Final judgment in the Klubrádió frequency tender case


On 4 November 2020, the Media Council of the National Media and Infocommunications Authority published a call for tenders for the community use of Budapest 92.9 MHz radio media service with local coverage. Three tenders were submitted in response to the call for tenders, including the plaintiff's tender, which was submitted under the permanent name of 'Klubrádió'. In its decision of 10 March 2021, which subsequently was challenged before the court, the respondent found that the plaintiff's tender was invalid in form and substance, and the tendering process was unsuccessful.

The plaintiff filed an administrative action against the decision, which action was dismissed by the Budapest Regional Court (Fővárosi Törvényszék), sitting as first instance court, by its judgment of 6 May 2021. The plaintiff appealed. In its final judgment of 28 September 2021 the Curia of Hungary (“the Curia”), hearing the plaintiff's appeal, upheld the first instance court’s judgment.

In the reasoning of its judgment the Curia has pointed out, inter alia, that the first instance court drew correct legal conclusions based on well-established facts, by relying on the statutory provisions applicable to the determination of the legal dispute at issue. The Curia has agreed both with the merits of the decision and the reasons given for it. It has stated that the plaintiff itself did not substantially dispute the deficiencies of its tender but considered them to be of minor importance. The Curia emphasises this because on account of the admitted factual deficiencies, the subject matter of the appeal is not the interpretation of the law, in general, by the first instance court (and, indirectly, by the respondent), but solely the legal consequence applied on account of those deficiencies. The provisions of Act No. CLXXXV of 2010 on Media Services and Mass Media (“Media Act”) concerning the diversity of media services as a value of paramount importance and the development and strengthening of democratic social publicity as an outstanding constitutional interest, had to be applied by the first instance court in relation to the facts of the case. Hence, those provisions could only be taken into consideration in the context of the assessment of the legal consequences that were applicable on account of the deficiencies. As to the legal consequences, the Media Act did not allow for discretion but specified them as mandatorily applicable in case of invalidity. As in this regard the first instance court rightly pointed out, nor could the provisions of sections 4 and 5 of the Media Act give exemption from the observance of and compliance with the specific provisions of the law. Those provisions could not and cannot be relied on by the authority or the court to overlook the formal or substantive invalidity of a tender submitted by a tenderer, in the present case, the plaintiff, but also the other two tenderers in the tender process, thus giving rise also to a breach of the fairness of the competition and the requirement of equal treatment. The protection of diversity and the interests of democratic public opinion do not excuse the plaintiff's failure, namely that it submitted an invalid tender. In that regard, the Curia considers it important to emphasise that, as a court applying the law, it had to assess the case at issue solely from a legal point of view and could not attach any importance to any other aspect of the case, therefore, in accordance with the principle of impartiality, it could not make an exception for the plaintiff by paying regard to extra-legal aspects. The plaintiff’s arguments based on the procedural standards of 'fairness' and 'good faith', stated as standards that were to be observed by the respondent and the first instance court could, as explained above, not serve as a legal basis for overriding the statutory provisions, transgressing and applying in a selective manner the conditions of the tender, overriding and disregarding the rules on account of the applicant's service profile, and treating the plaintiff with privilege.  

In respect of the plaintiff's tender, the respondent and the first instance court found three grounds for invalidity of which even one would have been sufficient to render the entire tender invalid. Therefore, in order for the action and the appeal to succeed, the plaintiff would have had to well-foundedly challenged the lawfulness of the findings in respect of each of the three invalidity grounds, but it could not prove a violation of law in any of the cases.

The first instance court examined in detail and determined the plaintiff's complaints submitted in its action in the context of the programme ‘Morning Quick Repeat’ (Reggeli Gyors ismétlés) and gave reasons for its decision. The lack of a definition of an independent programme, invoked by the applicant, was irrelevant, since of decisive importance was the fact that the 'Morning Quick Replay' did not comply with the definition of 'repetition' as defined in the interpretative provisions of the call for tenders, since it was to be broadcasted after a specific technical intervention, namely reediting and cutting.

The first instance court also provided sound reasons for substantive invalidity. In case of the programme entitled 'Kovátsworkshop' (Kovátsműhely), the plaintiff admitted both in its statement of claim and the appeal that the factual error found in the tender factually existed. That error was not eliminated by the fact that by that time, the applicant’s tender was the only registered tender still in competition. The respondent had to examine formal and substantive validity even if only one tenderer was involved in the tender process. The Curia emphasises that the mere fact that, in the case at issue, the respondent – lawfully – found that the plaintiff's tender was invalid could not, in itself, violate either the principle of freedom of the press or the plaintiff’s right to fair administrative authority proceedings.

Although in its appeal the applicant claimed that its business and financial plan complied with the specific requirements of both the Media Act and the call for tenders, the first instance court elaborated in detail, based on the information provided in the plaintiff's tender, the documents attached thereto, and the data available from public records, why it did not consider the tender admissible, in agreement with the respondent. It referred, inter alia, to the applicant's negative equity situation and the conditional and contradictory nature of the declarations made with a view to redressing the situation. As to the provision of donations by the listeners no commitments existed, nor were such commitments presented by the plaintiff, although in its appeal it relied on the market conditions and on its specific situation, therefore the influence of such donations could not be regarded as foreseeable and calculable with a high degree of probability, consequently, donations in themselves could not ensure the covering of the costs. On balance, the respondent and the first instance court well-foundedly concluded that the plaintiff’s business and financial plan, which formed part of its tender, could not be regarded as sound, and therefore they were not suitable for securing the goal set out in the call for tenders, namely to ensure the future presence of the radio station on the media market, with a predictable and stable operation.

Since the finding concerning the invalidity of the respondent's tender was well-founded, the first instance court correctly concluded that the tender process was lawfully found unsuccessful.

The letter of formal notice invoked by the plaintiff, expressing the Commission's concerns in the infringement proceedings brought by the European Commission represents only the first step in the infringement proceedings, in which no infringement of the EU law could or was established yet, therefore in determining the case that letter could not be taken into consideration. It should be noted that, in the case relating to the renewal of the plaintiff's media broadcasting rights, the respondent did not pass a decision having relevance in the present case, the invoked letter of formal notice is not related to the present proceedings, therefore the allegation in the appeal that the first instance judgment was contrary to the findings of the European Commission is without any basis.

The Communications Department of the Curia of Hungary