AYESHA A. MALIK, J.---Through this. Petition the Petitioner has challenged the vires of Rules 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 Bidding 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 Rules 13(3) and (4) of the Rules and Regulations 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 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 1st 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 12th August 2016 SRO No,774(1)/2016 was issued by PEMRA amending the earlier SRO No, 551(1)/2016. Consequently Regulations 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 Jahangir, argued that the Rules and the DTH Regulations being subordinate legislation have traveled 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 tantamount 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 broadcast 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 further 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 anti competitive 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 Rules 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 sect& 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 Rules 13(3) and 13(4) of the Rules as well as Regulations 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 Rules 13(3) and 13(4) of the Rules or whether 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 Rules 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 Rules 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 Rules 13(4) and (5) of the Rules and Regulations 2.11 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 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 where 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, through 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 programmers 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 significant 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 an i 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. Reluctantly 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 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 landscape is complex and demanding, requiring regulatory intervention at multiple levels.
12. Media ownership and its concentration are perceived as 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 anti Competitive 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 concentration 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 effect.
(2) In granting a licence, the Authority 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 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.
' Rules 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 landing rights permissions.
(2) A licensee having direct or indirect interest in any other media enterprise shall ensure:
1. appointment of separate editorial boards and monitoring facilities for each medium under its control;
2. establishment of separate management structures for each medium under its control; and
3. maintenance of separate accounting record for each medium under its control.
(3) A licensee who owns, controls or operates directly or indirectly any other distribution service license shall not be granted a landing rights permission or broadcast media licence.
(4) A licensee who owns, controls or operates directly or indirectly. broadcast media licence or landing rights permission shall not be granted a distribution service licence.
' DTH Regulations 2.5, 2.11 and 3.23 state as follows: 2.5 Applicants shall have less than 50% of the shares owned or controlled by foreign nationals/companies, if any, with or without management or control vested in foreign nationals or companies. The Chief Executive Officer of the applicant company shall be resident Pakistani.
2.11 The applicants must not already be a licensee who owns, controls or operates directly or indirectly any broadcast media licence or landing rights permission, in compliance with Rule 13 of the PEMRA Rules 2009.
3.23 Affidavit of the applicant company that neither the applicant company nor any of its Directors or shareholders are directly or indirectly owning, controlling or operating broadcast media license or landing rights permission in compliance with Rule 13 of PEMRA Rules 2009.
15. The term media enterprise is defined in Section 2(1) of the Ordinance to mean an enterprise concerned with the publication of a printed newspaper or a broadcast media or distribution service. So a media enterprise is an entity concerned with broadcast or distribution or publication in the electronic media. Section 2(hc) of the Ordinance defines electronic media to include broadcast media and distribution services. Broadcast Media has been defined in Section 2(c) of the Ordinance to mean such media which originate and propagate broadcast and prerecorded signals by terrestrial means or through satellite for radio or television and includes teleporting, provision of access to broadcast signals by channel providers and such other forms of broadcast media as the Authority may, with the approval of the Federal Government, by notification in the official Gazette, specify. Distribution Service is defined in Section 2(ha) of the Ordinance which means a service which receives broadcast and prerecorded signals from different channels and distributes them to subscribers through cable, wireless or satellite options and includes Cable TV, LMDS, MMDS, DTH and such other similar technologies. Simply put broadcast media collects and transmits its own content while distribution service is a license to deliver the content of various broadcasters to the viewer. So while broadcast media can distribute its own content it cannot distribute other broadcasters content whereas distributors deliver content from a variety of broadcasters to the viewer.
16. The legal framework is such that Section 23 of the Ordinance prescribes for the control of factors which cause concentration in the media market by preventing anti competitive practices from developing and by avoiding ownership concentration in the relevant media market. Section 23(1) of the Ordinance requires PEMRA to ensure that there is no monopolistic control or exclusivity in broadcast media or in distribution service. Section 23(2) of the Ordinance requires PEMRA to ensure open competition and to regulate ownership concentration at the time of grant of license. While the Section does not define undue concentration of ownership it requires PEMRA to ensure that undue concentration is not created within the relevant market. To achieve the objectives of Section 23 of the Ordinance, Section 39(2)(d) requires PEMRA to make rules setting out the terms and conditions where broadcast media license holders or distribution service license holders can own more than one media enterprise meaning that PEMRA is to define the terms and conditions on which media enterprises can integrate horizontally within the electronic media. In the same way Section 39(2)(e) of the Ordinance requires it to make rules to define the circumstances that constitute undue. concentration of media ownership meaning that PEMRA can describe the conditions which cause undue concentration of ownership within media enterprises to control vertical integration and prevent concentration of ownership in the media market. Therefore the intent of the law is that by defining the circumstances and providing for the terms and conditions PEMRA can regulate media enterprises and prevent fewer media owners from owning a larger share of the relevant media market.
17. PEMRA issued the Rules in 2009 and provided for the procedure of grant and renewal of licenses.
Rule 13, being the rule under challenge, defines fair competition to mean that maximum number of licenses should be issued after full participation of media enterprises in the procedure for grant of licenses. In order to avoid monopolistic control by media enterprises Rule 13(1) caps the number of licenses that can be granted to one media enterprise in broadcast or in distribution and Rule 13(2) provides for the terms and conditions for multiple grants to a media enterprise. Rules 13(3) and (4) define the circumstances for undue concentration in media ownership to mean the total exclusion of broadcast media from distribution services and of distribution service from broadcast media. As per this Rule a broadcast media license holder cannot operate a distribution service license and vice versa. The DTH Regulations were issued in August 2016 and prescribe the terms and conditions on which the DTH licenses will be offered for bidding. The Regulations 2.11 and 3.23 of the DTH Regulations essentially replicates the provisions of Rules 13(3) and (4) of the Rules. PEMRA defends Rules 13(3) and (4) and the DTH Regulations as being consistent with the mandate of Section 23(2) of the Ordinance.
18. In order to appreciate the true effect and meaning of Section 23(2) of the Ordinance, it is necessary to understand the relevance of media ownership and vertical integration. An enterprise or owner who operates publication, distribution or broadcast is a media enterprise. A media enterprise can own more than one company engaged in the media business and will include a group of companies which are engaged in different areas of the media sector. Within the electronic media a media enterprise engaged in broadcast, distribution or publication can operate another media enterprise engaged in the same line of work being broadcast, distribution or publication. This is integrating horizontally and allows the media enterprise to increase its production and reach a larger audience. Horizontal integration can give rise to oligopoly and in extreme cases monopoly hence integration is regulated by capping the number of licenses a media enterprise can own in the same medium being broadcast, distribution or publication. On the other hand, vertical integration is caused when one media emprise integrates within the electronic media to operate some other media enterprise. So a broadcaster will integrate to operate distribution services E or publication or publication will integrated to operate broadcast media and so on in the same market. Vertical integration includes cross ownership that is when a common entity will operate broadcast media as well as distribution service. Accordingly, vertical integration is of concern for PEMRA because if a smaller group of owners control a large share of the market through broadcast and distribution it will cause concentration of ownership, which in turn means reduction in diversity and plurality of content and the free flow of information. In this case, vertical integration refers to the ownership concentration of two important media enterprises, broadcast media and distribution services. This ownership concentration has the potential to challenge the stated objectives of the regulator, hence it must be adequately regulated.
19. The counsel for PEMRA argued at great length on the regulatory powers of PEMRA which arise out of Section 23(2) of the Ordinance. He argued that the stated Section called for a disjunctive interpretation of the word "and" in Section 23(2) of the Ordinance which requires the Authority to 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 ownership is not created in any city, town or area and the country as a whole.: When reading Section 23(2) of the Ordinance, it is apparent that the word "and" is used to separate two regulatory functions attributed to PEMRA. One function is to ensure that competition among st media enterprises is open and fair with maximum participation in a transparent process. The intent of the law is such that it guarantees free access to the market and any anti competitive practice would call for ex post regulations with remedial or corrective interventions. However since increase in competition alone does note, necessarily prevent ownership concentration, therefore Section 23(2) of the Ordinance also requires that at the time of grant of license PEMRA ensure that no undue concentration of media ownership is caused within the relevant market. The intent of the law mandated exalted regulations where PEMRA while anticipating the dangers of vertical integration would consider ownership issues at the time of grant of license. Consequently PEMRA has separated broadcast media from distribution service because it considers that the integration in itself will create undue concentration of media ownership. The counsel argued that regulating competition and ownership involved two different regulatory regimes with different regulatory objectives. It is his case that PEMRA was authorized to ensure that there is no undue concentration of ownership in the media market, hence PEMRA as the gatekeeper of the electronic media is mandated to prohibit vertical integration which results in undue concentration of ownership.
Understanding the Legislative Intent
20. In order to determine the scope of the regulatory framework within which PEMRA is to operate we will first look at the Preamble of the statute which is the gateway to the statute and the bedrock to understanding the scope and purpose of any statute. The Preamble to the statute sets out the reasons and the objects for which the statute has been promulgated and in this case the Preamble to the Ordinance clearly defines the purpose for which PEMRA was established. The stated purpose as per the Preamble is as follows:- ' WHEREAS it is expedient to provide for the development of electronic media in order to:
(i) improve the standards of information, education and entertainment;
(ii) 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 concerns, music, sports, drama and other subjects of public and national interest;
(iii) facilitate the devolution of responsibility and power to the grass-roots by improving the access of the people to mass media at the local and community level; and
(iv) ensure accountability, transparency and good governance by optimizing the free flow of information.
' Professor Aharon Barak in his book titled The Judge in a Democracy emphasized the importance of purposive interpretation to advance the object and intent of law. He said: ' Subjective purpose is not the only purpose relevant to statutory interpretation, especially in situations where we lack information about that purpose. Even when we do have such information it other forces operating in the media market which influence ownership convergence. Technology advancement and public needs/interest are two strong factors with competing interests which play an imperative role in the media market other than the economic factors. A harmonious balance of all three factors being economics, technology and public interest H becomes vital while shaping the regulatory environment. In this way, fair competition and efficient media ownership are the stated regulatory objectives for PEMRA under the Ordinance, who is to ensure that a common owner does not end up with control of a larger share of the market.
22. To facilitate the regulatory requirement the legislature delegated its authority to determine the circumstances which make concentration undue. Section 39 of the Ordinance requires PEMRA to make rules to further the purpose of the Ordinance, meaning thereby that it is to create a responsive and regulated environment for the electronic media which will respond to the prevailing circumstances, public need and ensure that the stated purpose of the Ordinance is achieved. By requiring PEMRA to define the circumstances which make concentration undue, PEMRA can adjust the regulatory controls so as to meet the needs of the people at any given time. The lawmaker in its wisdom did not define the circumstances which make concentration undue because the relevant market will keep changing as will the environment with the interplay of technology, economics and public demand. The rapid changes in technology will cause an overlap between the mediums of broadcast; publication and distribution. It will also affect the conditions of competition and ownership as it alters the range and quality of services. Consequently the established structures ensuring diversity and plurality of content will have to keep changing and adapt to the changing circumstances. Different media enterprises fulfill different functions in a democratic society creating structures that encourage diversity and pluralism of content in the media. When advancement in technology breaks the traditional divides between media enterprises, the regulatory landscape will have to adjust to the need of the time in order to guarantee a diverse media. The Ordinance through Section 39(2)(e) facilitates PEMRA to retain control on the prevailing circumstances by adjusting its regulatory controls as necessitated by the need and demand of the time. The delegated function of rule making enables PEMRA to modify the regulatory controls in order to achieve the purpose and regulatory objectives prescribed under the Ordinance. It is important to note here that although the legislator has imposed upon PEMRA the duty of enlarging the choice to ensure diversity in information and plurality in content, it has identified the regulatory controls through which this can be achieved. Hence Section 23(2) of the Ordinance provides the regulatory objectives to be achieved by PEMRA and Section 39(2)(e) gives PEMRA the authority to make rules to achieve the intent of Section 23(2) of the Ordinance.
23. The Rules were framed and notified on 12.12.2009 and in terms of Section 39(2)(e) of the Ordinance, the circumstances constituting undue concentration defined by PEMRA are contained in Rules 13(3) and 13(4). The stated Rules oust broadcast media license holders from owning, controlling or operating directly or indirectly a distribution service license and vice versa meaning thereby that it totally prohibits vertical integration. The question is whether the ouster created by PEMRA under the Rules is mandated under Section 23(2) of the Ordinance or whether the ouster is in excess of the powers delegated to PEMRA. he counsel for PEMRA argued at length that Rules 13(3) and (4) of the Rules define the circumstance which is perceived by PEMRA to create undue concentration of media ownership. It is their case that there are legitimate and lawful reasons for keeping broadcasters and distributors separate which includes preventing a high degree of market power by a common entity and by conflict of interest. The counsel argued that a broadcaster is an entity that creates original content and includes TV channels and FM radio stations. A distribution service is a platform that carries content from broadcasters and distributes it through its network to the subscriber. By way of cross ownership a common entity can control a significant share of the market if it is allowed a broadcast license holder to obtain a distribution license. The learned counsel also agitated that it is common practice for regulators to separate media owners from vertically integrating by separating the mediums issued in the electronic media. It is his case that since PEMRA has to define the circumstance which amounts to undue concentration it has restricted cross ownership which results in undue concentration. Therefore it was argued that PEMRA has performed its regulatory duty as mandated under Section 23(2) of the Ordinance by restricting broadcasters from obtaining distribution licenses and vice versa.
Opinion of the Court
24. We have given great thought to the arguments made before us and have examined the Ordinance, Rules and DTH Regulations impugned before us. We are of the opinion that Section 23(2) of the Ordinance does not mandate any prohibition which would lead PEMRA to conclude that it is authorized under the stated Section to oust broadcast media from distribution services and vice versa. The scope of delegated authority has been explained by the august Supreme Court in the case titled Khawaja Ahamd Hassaan v. Government of Punjab and others (2005 SCM R 186), wherein the Court held that : ' The subordinate power of framing rules granted by the statute cannot be exercised to override the expression provisions of the statute itself. It is well settled by now that a statutory rule cannot enlarge the scope of the section under which it is framed and if a rule goes beyond what the section contemplates, the rule must yield to the statute. The authority of executive to make rules and regulations in order to effectuate the intention and policy of the Legislature must be exercised within the limits of mandate given to the rule making authority and the rules framed under enactment must be consistent with the provision of the said enactment. The rules framed under a statute, if are inconsistent with the provisions of the statute and defeat the intention of Legislature expressed in the main statute, same shall be invalid.
' The scope of Section 23(2) of the Ordinance is to provide PEMRA with its regulatory objectives so that it can regulate the electronic media and achieve the stated purpose of the Ordinance being diversity and plurality in content. To accomplish the stated purpose of the Ordinance maximum participation of stakeholders is required for the grant of a license. In this regard not only does Section 23(2) of the Ordinance require open access and fair competition but to ensure diversity and, plurality in content it necessitates that PEMRA reach out to a maximum number of participants which will include the participation of existing media enterprises for the grant of media licenses.
Therefore the stated Section does not envision any prohibition on broadcast media operating distribution services or vice versa but to the contrary it requires all media enterprises to compete in the media market with each other and with new media entities. This is in consonance with the spirit of healthy competition and efficient economy. Furthermore the intent of Section 23(2) of the Ordinance is that PEMRA ensure that ownership conglomerates are not formed given that the regulatory objective is to prevent undue concentration of media ownership in a given market.
PEMRA is therefore mandated to consider the ownership configuration of a media entity at the time of grant of a license, with reference to a particular market in order to guarantee that the grant of the license will not result in undue concentration within that market. This means that PEMRA has to consider the ownership issue of a media enterprise before it grants a new license because it is by virtue of that particular grant that undue concentration may be caused in a market. Each case for grant of license has to be seen against a set of circumstances that should be defined pursuant to Section 39(2)(e) of the Ordinance, where after a determination can be made whether the grant of a license will result in undue concentration, in a particular market. Hence the emphasis of Section 23(2) of the Ordinance is on the role PEMRA should play at the time of granting a license, keeping in mind the area within which the license is to operate. Therefore we are of the opinion that the law env i,sioned an ongoing regulatory exercise whereby PEMRA defines the conditions which will enable it to monitor and control the circumstances which will make the formation of media consolidations impossible in any given area, city, town or the country as a whole.
25. In terms of the dicta laid down by the august Supreme Court of Pakistan in the case cited at 2005 SCM R 186 (supra) rules and regulations formed under a statute cannot transgress the limits set by the statute. The superior courts have repeatedly held that the rule making body cannot frame rules which are in conflict with or in derogation of the substantive provisions of the statute under which the rules are framed and in case of any inconsistency with the parent statute the excessive rule will be considered illegal because it has gone beyond its delegated authority. It must be kept in mind that when the legislature confers powers on a regulatory authority to frame rules it is expected that the rules will advance the purpose of the legislature and not run contrary to it. In this case Section 23(2) of the Ordinance provides PEMRA with two regulatory objectives having separate regulatory tools yet at the same time aiming to achieve the same stated purpose of the Ordinance. The use of the word 'and' in Section 23(2) of the Ordinance separates the two distinct regulatory objectives, being fair competition and prevention of undue concentration. The regulatory objectives provide PEMRA with the scope of its regulatory duty which will enable it to achieve the stated purpose of the Ordinance at all times. A great deal of emphasis was placed by Mr. Salman Akram Raja, the counsel for PEMRA on reading the and in Section 23(2) disjunctive, which as per his understanding means that PEMRA is authorized to prohibit broadcast media from operating distribution services and vice versa as the vertical integration of these two media enterprises will result in undue concentration of media ownership. However, we find that the emphasis on a disjunctive reading is misplaced as we are of the opinion that whether the and is read conjunctively or disjunctive it will not change the intent of the law. The Ordinance requires the regulator to achieve diversity and plurality in content and the free flow of information by encouraging entities to operate media. enterprises. Under Section 23(2) of the Ordinance the regulatory objectives for PEMRA are prescribed and in doing so the legislature did not impose any prohibition with respect to vertical integration of specific media enterprises in the electronic media.
PEMRA has misunderstood its regulatory functions and the objectives of the law. The function of PEMRA is to carry out the stated purpose of the Ordinance and to ensure that it implements and enforces the objectives of Section 23(2) of the Ordinance. Hence PEMRA is required to regulate vertical integration of all media enterprises so that they do not form concentrated ownership in a media market, which will give them a larger share of that market and enable them to prevent diversity and plurality in content in that market.
26. We are mindful of the fact that PEMRA is a front line regulator who has been given authority by the legislator to structure the sector such that it works in the public interest and promotes diversity and plurality of content. For this purpose some flexibility has been given to PEMRA to ensure that it can effectively regulate the sector. Whenever there is an element of flexibility, the regulator may run the risk of over stepping its boundary and going beyond the authority delegated to it. That is why the superior courts of the country need to examine the question as to whether the rules and regulations under a statute are inconsistent with the statute itself and whether the rules and regulations achieve the purpose of the statute. The courts are to ensure that the regulator remains within its regulatory domain and does not attempt to step into the role of the legislator. In 2005 SCM R 186 (supra) the august Supreme Court of Pakistan held that: ' Where a Court is required to determine whether a piece of delegated legislation is bad on the ground of arbitrary and excessive delegation, the Court must bear in mind the following well- settled principles:
(1) The essential legislative function consists of the determination of the legislative policy and its formulation as a binding rule of conduct and this cannot be delegated by the Legislature.
(2) The legislature must retain in its own hands the essential legislative functions and what can be delegated is the task of subordinate legislation necessary for implementing the purposes and objects of the Act.
(3) Where the legislative policy is enunciated with sufficient clearness or a standard is laid down, the Courts should not interfere.
(4) What guidance should be given and to what extent and whether guidance has been given in a particular case at all depends on a consideration of the provisions of a particular Act with which the Court has to deal, including its Preamble.
(5) The nature of the body to which delegation is made is also a guidance in the matter of delegation.
(6) What form the guidance should take, will depend upon the circumstances of each statute under consideration, and cannot be stated in general terms. In some cases guidance in broad general terms may be enough, in other cases more detailed guidance may be necessary.
We have examined the legal framework and the regulatory objectives and find that the legal framework under the Ordinance requires PEMRA to prevent undue concentration of ownership in a market. This is the given regulatory objective under Section 23(2) of the Ordinance. In order to achieve this objective the legislature delegated the authority to define the circumstances which could cause undue concentration in any market so that it can regulate ownership issues. By defining the circumstances PEMRA can set out a regulatory environment within which the legislators intent is effectuated. By requiring PEMRA to define the circumstances, the lawmaker delegated the authority of defining thresholds and standards on the basis of which it can police the electronic P media. This function was delegated so that PEMRA could identify the factors which cause undue concentration. The legislature in its wisdom accepted that the circumstances would keep changing hence PEMRA must have the flexibility to change its controls or redefine the thresholds so that at all times it ensures that undue concentration is not caused in the relevant market. PEMRA defined the circumstances to mean a total restriction on vertical integration between broadcast media and distribution services which restriction we find to be based on the presumption that any vertical integration between broadcast media and distribution services will result in undue concentration of ownership. Respondent PEMRA urged this point on the strength of the argument that diversity and plurality of information comes from a diverse number of media owners. The counsel for PEMRA also argued that in the Pakistani market the larger channels are all competitors and if they are allowed to distribute each other's content conflict of interest between media enterprises will arise. Hence the DTH license can be abused and exploited by the broadcast media license holders. In support of this argument it was stated that around the world media ownership rules and restrictions are included in the regulatory framework to restrict cross ownership and vertical integration. The thrust of the arguments made was that PEMRA as the regulator can impose a complete restriction not specifically prescribed in the law to achieve the purpose of. the Ordinance. We are of the opinion that Section 23(2) of the Ordinance does not contemplate or mandate an ouster or restriction. The letter and spirit of the law is to increase the free flow of information by increasing participation of media enterprises. Section 23(2) of the Ordinance in furtherance of this purpose requires PEMRA to regulate ownership concentration.
While creating a regulatory framework which is geared towards encouraging diversity and plurality the lawmaker did not oust any media enterprise from integrating with another media enterprise. It simply required ownership concentration to be regulated so that it does not become undue, meaning thereby that some element of concentration is permissible. In this regard we are also of the opinion that PEMRA has not carried out the legislative intent by defining or identifying the circumstances which push ownership concentration beyond a threshold to become unacceptable concentration of ownership. PEMRA has simply issued a blanket ouster in the Rules without setting any standards or thresholds on the basis of which it could measure, monitor or control concentration of media ownership. The Ordinance recognizes that a democratic electorate needs to be well informed in order to make rational and intelligent decisions. With the growth of the electronic media and the development of technology, media enterprises have moved towards cross ownership and vertical integration not only for better business prospects but also to reach a larger audience. Television stations are owned by newspapers owners because they have the expertise, the resources and Q the economic interest to enter in the realm of broadcast media.
Even today there is no bar on newspaper owners having broadcast media licenses or distribution service licenses meaning that vertical integration between publication and broadcast or publication and distribution service is not considered to cause undue concentration of media ownership. However the restriction in Rules 13(3) and (4) of the Rules suggests that when broadcast media integrates with distribution services then any level of integration will result in undue ownership concentration. We are of the opinion this kind of justification does not reflect the legislative wisdom nor does it achieve the stated purpose of the Ordinance.
27. The delegated authority of PEMRA under Section 23(2) read with Section 39(2)(e) of the Ordinance was to strike a balance between appropriate levels of concentration by placing limits on ownership to preserve pluralism in information. A certain level of ownership concentration can be allowed if it enables media enterprises engaged 'in the electronic media to offer more and better services in the market. With the rapid developments in technology they are bound to be overlaps within the mediums and the services provided by media enterprises. Technology will cross over into all mediums and compel the electronic media to interact at different levels. By prohibiting vertical integration vide the impugned Rules PEMRA denies two specific media enterprises from becoming more efficient and effective in their job. It also means that both the prohibited media enterprises cannot vertically integrate to cut costs or improve efficiency, while other media enterprises can benefit from vertical integration. Consequently the effect of the impugned Rules is that by restricting two specific media enterprises from vertically integrating and allowing other media enterprises to vertically integrate undue concentration of media ownership is left unregulated because it is seen only in the context of integration between broadcast media and distribution services and not in the context of the relevant market. This understanding of the requirements of Section 23(2) of the Ordinance is totally illogical and is not in furtherance of the objectives or purpose of the law because regulating ownership concentration means regulating ownership of all media entities operating within the electronic media so that a few media owners do not end up with a larger share of the market. In our opinion the mandate of the law was to cover all media enterprises R especially since the objective is to create an efficient market which will offer a wide range of programmed, news, information and entertainment having plurality in content.
28. Delegated authority is incidental to the statutory function and cannot run parallel to the legislative function. Section 23(2) of the Ordinance requires PEMRA to regulate the electronic media while maintaining diversity in content and plurality in information. regulating the electronic media means to define the tools through which the objective of the law can be achieved. Given the fast pace at which the electronic media will grow and develop, the statutory intent is to give PEMRA the ability to regulate the changing landscape. While the realm for regulating is prescribed, PEMRA is to ensure that within the given domain, the regulatory objectives are achieved. This means that PEMRA is the implementer and enforcer of the legal mandate set out in the Ordinance. Its primary function is of regulating and not of devising a new legal landscape. As a frontline regulator PEMRA has to regulate the media market by imposing competition controls and ownership controls in the relevant market. It had to create effective safeguards to prevent vertical integration from resulting in undue concentration of media ownership. The material from international markets relied upon by PEMRA have prescribed different restrictions in their jurisdiction depending upon the characteristics of the market and the social and cultural needs of the people. Restrictions on dominance by and within the media market, restrictions on mergers and acquisitions, restriction on ownership levels. The material relied upon by the Respondents shows that the international markets have gone to great lengths to balance competing elements through laws and regulatory frameworks. Without determining the balancing requirements of the local market PEMRA has sought to rely upon the debates emerging in international markets which are dealing with concentration issues within their own systems as per their peculiar circumstances. The international literature relied upon does not conclude that vertical integration between broadcast and distribution means undue concentration of ownership. The jurisprudence and experiences from around the world reveal that restrictions, controls and safeguards are necessary and must be reviewed periodically to deal with the changes in the economic aims, technological advancement and public need. Periodical reviews and introspection is based on empirical data and evidence which identifies the concentration in media markets, its causes and possible solutions. For a market which has yet to launch the DTH technology PEMRA has assumed concentration issues based on experiences from around the world without any real time reference to its own market.
Nothing was placed before us in support of its contention that if broadcasters are allowed to operate DTH license they will cause undue concentration of media ownership.
29. A vital aspect of the regulatory function was to apply the defined circumstances when granting a license for a particular market. Section 23(2) of the Ordinance specifically requires that undue concentration is not caused in any city, town, area or country, as a whole. This is because the control of media ownership is within a relevant media market which means that the relevant market, its trends and requirements have to be identified before the controls are put into place.
Cross media interests have to be looked at on a case to case basis to ascertain whether ownership concentration is being caused in a relevant media market. Hence the nature of media services available in a given market and its ownership composition are necessary indicators for measuring undue concentration of media ownership. Without identifying the indicators and merely relying on the medium of business to conclude undue concentration within a relevant market in our opinion is totally flawed and against the mandate of Section 23(2) of the Ordinance. Plurality and diversity of content requires a free flow of information from as many divergent sources as possible. The diversity of owners would mean a diversity of viewpoints including integration of broadcast media license holders with distribution license holder which does not necessarily result in undue concentration of media ownership. PEMRA has repeatedly relied on the thought process developing in some parts of the world on the question of undue concentration of media ownership through cross ownership or vertical integration, however, they have not been able to show any example of any regulatory regime where broadcast media has been totally ousted from distribution services.
Furthermore each media market will be controlled based on its own experiences and prevailing circumstances and the fact that there is a debate in some parts of the world does not legitimize the restriction placed by PEMRA.
30. Another important aspect of this case is the role of the regulator PEMRA. Regulators draw their authority from the legislation which creates them. The limits placed on the regulator are prescribed under the law. Section 23(2) of the Ordinance did not leave it open for PEMRA to set out a new regulatory policy but instead required PEMRA to work within the confines of the prescribed objectives. We have considered the lengthy arguments made before us by the counsel for PEMRA justifying the acts of PEMRA and the reasons for defining the circumstances to mean that broadcast media and distribution media cannot vertically integrate. We have already held that Section 23(2) of the Ordinance did not impose any prohibition or restriction upon the aggregation of interests that is on 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 recognizes the fact that there will be some amount of concentration which if not crossed will not be considered as undue. The electronic media is 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. Due to the continuous advancement in technology the hard lines between media enterprises have softened the divide and in fact today there are overlaps between media enterprises. An absolute restriction on vertical integration between broadcast media and distribution services will hamper technological advancement in these mediums especially since DTH technology will be launched in Pakistan for the first time and at this stage there is at best an apprehension that broadcast media may end up with a larger share of the media market. Therefore we find that PEMRA's response to controlling undue concentration has no nexus with the intent of the Ordinance. It has imposed a restriction which will not achieve the regulatory objective and in fact infringes on the rights of broadcast media and distribution service to participate and progress through vertical integration.
Interestingly PEMRA has defended its actions by projecting the revenue the three DTH licenses will generate especially with foreign participation, as well as the potential jobs and opportunities it will create for the Country. In this regard, great emphasis was placed on the fact that foreign investors have shown interest in the auction for DTH license and their presence is of great significance for the media sector as well as the image of the Country. We find that these arguments are totally unrelated to the regulatory objectives given in Section 23(2) of the Ordinance and have no nexus with the stated purpose of the Ordinance. The presence of foreign investors and the quantity of revenue generation is not the primary_ objective for PEMRA. It has to achieve diversity and plurality through open access and fair coming all stakeholders to participate in the bid for DTH license so that the viewers get diversity and plurality in content. It has to protect the public interest and meet the public demand because the public is the ultimate beneficiary of the DTH technology and all advancements in the electronic media. A consequence of auctioning the DTH license may lead to revenue generation and foreign participation but it certainly cannot be the overriding factor motivating PEMRA to launch the DTH technology. It also cannot justify the continuation of the restriction on broadcast media to operate a DTH license as PEMRA is obligated to ensure that the public interest is served through its decisions. 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, Rules 13(3) and (4) of the Rules and Regulations 2.11 and 3.23 of the DTH Regulations do not serve the public interest by ousting broadcasting media from participating in the DTH license nor is there any reasonable nexus of the ouster with the intent of Section 23(2) of the Ordinance. In our opinion, PEMRA has abdicated from its functions as a regulator and instead transgressed into the domain of the legislature which is not permissible under the law.
31. PEMRA was not able to show the mode or manner in which it measures concentration nor could it 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. Concentration can be measured through any number of factors including economic, geographic, or linguistic factors. It can be measured with a diversity index or a market share index and so on. Whatever be the method, PEMRA had to develop standards to measure concentration in the market. We find that this exercise was vital to effectuate the intent of the law because by not imposing any prohibition the Section permits vertical integration as it offers advantages which a media enterprise may want to take the benefit of rtical integration offers greater efficiency and enhanced coordination for the media enterprise. It reduces cost and provides the benefit of economies of scale to the business. In this way by prohibiting vertical integration between broadcast and distribution PEMRA has also denied the Petitioner 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. Therefore we are of the opinion that there is no ambiguity in the requirements set out by the law and hence the boundaries within which the rule making framework was to operate. PEMRA was to frame rules to regulate the sector as per the arrangement prescribed under Section 23(2) of the Ordinance and not to impose restrictions which the law does not envision.
32. Therefore to our mind 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. Where the rules and regulations go beyond the prescribed mandate the august Supreme Court of Pakistan has held in the case titled Zarai Taraqiati Bank Limited and others v. Said Rehman and others . (2013 SCMR 642) that: ' The "rules' and "regulations" framed under any Act are meant to regulate and limit the statutory authority. All statutory authorities or bodies derive their powers from statutes which create them and from the rules or regulations framed thereunder. Any order passed or action taken which is in derogation or in excess of their power can be assailed as ultra vires. Rules and regulations being forms of subordinate legislation do not have substantial difference as power to frame them is rooted in the statute. Statuary bodies are invariably authorized under the Act to make or adopt rules and regulations not inconsistent with the Act, with respect to such matters which fall within their lawful domain to carry out the purpose of the Act.
' In the Suo Motu Case No,11 of 2011, in the matter of (Action taken on the news clipping regarding scandal. of billions of rupees of National Police Foundation Land) (PLD 2014 SC 389), the august Supreme Court of Pakistan held that: ' Rulemaking body cannot frame rules in conflict with or in derogation of the substantive provisions of the law or statute, under which the rules are framed. Rules cannot go beyond the scope of the Act. No rule can be made which is inconsistent with the parent statute, whereas, no regulation can be framed which is inconsistent with the parent statute or the rules made thereunder and the provisions of these rules or regulations, as the case may be, to the extent of such inconsistency with the parent statute or rules shall be void and inoperative.
' It was also held by the august Supreme Court of Pakistan in the case titled Mian Zaiuddin v. Punjab Local Government and others (1985 SCM R 365) that: ' Rule framed under statute could not go beyond and overreach statute itself. To make implementation of statutory provision, consistent harmonious directly effect must be given to requirement of Rule.
' In 2005 SCM R 186 (supra) the august Supreme Court of Pakistan held that: ' If the rules framed under the statute are in excess of the provisions of the statute or are in contravention of or inconsistent with such provisions then those provisions must be regarded as ultra vires or the statute and cannot be given effect to.
' It was further held in the aforesaid case that: ' In the case of statutory rules the Court can always examine the question as to whether the same are inconsistent with the statute under which they are made.
' The counsel for PEMRA argued that this Court cannot look into the wisdom of the policy decision of PEMRA with respect to permissible levels of concentration of market power as it is based on an appreciation of facts that pertain to the structure of the electronic media. However, we find that this argument of the learned Counsel is without any basis as this Court can examine whether PEMRA has exceeded its statutory mandate and formulated a policy which is against the authority delegated to it under the Ordinance.
33. In view of the aforesaid, while allowing this Petition, we find that Rules 13(3) and (4) of the Rules along with Regulations 2.11 and 3.23 of the DTH Regulations have gone beyond the authorized mandate of Section 23(2) of the 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.
(Sd.)
Ayesh A. Malik, J (Sd.)
Abid Aziz Sheikh, J (Sd.)
SHAHID KARIM, J.--- Shahid Karim, J Section 23: ' I have seen, in draft, the judgment to be delivered by Ayesha A. Malik, J, and agree with the conclusions drawn. I have added a note owing to the importance of the issue involved:
2. The challenge mounted by Independent Newspaper Corporation (Pvt.) Ltd. (hereinafter INC) is predicated on the cardinal principle vouched by respectable authority. It says that while construing a grant of delegated legislative power, the delegatee may not act beyond the scope of the primary legislation.
3. To begin with in my opinion, the key words are 'In granting a license' used in subsection (2) of section 23 of PEMRA Ordinance, 2002. This presupposes that the Authority has been conferred a power to grant licenses and Rules 13(3) and (4) seem to have taken that power away at least in respect of broadcast licensees who wish to apply for distribution services. So this in my estimation is the first way in which the Rules travel beyond the primary law and, in the ultimate analysis, the most critical one to exercise a gravitational pull on the outcome that this Court conceives.
4. Section 23 is the primary source of power to regulate undue concentration of media ownership and it is tied up with the stage when the license is being granted. It reads thus:
23. 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 &Luse are, to the extent of exclusivity, hereby declared to be inoperative and of no legal effect.
(2) In granting a licence, the Authority 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 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 fare competition and provision of level playing field.
5. The first duty of the Authority encapsulated in first part of section 23 (subsection 2) is to 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. Media enterprise is defined to include both broadcast media and distribution services. The definition is couched in section 2 (1) of PEMRA Ordinance, 2002, to mean: "media enterprise" means an enterprise concerned with the publication of a printed newspaper of a broadcast media or distribution service."
6. Section 23 merely gives expression to a form of anti-monopoly clause. It obliges the Authority to facilitate more media enterprises than one to operate in any given unit of area or subject. It has relation to section 18 and the categories of licenses granted under it. For instance, in granting 'license for distribution services, the law requires for more than one media enterprise' to be facilitated to operate in any given unit of area. Media enterprise, to reiterate, includes both broadcast and distribution and thus far the law permits and in fact encourages the participation of multiple media enterprises at the time of granting license.
7. The second part and that undue concentration of media ownership is not created in any city, town or area and the country as a whole,' is a limit on the power and duty of the Authority yet reaffirms the duty imposed by the first part by differing semantics. In my opinion, section 23 is all about undue concentration of media ownership. Thus subsection (2) has to be read as a whole and the obligation on the Authority to ensure open and fair competition to facilitate operation of more than one media enterprise is merely an attempt to rule out undue concentration of media ownership. If the Authority succeeded in ensuring open and fair competition, undue concentration of media ownership will wither away. The power to grant a license includes the power to deny it.
Thus if a media enterprise is already operating in any given unit of area, a license to a new media enterprise may be refused on the ground that it will give rise to undue concentration of media ownership in that unit of area or subject. It is a fallacy to urge to read 'and' as disjunctive or conjunctive. It does not really matter as subsection (2) deals with one subject i,e, undue concentration of media ownership and the first and second parts; separated by the term 'and', are nuances of the same subject.
8. There are a myriad of situations that can be conjured up and which the Authority may confront while ensuring open and fair competition. A broadcast media or distribution service with financial muscle may seek to have complete sway over the field and thus the Authority must ensure that the smaller media enterprises are protected. This will entail a review in terms and conditions of license over time and at the time of granting a license.
9.What is meant by 'undue concentration of media ownership'? The term has not been defined and the legislature intends the meaning to be culled out by all persons tasked to construe it, from an entire reading of the Ordinance, 2002 and the Rules, 2009, cumulatively. But firstly, section 23 itself gives an insight into the concept. Undue concentration of media ownership must not be created in any city, town or area and the country as a whole. At first blush, it means that a person must not be allowed control or swa y on different facets of electronic media in such a way that there is concentration of power of that person over any city, town or area, and the country as a whole. It will be seen that undue concentration of media ownership has been used in relation to geographical areas by the use of the words 'is not created in any city, town or area and the country as a whole.'
What does it signify? Clearly that the Authority is obliged to ensure against undue concentration vis a vis geographical units and not in respect of vertical integration. It merely means that for any city, for example, different categories of licenses must not be issued to media enterprises which are directly or indirectly controlled or owned by the same set of directors or partners. This would lead to undue concentration of media ownership. This has been achieved in the United States by the issuance of 'chain broadcasting', regulations and licensing policies on multiple ownership of broadcast stations, amongst others. An elaboration of this concept can be gleaned from Rule 13(1) of the Pakistan Electronic Media Regulatory Authority Rules, 2009 (Rules, 2009). Rule 13(1) says:
13. Media ownership concentration and exclusion o 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 landing rights permissions.
10. The above rule is within the permissible limits of Section 23 and section 39(d) and (e) of PEMRA Ordinance, 2002 and defines the circumstances which constitute undue concentration of media ownership. At that heart of this determination is the urge to facilitate fair competition and to promote media diversity and plurality. Thus Rule 13(1) settles the maximum number of licenses that a person may be issued who operates more than one media enterprise. Rule 13(1) does not oust but limits the grant of licenses thereby ensuring against undue concentration of media ownership.
It is fantastic indeed that while the Authority chose to regulate grant of licences for horizontal integration, it abdicates that power in its entirety in case of vertical integration.
11. But this does not mean at all that a licensee of broadcast media cannot apply for and be granted a license for distribution services. This would be legislating and not interpreting the law.
This begs the question; what was there to stop the legislature from providing that the issuance of a license for distribution services to a licensee of broadcast media will constitute undue concentration of media ownership? The theme, that permeates the law is media diversity, plurality and the need to enlarge the choice available to the people of Pakistan in the realm of media. This can legitimately be achieved by ensuring that concentration of media ownership does not occur for a particular geographical area so as to become undue . So what needs to be ensured is that the people of a city etc. and ultimately the country as a whole do not suffer on account of undue concentration of media ownership. The DTH license is still to be auctioned and it is well-neigh impossible to gauge whether issuing of a license to the INC will result in undue concentration of media ownership for a particular geographical area as also to judge beforehand that the INC (and the directors and partners controlling it) hold enough categories of different licensees in that area to be guilty of the vice of undue concentration of media ownership. This is all too presumptuous at this stage and it was certainly peremptory on the part of Authority to have completely ousted INC and others similarly placed.
12. PEMRA states that such an intention is clearly evident from a reading of section 23. We are afraid, such an intention is conspicuously missing from section 23 and this contention is indefensible.
13. What is the linchpin of the logic behind 'undue concentration of media ownership'? It is relatable to individual media enterprises and not to a whole category of electronic media. It would be anathema to the entire concept if all the media enterprises belonging to a category wiper debarred from applying for a license on the pretext that it would cause 'undue concentration of media ownership'. It would be utterly irrational and disproportionate and would run counter to the policy of the law. The policy of law is to weigh at the time of grant of license to a media enterprise whether by issuance of license thereby to that particular applicant, undue concentration of media ownership will not occur. Examples will easily abound where a broadcaster having a very small share in the market will not be guilty of undue concentration of Media ownership if issued a distribution license. The question is: 'why should that media enterprise be pre-judged and ousted from applying at all?' #TS##.
14. The proviso to subsection (2) of section 23 lends actuality to the analysis. It puts paid to the argument of PEMRA that section 23 permits the prohibition brought out in Rules 13(3) and (4). The proviso enacts that:
15. 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:"
16. Once again the ineluctable inference while construing the proviso is that there is no bar on a licensee to own, control or operate more than one media enterprise. PEMRA wants us to read the proviso in such a manner so as to hold that it applies to all licensees except licensees of broadcast media. This interpretation cannot be countenanced. It has been said that:
17. "Whatever temptations the statesmanship of policy making might wisely suggest, construction must eschew interpolation and evisceration. The judge must not read in by way of creation."
' Felix Frankfurter, Some reflections on the Reading of Statutes, 47 Colum. L. Rev. 527, 533 (1947).
16.This rule, known as the Omitted case Canon, has been elaborated upon in Reading Law. The Interpretation of Legal Texts by Antonin Scalia and Bryan A. Garner, in the following way: "Nothing is to be added to what the text states or reasonably implies (casus omissus pro omisso habendus est). That is, matter not covered is to be treated as not covered."
' The principle that a matter not covered is not covered is so obvious that it seems absurd to recite it. The judge should not presume that every statute answers every question, the answers to be discovered through interpretation. As the noted lawyer and statesman Elihu Root said of the judge: "It is not his function or within his power to enlarge or improve or change the law." Nor should the judge elaborate' unprovided-for exceptions to text; as Justice Blackmun noted while a circuit judge: "If the Congress had intended to provide additional exceptions, it would have done so in clear language."
17.As stated in the preamble, the Ordinance, 2002 is all about diversity and plurality and encourages participation of more media enterprises at the time of grant of license. This must, however, be counter balanced by guarding against undue concentration of media ownership. But the primary purpose of law is to take all measures for diversity and plurality. Undue concentration of media ownership is a limit and not the purpose and so must be construed as such. Rules 13(3) and (4) stultify the purpose of the law which emphasises and encourages participation of all eligible media enterprises at the time of grant of license.
18.Lord Bingham in his book 'The Rule of Law' said, 'Rules are forged in the furnace of everyday experience. ' The Rules 13(3) and (4) on the contrary, are not at all forged in the furnace of everyday experience. PEMRA drew a distinction to exist between ex-ante ownership regulation and ex-post competition regulation. Rules 13(3) and (4) in its opinion, is an illustration of ex-ante ownership regulation. Thus, competition regulation and ownership regulation are two distinct forms of regulation. In his written brief, this was explained by Mr. Salman Akram Raja, Advocate, as follows: "...Competition regulation is generally ex post and seeks to prohibit anti-competitive behaviour and punish entities that have indulged in such behaviour. It is accepted that competition regulation alone cannot achieve the diversity and plurality that is desirable in the media sector.
Consequently, ownership restrictions are widely imposed so as to ensure diversity and remove the possibility of suppression of plurality and conflict of interest. Reference may kindly be made to the Articles placed at Sr. Nos. 3 and 4 in Paper Book-I as well as at Sr. No, 7 of Paper Book-III submitted by the Respondent PEMRA."
19. The above statement is generally true and acceptable. It is though difficult to accept the restrictions placed in Rules 13(3) and (4) to be caught by the above statement and a mere reflection of it. Ownership restriction can certainly be prescribed by PEMRA by way of 'defining the circumstances which would give rise to undue concentration of media ownership.' And this will then have to be weighed at the time of grant of license to an applicant whose application will be analysed on the touchstone of the circumstances so defined. No two applicants will have the same status and position nor will they all suffer from the same set of disabilities/grounds. Having defined the circumstances, it is inconceivable that PEMRA will consider all applicants through the same lens. The analyses will have to be ad hoc and on a case to case basis.
20.Section 23 is an embodiment of ex ante ownership regulation. But the whole argument of PEMRA runs counter to the scheme of section 23. The fulcrum of section 23 is the power of the Authority to grant a license and the right of a person to apply for it. While deciding to grant a license, the Authority will necessarily embark upon the exercise of ex ante ownership regulation.
There is no denying that power to vest in the Authority and to base its decision upon empirical data to deny a license to an applicant on the ground that in so issuance of license, there shall be undue concentration of media ownership in any city, town or area. There is enough power that resides in the Authority it that stage to fulfill its goal of ex ante ownership regulation.
21.PEMRA agreed that the Ordinance, 2002 deals with two sets of potential applicants who may be 'denied a license.' The applicants we are concerned with are those that cause undue concentration of media ownership in terms of Section 23: According to PEMRA.
B) The Ordinance of 2002 deals with two sets of potential applicants who may be denied a license: ' Firstly, applicants who suffer from any of the disabilities/ grounds for ineligibility specified in Section 25 of the PEMRA Ordinance, 2002. Four specific grounds of ineligibility are specified in the aforesaid Section 25. These grounds bar the grant of a license to a person suffering from any of the ineligibility specified therein, regardless of whether the grant of license to such a person would have any adverse consequences for either open and fair competition or undue concentration of media ownership.
Secondly, applicants who do not suffer from any of the disabilities specified in Section 25, but the grant of a licence to them is likely to damage competition and/or cause undue concentration of media ownership in terms of Section 23 of the Ordinance of 2002."
22.There can be no question of denial of a license if there is no application. For, a license can only be denied if a media enterprise or a person is permitted to apply. Sections 13(3) and (4) forecloses. all such applications and thus no question of denial of license arises.
23.This brings us to Section 39 from which flows the power to make rules. Section 39 reads as under: "39. Power to m ake 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 licence 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 measure 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. 24.The power of the Authority to make rules is to 'carry out the purposes of this Ordinance.' Thus, in the context of Section 23, the power can only be exercised to ensure that undue concentration of media ownership does not occur in issuing a license to an applicant. As a guideline, the Authority may, therefore, define those circumstances by clause (e) of subsection (2) of Section 39. This is the true construction on a combined reading of Section 23, Sections 39(1) and (2)(e). Since Section 23 obliges the Authority to ensure against undue concentration of media ownership in granting a license, the power to define circumstances cannot be used in a manner that has the effect of debarring a person from applying altogether. In my opinion, to define circumstances can only mean to lay down a set of parameters for the Authority to follow while considering an application for the grant of a license. It cannot be taken to mean, by any stretch of imagination, to empower the Authority to shut the door on a whole category of media enterprise.
Delegated Legislation: 25.The position regarding judicial review of delegated legislation (and enactment of secondary legislation hereby) is clear. The courts have the authority to review subordinate legislation if it is satisfied that in making it, the delegate acted out with the legislative powers conferred upon it. In F.
Hohman La Roche and Co v. Secretary of State for Trade and Industry [1975] AC 295, Lord Diplock elaborated the rule thus: "In constitutional law a clear distinction can be drawn between an Act of Parliament and subordinate legislation, even though the latter is contained in an order made by statutory instrument approved by resolutions of both Houses of Parliament. Despite this indication that the majority of members of both Houses of the contemporary Parliament regard the order as being for the common weal, I entertain no doubt that the courts have jurisdiction to declare it to be invalid if they are satisfied that in making it the Minister who did so acted outwith the legislative powers conferred upon him by the previous Act of parliament under which the order is ultra vires by reason of its contents (patent defects) or by reason of defects in the procedure followed prior to its being made (latent defects)."
26.This point has been explained by Sir John Donaldson MR in RV Her Majesty's Treasury, Ex p Smedley [1985] 1 QB 651 (666-667) and by Lord Phillips in R (Asif Javed) v. Secretary of State for Home Department [2001] EWCA Civ 789. In a recent judgment of the United Kingdom Supreme Court, Bank Mellat v. Her Majesty's Treasury [2013] UK SC 39, Lord Sumption put the rule as follows: "The position in relation to secondary legislation is necessarily different, because a statutory instrument is made under powers conferred by statute. These powers are accordingly subject to whatever express or implied limitations or conditions can be derived from the parent Act as a matter of construction. In R v Electricity Commissioners Ex p London Electricity Joint Committee Company (1920) Limited [1924] 1 KB 171, 208, Lord Atkin observed at a very early stage in the development of public law that he knew of "no authority which compels me to hold that a proceeding cannot be a judicial proceeding subject to prohibition, or certiorari because it is subject to confirmation or approval, even where the approval has to be that of the Houses of Parliament. "It has sometimes been suggested that this applies only where the ground of objection to a statutory instrument is that it is wholly outside the power conferred by the Act. This was the view expressed by Lord Jauncey and affirmed by the Inner House in City of Endinburgh District Council v Secretary of State for Scotland 1985 SC 261. He considered that where Parliament had reserved the right to consider the merits (as opposed to the vires) of a statutory instrument was not open to the courts to review their rationality or their procedural fairness."
27.He went on to hold that this distinction was not sustainable.
28.Let us see the practical effect of the argument that Mr. Salman Akram Raja, Advocate invites this Court to accept. Quite simply, it will make Section 23 redundant. Since the broadcast media has been debarred on the threshold, only those persons with no media ownership at all will apply.
Since those persons have little or no prior media ownership, no question regarding undue concentration of media ownership is likely to arise. In the context of the instant case, Section 23 will not engaged. Can this be the intention of the legislature and the policy of law? Certainly not by rules, therefore, a provision of the primary 'legislation cannot be rendered dormant and redundant.
29.PEMRA invokes to its aid the Consultation Paper on issue relating to Media Ownership by the Telecom Regulatory Authority of India, on February 15, 2013. At first blush, this paper is peculiar to India and the Rules which govern such matters. It is otiose to invoke the contents of this Consultation paper to support PEMRA's case. The TRAI in India does not prohibit or block the broadcast media from applying for a distribution service license. There are safeguards and controls put in place to regulate media ownership. The Consultation paper, too, does not suggest that the broadcasters be ousted completely by the Rules. It merely suggests 'controls' to be put in place for 'Vertical Integration' . We do not find it to be relevant at all. To our mind, the only relevance that the study had was to leave us wondering why such a study was not carried out by PEMRA before enacting Rules 13(3) and (4). It is certainly not PEMRA's case that the study formed the basis of its decision which culminated in Rules 13(3) and (4), for the Consultation Paper of TRAI recommends no such thing.
30.FCC v National Citizens Comm. For Broadcasting, 436 U.S. 775 (1978) was a paradigm case and PEMRA heavily relied upon it. The backdrop of the precedent was that "After a lengthy rulemaking preceding the Federal Communications Commission (FCC) adopted regulations prospectively barring the initial licensing or the transfer of newspaper--broadcast combinations where there is common ownership of a radio or television broadcast station and a daily newspaper located in the same community." It was held by the U.S Supreme Court that, "Diversification of ownership has not been the sole consideration though relevant to the public interest, however, the Commission's other, and sometimes conflicting, goal has been to ensure "the best practicable service to the public." Ld., at 394. To achieve this" goal, the Commission has weighed factors such as the anticipated contribution of the owner to station operations, the proposed program service, and the past broadcast record of the applicant - in addition to diversification of ownership- in making initial comparative licensing decisions. See id., at 395-400.
Moreover, the Commission has given considerable weight to a policy of avoiding undue disruption of existing service. As a result, newspaper owners in many instances have been able to acquire broadcast licenses for stations serving the same communities as their newspapers, and the Commission has repeatedly renewed such licenses on findings that continuation of the service offered by the common owner would serve the public interest."
31.Thus it was recognized that there was no obligation that diversification should be given controlling weight in all circumstances and in some cases controlling weight be given to the goal of achieving the best practicable service to the public. The Rules related to multiple ownership. In FCC, the Court alluded to the Commission's licensing policies which had long acted on the theory of diversification of mass media ownership service viewpoints, as well as by preventing undue concentration of economic power. More importantly, that was to be part of the process at the time of grant of license and in making initial comparative licensing decisions. The problem was to be dealt with on an ad hoc basis and to see whether it would serve public interest or not. The overwhelming opinion was that if public interest was the controlling or overriding factor then it was best to leave the decision to be made on an ad hoc basis and not by rule-making which completely takes away the power to weigh public interest. Implicit in section 23 is the element of public interest which permeates it. Considerations at the time of giant of license and its renewal may vary considerably on the touchstone of public interest. This may be illustrated by reference to the Commission's policy statement concerning comparative hearings involving regular renewal applications (at footnote 5) and the following observations: "Citing considerations of predictability and stability, the statement adopted the policy that, where an incumbent's program service "has been substantially attuned to meeting the needs and interests of its area," the incumbent would be granted an automatic preference over any new applicant without consideration of other factors -- including diversification of ownership -- that are taken into account in initial licensing decisions."
"The court agreed with the Commission, however, that "incumbent licensees should be judged primarily on their records of past performance." Id., at 44, 447 F.2d, at 1213. The court stated further that "superior performance [by an incumbent] should be a plus of major significance in renewal Page 783 proceedings." Ibid. (emphasis in original). After the instant regulations were promulgated, the Commission adopted a new policy statement in response to the Citizens Communications decisions, returning to a case-by-case approach in which all factors would be considered, but in which the central factor would still be the past performance of the incumbent."
32. Thus, a distinction was drawn between the initial and renewal licensing decisions. This assumes significance in the context of vertical integration and a decision on granting distribution license.
Would it not be proper to consider the application of an incumbent having a broadcast license and to refuse or grant a license primarily on its record of past performance? This will serve the public interest and the element of diversification of owner "In the instant proceeding, the commission specifically noted that the existing newspaper- broadcast cross-owners as a group had a "long record of service" in the public interest; many were pioneers in the broadcasting industry and had established and continued "traditions of servicship can also be considered alongside other considerations. This will make the decision broad-based as also comport with the tenor and purpose of section 23. Particularly poignant, from our point of view, are the telling observations regarding experience and "long record of service" in public interest of the incumbents: e" from the outset. Order, at 1078. Notwithstanding the Commission's diversification policy, all were granted initial licenses upon finding that the public interest would be served thereby, and those that had been in existence for more than three years had also had their licenses renewed on the ground that the public interest would be furthered. The Commission noted, moreover, that its own study of existing co-located newspaper-television combinations showed that in terms of percentage of time devoted to several categories of local programming, these stations had displayed" an undramatic but nonetheless statistically significant superiority" over other television stations. Id., at 1078 n.
26. An across-the-board divestiture requirement would result in loss of the services of these superior licenses, and -- whether divestiture caused actual losses to existing owners, or just denial of reasonably anticipated gains- the result would be that future licensees would be discouraged from investing the resources necessary to produce quality service."
"At the same time, there was no guarantee that the licensees who replaced the existing cross- owners would be able to provide the same level of service or demonstrate the same long-term commitment to broadcasting. And even if new owners were able in the long run to provide similar or better service, the Commission found that divestiture would cause serious disruption in the transition period. Thus, the Commission observed that new owners "would lack the long knowledge of the community and would have to begin raw," and--because of high interest rates -- might not be able to obtain sufficient working capital to maintain the quality of local programming."
33.Thus the holding in FCC, on the contrary, bolsters the case-for declaring ultra vires the provisions of Rules 13(3) and (4).
Constitutional challenge: 34.The INC argued that the Rules 13(3) and (4) impinge upon their rights enshrined in Articles 18, 19 and 19A of the Constitution. In view of our holding that the Rules are out with the authority conferred on PEMRA by the Ordinance, 2002, we do not feel inclined to weigh and determine the constitutional aspects of the matter. This is based on the entrenched principle of judicial restraint. Brandeis, J. in Ashwander v Tennessee Valley Auth. 297 US 288, 347 (1936), laid the Rule thus: "If a case can be decided on either of two grounds, one involving a constitutional question, the other a question of statutory construction or general law, the Court will decide only the latter." 35.Also in United States ex rel. Attorney Gen. v. Delaware and Hudson Co. >, 213 U.S. 366 (1909), White, J. held that: "Where a statute is susceptible of two constructions, by one of which grave and doubtful constitutional questions arise and by the other of which such questions are avoided, our duty is to adopt the latter."
36.I agree that the petition be allowed.
(Sd.)
Shahid Karim, J