DECISION № 3 OF 4 JUNE 2009 ON CONSTITUIONAL CASE № 3/2009
The case was filed on 3 April 2009 upon a request of 51 Members of the 40 th National Assembly. Constitutional Case № 2/2009 that had been filed on 2 April 2009 upon a request of 48 Members of the 40 th National Assembly was attached to it to be considered and resolved together.
The two cases are similar: they challenge the constitutionality of :
- Art. 47а of the Electronic Communications Act (ECA) (DV, No 41 / 2007, last amended in DV, No 17 / 2009);
- Art. 48, paras 3, 4 and 5 of the ECA ;
- § 5 of the Transitional and Concluding Provisions of the Electronic Communications Act (ECATCP), amended by § 77 of the Act Amending the Electronic Communications Act ( AAECA ), (DV, No 17 / 2009 );
- § 5а ECATCP, created by § 77 AAECA (DV, No 17 / 2009 ) ;
- § 5 b ECATCP, created by § 77 AAECA (DV, No 17 / 2009 ) ;
- § 5 c ECATCP, created by § 77 AAECA (DV, No 17 / 2009 ) ;
- § 5 d ECATCP, created by § 77 AAECA (DV, No 17 / 2009 ) ;
- Art. 116 i of the Radio and Television Act (RTvA) , ( DV, No 14 / 2009).
On the noncompliance of Art . 47а, Art. 48, paras 3 and 4 of the ECA and Art. 116 i of the RTvA with Art. 19, paras 1, 2 and 3 of the Constitution
Art. 19, paras 1, 2 and 3 of the Constitution deal with free economic initiative , the law-established equal legal conditions for business with the aim to prevent abuse of monopoly and unfair competition and to protect the consumer. Also the text provides for the protection of investments and of the businesses of Bulgarian and non-Bulgarian individuals and corporate entities.
The Court assumed that nondiscrimination conditions for business and the economic freedom are not absolute and do not amount to the inexistence of restrictions and to the impossibility to set by a law requirements to economic actors' activities. According to the Constitution such restrictions may relate to the prevention of monopolies, control on unfair competition and protection of consumers.
In the view of the Court these restrictions do not infringe on free economic initiative that the Constitution proclaims. If a radio and TV operator is licensed for digital radio broadcasting in addition, the operators broadcast their programs only, i.e. the operator would squeeze out other radio and TV operators and their programs from the air.
The same holds true of competition. The arguments are similar: if a radio and TV operator or affiliated persons are let to deal with radio broadcasting as they wish, or if a radio broadcaster undertaking is let to operate with affiliated persons – radio and TV operators, this may squeeze out competition altogether in such a monopolist environment. It would be natural for such an undertaking to broadcast nothing else but programs of its own or else of the affiliated persons. That would be detrimental to the consumers who are left without any choice and whose access to information is lessened.
Art. 48, para 3 deals with a hypothesis opposite to that of Art. 47а , viz. the impossibility for an undertaking that has obtained such a license (the so-called multiplex operator) to be a radio and TV operator, respectively to produce radio and TV programs.
In the opinion of the claimants, the arguments of anticonstitutionality boil down to:
One of the claims recognizes that the provisions referred to disallow the vertical concentration of activities in order to eliminate competition within the two groups of players. The claim concerns the non-existence of geographic limitations to the affiliated persons while it disregards the real market and disagrees with the freedom of economic initiative and the protection of investments and of businesses in a respective sector. The argument is that given the relation existing between the multiplex operators and the TV operators within the EU, they are barred from the participation in selection procedures for multiplex operators in Bulgaria both at national and regional level. Further, it is claimed that such a restriction is not posed in any other country while the existence of affiliated persons within the EU does not affect the competition of the national radio and TV operators.
Regarding the second claim, it stresses on the impossibility for radio and TV operators to broadcast their programs by means of their own networks of electronic communication as they are currently doing it by means of analogue terrestrial broadcasting.
The amendments to the ECA and the RTvA are conditioned by the need to put in place a new legal framework on digital terrestrial broadcasting that will make sure the successful transition from analogue to digital radio broadcasting.
The claimants think the provision of Art. 47а of the ECA curtails the Constitution-enshrined right of individuals and corporate entities in the country to free economic initiative. In their view investments are not protected nor are the businesses of Bulgarian and non-Bulgarian individuals and corporate entities.
The claimants' conclusion cannot be subscribed to.
No doubt, radio and TV activities comprise the production of radio and TV programs and the broadcasting of the productions by terrestrial dissemination (analogue and digital) in a way to reach a numberless audience. There is no need for the productions of a radio and TV operator to be broadcast by the operator's own network.
The limitation of Art. 47а of the ECA on the license to radio and TV operators and affiliated persons to use a radio frequency spectrum and the ban of Art. 48, para 3 of the ECA on a multiplex operator and affiliated persons to be radio and TV operators and to produce radio or TV programs are the lawmaker's efficient tool to enforce the principles of free economic initiative, to prevent unfair competition and to protect the rights of Bulgarian and/or non-Bulgarian individuals and corporate entities.
The Court did not find Art. 47а and Art. 48, paras 3 and 4 of the ECA and Art. 116 i of the RTvA to be in contravention to Art. 19, paras 1, 2 and 3 of the Constitution of the Republic of Bulgaria. These legal texts are intended to disallow vertical and horizontal concentrations and monopolist positions.
The purpose of these provisions is to draw a clear dividing line between the undertaking (the so-called multiplex operator) and the producers of programs (radio and TV operators). The text conforms to Art. 18, para 3 of the Constitution reading that the State shall exercise sovereign rights with respect to radio frequency spectrum and the geostationary orbital positions allocated by international agreements to the Republic of Bulgaria.
If a multiplex operator chooses to produce programs, this might lead to a multiple abuse: non-conclusion of a contract with a TV operator, inclusion into the contract of additional services apart from the multiplex ones and not least, discrimination against individual TV operators. An example of possible discrimination is the provision of frequencies for programs. A TV channel has a limited transmission capacity . In the multiplex service the capacity is distributed by the so-called “bit frequencies”. The share that a TV operator is allocated determines the quality of the transmission and the number of the services transmitted within a multiplex. Accordingly, the provision of fewer bit frequencies may turn out to be unprofitable for a TV operator.
It is with the intention to protect public interest that a differentiation is made in the texts of Art. 47а and Art. 48, paras 3 and 4 of the ECA – viz. that a multiplex operator and a radio and TV operator shall be separate persons. The opposite, the placement of the two types of activities into one entity, would lead to a monopolist position and abuse horizontally and vertically and thus infringe on consumer rights. All said, the challenged provisions respect public interest and generate conditions for a pluralist media environment.
The text of Art. 48, paras 3 and 4 of the ECA is repeated in Art. 116 i of the RTvA, hence the assumption of the former's noncompliance with the Constitution is transposable onto its mirror image in the RTvA. Therefore, Art. 116 i of the RTvA is not in contravention to Art. 19, paras 1, 2 and 3 of the Constitution .
On the noncompliance of Art. 48, para 5 of the ECA with Art. 19, paras 1, 2 and 3 of the Constitution
According to Art. 48, para 5 of the ECA an undertaking or affiliated with it persons in the meaning of the Commercial Code, to which a license to use individually allocated limited resource – radio-frequency spectrum for implementation of electronic communications through terrestrial digital radio broadcasting networks has been issued, shall not have the right to set out an electronic communication network for broadcasting of radio and television programs.
The Constitutional Court judged that the text of Art. 48, para 5 of the ECA was in contravention to Art. 19, paras 1 and 2 of the Constitution. The text bans multiplex operators and affiliated persons to install and use radio and TV program networks (the so-called backbones). Art. 48, para 5 of the ECA constricts free economic initiative and fails to guarantee equal legal conditions for business to corporate entities. The ban to install an electronic communication network to broadcast radio and TV programs on an undertaking that holds a license to use an individually allocated limited resource – a radio frequency spectrum for transmission by terrestrial digital radio broadcasting networks – does not guarantee the Constitution-enshrined rights of citizens of pluralism of opinion nor does it prevent the concentration of possibilities to influence operators who produce radio and TV programs. Moreover, an undertaking that will establish the digital radio broadcasting network will have to hire a transmission network (a backbone) . Such backbones can be installed either by the use of a radio frequency spectrum or else by a cable network and also by using the geostationary orbital positions allocated to the Republic of Bulgaria. The lawmaker unjustifiably impedes the economic initiative of multiplex operators to develop and operate their own transmission networks as evidently these are seen as affiliated activities.
The suggestion that the restriction introduced guarantees the better quality of the services provided to customers is untenable as in fact the restriction allows the multiplex operators to focus solely on their core activity inasmuch as their investment into the establishment and development of their own backbone will slow down the process of investment in broadcasting. It is not serious to claim that the multiplex operators can, if they possess a transmission network, limit the access of other persons to that network and thus breed conditions that invite abuse.
The practical application of the challenged provision leads to the passage of a piece of legislation which names the undertakings that are to rent the backbone to the future multiplex operators while the multiplex operators will not be allowed to install their own transmission networks. This is a factor that may lead to abuse owing to a monopolist position.
In that sense Art. 48, para 5 of the ECA is discordant with the Constitution as it breaches Art. 19, paras 1, 2 and 3 of the Constitution .
On the noncompliance of the amended § 5 and the newly created § 5а, § 5 b , § 5 c and § 5 d of the ECATCP with Art. 19, para 2 and Art. 41, para 1 of the Constitution
The ECA Transitional Provisions treat relations concerning the transition and ensure that the Republic of Bulgaria meets commitments like the elimination of analogue terrestrial radio broadcasting and the provision of guarantees that televiewers can access the terrestrial digital radio broadcasting (terrestrial television).
The claimants insist that § 77 of the AAECA which amends § 5 and creates new § 5а, § 5 b , § 5 c and § 5 d , contravenes Art. 19, para 2 and Art. 41, para 1 of the Constitution. Thus conditions are created to monopolize the possession of the multiplexes that are required for the first stage of the digitalization of the radio and TV broadcasting.
§ 5 of the ECATCP reads that the CRC (the Communications Regulation Commission) shall be free to issue licenses to TV operators with a registration as per the RTvA to use the free limited resource – the radio frequency spectrum. The usage shall be for a short term in keeping with the RTvA, as long as a license for digital broadcasting of nationwide coverage is obtained. The license shall be issued upon the reception of a positive opinion from the CEM (the Council for Electronic Media) in a procedure defined in CRC-approved rules .
The text in question is not in contravention to the Constitution as it provides conditions to make an efficient use of free unused frequencies for the short term for analogue radio broadcasting and as long as these frequencies are provided, in line with the law-established procedure, for the digital purpose. This won't generate a monopolist position nor will it restrain free competition. Paragraph 5 of the ECATCP is not in contravention to Art. 1 9, paras 1, 2 and 3 of the Constitution of the Republic of Bulgaria.
§ 5а, para 1 of the EACTCP gives the sequence of the establishment of digital networks with nationwide coverage for Stage 1 and Stage 2 of the transition. It is noted that Stage 1 and Stage 2 of the transition will proceed in parallel.
§ 5а, para 1 of the ECATCP reads that within the framework of one procedure under Art. 48, para 1 the CRC shall issue one license to an undertaking and the holder of that license shall be free to use individually a certain limited resource – a radio frequency spectrum for electronic communications by means of electronic communication networks for terrestrial digital radio broadcasting with nationwide coverage in accordance with what is planned for Stage 1 by the Plan for Terrestrial Digital Television Radio Broadcasting in the Republic of Bulgaria.
According to paragraph 2 of the same text the procedure in paragraph 1 opens an analogical selection procedure for an undertaking for Stage 2 of the Plan for Terrestrial Digital Television Radio Broadcasting.
The undertakings that are license holders under paras 1 and 2 shall not be affiliated persons (§ 5а, para 3).
The text challenged invites abuse of monopolist position. The text reads that within the framework of one competition program, a corporate entity shall become the owner of the two multiplexes of Stage 1 of the digitalization for the purpose of digital television radio broadcasting.
The license will not promote competition in digital radio broadcasting. The license will affect adversely the interests of users on the media market even if the undertaking which is the license holder is selected in a competition as the free unused limited resource – the radio frequency spectrum – is not sufficient to be allocated to all persons who express an intention to apply for a license when only one will get a license.
The Constitutional Court judged that § 5а, para 1 of the ECATCP was in contravention to Art. 19, paras 1 and 2 and Art. 41, para 1 of the Constitution of the Republic of Bulgaria. The law makes it binding that the two digital networks of Stage 1 of the Plan for Terrestrial Digital Television Radio Broadcasting in the Republic of Bulgaria shall be awarded to one person following a competition. Competition per se will not ensure equal opportunities to persons who are willing to establish digital networks nor will it provide nondiscriminatory legal conditions for business. Equal opportunities and nondiscriminatory legal conditions will be available if the lawmaker, for instance, puts in place competition for either of the two digital networks in Stage 1 of digitalization. Claims of short terms and sizeable investments to install facilities needed for the digital broadcasting of radio and TV programs are irrelevant to what is required by Art. 19, paras 1 and 2 of the Constitution. Currently the digital broadcasting of radio and TV programs across the country is done by cable or satellite. Regional networks are to be installed in addition to a national digital terrestrial radio broadcasting network. Hence the inadmissibility to have codified special privileged terms to make business like what § 5а, para 1 of the ECATCP provides for with the selection of one corporate entity by means of a single competition procedure to who the two national terrestrial digital radio broadcasting networks of Stage 1 of the digitalization are to be awarded.
Given the stated reasons, the Constitutional Court judged that § 5а, para 1 was in contravention to Art. 19, paras 1, 2 and 3 of the Constitution in its part ,,one” and ,,one” .
The Constitutional Court did not find any disagreement between para 2 and para 3 of § 5а of the ECATCP and Art. 19, paras 1, 2 and 3 of the Constitution of the Republic of Bulgaria. The quoted ECATCP texts provide for a competitive selection of a corporate entity within Stage 2 of the Plan for Terrestrial Digital Television Radio Broadcasting in the Republic of Bulgaria and for a limitation to the effect that corporate entities awarded digital broadcasting networks in Stage 1 and Stage 2 of digitalization shall not be affiliated persons in the meaning of the Commercial Code.
The Constitutional Court did not find any disagreement between ECATCP § 5, § 5 b , § 5 c and § 5 d and the Constitution of the Republic of Bulgaria.
Paragraph 5 b provides for competition procedures to select undertakings to establish regional digital radio broadcasting networks.
Paragraph 5 c provides for the termination of analogue broadcasting in the event of limited resource – a radio frequency spectrum for terrestrial digital radio broadcasting while digitalization is underway. The process is the transition from analogue to digital terrestrial television radio broadcasting within the range of a coincident radio frequency spectrum. Digitalization can proceed in no other way but phased out analogue radio broadcasting and provision of the freed frequencies to be used for digital radio broadcasting. The termination of analogue radio broadcasting will not bar the Bulgarian televiewers' access to TV programs inasmuch as the national TV programs which are currently broadcast analogously will have to be broadcast also digitally by the undertakings of Stage 1 of the digitalization. Analogue radio broadcasting will be terminated as soon as the digital network achieves coverage in terms of population as good as the existing one.
The claimants' claim is untenable in the particular case. By virtue of Art. 29 of the RTvA the CRC is bound to exercise all its powers, including the withdrawal of licenses, in line with the objectives and principles of the law (Arts . 4-5 of the ECA ). These include, inter alia, consumer protection, guaranteed consumer's right to easy access and quality electronic communications and the elimination of any obstacles to achieve the stated objectives. The law provides for the withdrawal of license solely if needed and paralleled by radio broadcasting (analogue and digital) which is guaranteed over a certain period of time.
Paragraph 5 d provides for the creation of a public multiplex to guarantee the broadcasting of the public radio and TV programs of the Bulgarian National Radio and the Bulgarian National Television while the public nature of these two institutions is guaranteed. This text is intended to guarantee public interest in the process of digitalization by the passage of a special piece of legislation.
Therefore the Constitutional Court judged that the cited paragraphs were not in dissonance with the Constitution of the Republic of Bulgaria.
It should be noted that the transition from analogue terrestrial radio broadcasting to digitalization is a complicated and expensive exercise. Its implementation should, in no unsanctioned way, affect the televiewers who are citizens enjoying Constitution-guaranteed rights to the acquisition and dissemination of information.
Председател: Румен Янков