The government acted unfairly when it suddenly introduced a "gradual and orderly approach" in considering free-to-air television licences, a lawyer for failed bidder Hong Kong Television Network said yesterday.
Barrister Russell Coleman SC told the Court of First Instance that prior to this new approach, it had been government policy to foster fair competition by not imposing any limit on the number of licences.
Coleman was spelling out HKTV's argument in its application for a judicial review of the government's decision on October 15 last year to award licences to channels run by established players PCCW and iCable, but not to HKTV.
He claimed that it had been government policy since 1998 to have fair competition in the market through not imposing any limit on the number of licences.
"The [Chief Executive in Council] failed to seek the views and recommendations of the Communications Authority as to the introduction of the alleged gradual and orderly approach and the impact this would have on the outcome of the free television licence applications," he said.
Chief Executive Leung Chun-ying and the Executive Council had also failed to discharge their common law duty to provide adequate reasons for the decision to refuse HKTV a licence.
The company had then been precluded from amending its application and had no opportunity to address in substantive terms the new approach of the government.
"It is absolutely necessary for the chief executive to specify what he is thinking … and give the chance for the licensee to make representations," Coleman said.
He also said that records showed that Rita Lau Ng Wai-lan, secretary for commerce and economic development from 2008 to 2011, had discussed free-to-air licences with HKTV boss Ricky Wong Wai-kay and indicated that the government would welcome an application for a licence in 2009.
HKTV and its two competitors had applied for licences late that year.
Coleman said that when Donald Tsang Yam-kuen was chief executive in June 2012, it was still government policy to grant licences to all applicants.
Early last year, Commerce Secretary Greg So Kam-leung had said the Broadcasting Authority - now part of the Office of the Communications Authority - would recommend that all three applications should be approved, the court heard.
However, in March last year concerns began to be raised about "sustainability" of the industry and how "cut-throat competition" would affect it, Coleman said.
He claimed that Leung had said at one Exco meeting that "competition may not be in the ultimate interest of the consumers".
Members of the council also expressed worries that competition in the industry would degrade the quality of television programmes.
However, the lawyer said that the general revenue from television advertising was HK$3.5 billion to HK$3.6 billion a year, which was enough to cover the operating costs of five television stations.
The hearing continues before Mr Justice Thomas Au Hing-cheung today.