. (2) In particular, and without prejudice to the generality of the fore-going power , such rules may be provided for all or any of the following matters, namely:- (a) to prescribe the forms for the licences for working, installing, operating, or dealing in transmission broadcast or distribution apparatus and the manner in which applications for the licences shall be granted; (b) To prescribe the terms and conditions of the licence including fee to be charged in connection with the issuance of licences and related matters, (c) to prescribe standards and measures for the establishment of broadcast media stations, installation of broadcasting, distribution service or teleporting equipment, transmitters, receivers, boosters, converters, distributors and common antennae; (d) to prescribe terms and conditions for the broadcast media or distribution service operators who own, control or operate more than one media enterprise; and (e) to define the circumstances constituting undue concentration of media ownership and abuse of powers and anti-competitive practices by media companies. Rule 13(3) and (4) of the Rules provides that: Media ownership concentration and exclusion of monopolies : (1) To ensure that fair competition is facilitated, media diversity and plurality are promoted in the society and undue concentration of media ownership is not created. Maximum number of licences that may be issued to a person or any of its directors or partners where such person is a company or firm, who is directly or indirectly , controlling, owning or operating more than one media enterprise, shall not exceed a total of four satellite TV, four FM Radio licences and two…
Read the unabridged text and precedent citation network on Al Wakeelo Legal Research Platform.