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HCAL 176/2013
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST
NO 176 OF 2013
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IN THE MATTER of an application by Television Broadcasts Limited for Leave to apply for Judicial Review pursuant to Order 53, rules 3 of the Rules of the High Court (Cap. 4A) |
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and |
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IN THE MATTER of the Broadcasting Ordinance (Cap. 562) and related legislation |
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| BETWEEN |
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| TELEVISION BROADCASTS LIMITED |
Applicant |
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and |
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COMMUNICATIONS AUTHORITY |
1st Respondent |
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THE CHIEF EXECUTIVE IN COUNCIL |
2nd Respondent |
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| Before: Hon G Lam J in Court |
| Dates of Hearing: 6-9 October 2015 |
| Date of Judgment: 29 January 2016 |
TABLE OF CONTENTS
| I. |
Introduction |
| II. |
Factual background |
| • Television broadcasting in Hong Kong |
| • Television advertising in Hong Kong |
| • Supply and demand of artistes in broadcasting in Hong Kong |
| • TVB’s contracts with artistes and singers |
| • The relevant clauses and policies |
| • Complaint and investigation |
| III. |
Legal and regulatory framework |
| IV. |
The Authority’s decision |
| V. |
The application for judicial review and its grounds |
| VI. |
Ground 1 – Usurpation of judicial function |
| VII. |
Ground 2 – Non-compliance with Articles 10 and 11 of Bill of Rights |
| • Whether determination of criminal charge |
| • Whether Article 11(4) is satisfied |
| • Whether Article 10 is engaged |
| • Whether Article 10 has been complied with |
| - Whether the Authority is an independent and impartial tribunal |
| - Whether CEIC on an appeal under s. 34 is an independent and impartial tribunal |
| - Whether the court upon judicial review is a court of full jurisdiction |
| - General points and conclusion on Ground 2 |
| VIII. |
Ground 3 – no jurisdiction to review practices outside of the television programme service market |
| • Lack of jurisdiction |
| • Failure to examine link to television programme service market |
| IX. |
Ground 4 – failure to identify the relevant upstream market and error in the substitutability assessment in relation to that market |
| • Failure to define relevant upstream market |
| • Alleged errors in substitutability assessment |
| X. |
Ground 5 – failure to adopt a rational and correct approach to assessing and failure to conduct sufficient enquiry into TVB’s market position |
| • Irrationality |
| • Failure to inquire into effect of reduction in quality of programmes |
| XI. |
Ground 6 – application of wrong standard of proof in concluding TVB’s conduct had the purpose or effect of preventing, distorting or substantially restricting competition and reaching that conclusion on manifestly inadequate evidence |
| • Manifest inadequacy of evidence |
| - De facto exclusivity |
| - The no-obligation-to-use clause |
| - Effect on competition in the television programme service market |
| • Standard of proof |
| • Requirement of cogent and compelling evidence |
| XII. |
Ground 7 – lack of proportionality in the remedial measures adopted |
| XIII. |
Conclusions and Orders |
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J U D G M E N T
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I. INTRODUCTION
1. This is an application for judicial review in connection with a finding of infringement of competition law in the broadcasting sector of Hong Kong. On 19 September 2013 the Communications Authority (“Authority”) issued a decision (“the Decision”) under the Broadcasting Ordinance (Cap. 562) (“BO”) against Television Broadcasts Limited (“TVB”), the applicant herein. TVB is the holder of a domestic free television programme service licence issued under the BO.
2. The Authority found that TVB had infringed ss. 13(1) and 14(1) of the BO by adopting certain practices, and clauses in its contracts with artistes and singers, which had the purpose and effect of preventing, distorting or substantially restricting competition in the television programme service market in Hong Kong. The Authority directed TVB to bring to an end the infringement and to undertake a number of actions to ensure compliance with this direction, and in addition imposed a financial penalty of HK$900,000 on TVB.
3. Under s. 34 of the BO, a party subject to an adverse decision of this type may appeal to the Chief Executive in Council (“CEIC”). TVB has lodged an appeal to the CEIC, who has decided, at TVB’s request, to suspend the appeal procedure pending the determination of the present judicial review proceedings.
4. In this application for judicial review TVB challenges the legality of the Authority’s decision on a number of grounds as well as the compatibility of the statutory procedure with the Hong Kong Bill of Rights[1]. The application is opposed by the two respondents, namely, the Authority and the CEIC. The Authority has made submissions primarily in relation to the grounds attacking the Decision itself, whereas the CEIC has confined himself to advancing submissions in defence of the statutory procedure.
5. The provisions in the BO relating to competition, including in particular the rules on conduct contained in ss. 13 and 14, have been repealed[2] and in effect substituted by the relevant provisions found in the Competition Ordinance (Cap. 619) which fully came into force on 14 December 2015. The present case including any appeal to the CEIC is likely to be the last competition case governed by the BO,[3] since, as I have been told, there is no other case pending in which these provisions are invoked.
II. FACTUAL BACKGROUND
6. In this section I set out the background which sets the context in which the Decision was made by the Authority. The contents of this section are primarily adapted with modifications from the Decision, and are uncontroversial unless otherwise indicated.
Television broadcasting in Hong Kong
7. The Hong Kong television broadcasting sector includes both Free to Air (“FTA”) television services and pay television services. There were at all material times only two FTA broadcasters, namely TVB and Asia Television Limited (“ATV”). They transmit 11 channels in Cantonese, Putonghua and English on digital terrestrial transmission including simulcasts of the main Cantonese channels (TVB Jade and ATV Home) and English language channels (TVB Pearl and ATV World) on analogue terrestrial transmission. The channels broadcast a mix of self-produced and third party programming. FTA broadcasters rely on advertising revenues for their funding. Additionally Radio Television Hong Kong (“RTHK”) is a government funded broadcaster that produces programming which is broadcast on TVB, ATV and other pay TV channels.
8. There are three main domestic licensed pay TV providers: Hong Kong Cable Television Limited, PCCW Media Limited and TVB Network Vision Limited. Hong Kong Broadband Network also provides pay TV services, but since its service is provided over the Internet, it is exempted from the licensing regime of the BO. These services providers offer a range of channels in return for subscriptions as well as selling advertising.
Television Advertising in Hong Kong
9. In addition to providing entertainment and supplying information, television broadcasting also carries commercial advertising in Hong Kong. The Authority estimated that in 2010, HK$80,000 million was spent on advertising in Hong Kong; of this, television advertising was the single biggest category of HK$28,000 million, or approximately 35% of the total.
Supply and demand of artistes in broadcasting in Hong Kong
10. Based on the evidence it had seen, the Authority considered (though TVB disagreed) that there were a large number of relatively low value artistes, and a much more restricted supply of more “valuable” artistes in Hong Kong. A small number of artistes tended to receive high levels of remuneration, with a long tail of artistes who received relatively low levels of remuneration. Similarly, there were a small number of artistes who appeared to have a very high media profile and a long tail of artistes with a lower media profile.
11. In Hong Kong, artistes usually sign contracts with TV broadcasters to perform in programmes produced by the TV broadcasters concerned. It is not common for artistes who are not contracted with broadcasters to regularly work for Hong Kong broadcasters. While some top artistes/singers may not need to sign any contracts for appearing on TV, the percentage is small. Most of these high value artistes do not regularly perform in TV programmes, though they may occasionally appear in music programmes, variety shows, charitable events or award presentation ceremonies on television on a one-off basis instead of participating in dramas.
TVB’s contracts with artistes and singers
12. During 2007 to 2010, TVB contracted with about 75% to 80% of all the artistes on contract with the main Hong Kong broadcasters. A significant portion of singers also entered into contracts with TVB. Although following a dispute between TVB and four record companies, the number of singers contracted with TVB fell by 39 in 2010, TVB still contracted with a majority of singers in 2010.
13. TVB had entered into several main types of contract with artistes and singers, namely, one-show contracts, serial-based contracts, singer contracts, and other contracts which were considered to be “full time” contracts and not the subject of investigation by the Authority. The first 3 types of contracts, which the Authority referred to as “occasional use contracts” were the subject of the Authority’s investigation and eventually the Decision. They may be further described as follows:
(1) “One-show contracts” refer to contracts between TVB...
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