The Federal Supreme Court, in the extraordinary session of November 8, 2017, ruled that the Article 25 of Law 12.485/2011, known as the Pay-TV Law, is unconstitutional. Such provision forbids channels from broadcasting commercial advertising biased Brazilians public if hired abroad by a foreign advertising agency.
The majority of the Justices ruled that the provision establishes a market restraint in favor of Brazilian advertising agencies does not have constitutional basis but violates the principles of isonomy as stated in article 5 of the Federal Constitution: “All persons are equal before the law, without any distinction whatsoever, Brazilians and foreigners residing in the country being ensured of inviolability of the right to life, to liberty, to equality, to security and to property, on the following terms: (…)”.
Justice Dias Toffoli stressed that, although the principle of isonomy does not exclude the possibility of privileged legal treatment to certain categories of subjects, the criteria for assess inequalities shall be provided by law. In the words of the Brazilian jurist Celso Antonio Bandeira de Melo, which was quoted in the vote of Justice Dias Toffoli, “(…) it is necessary to check whether there is a rational justification, a logic ground to attribute a specific legal treatment on the inequality proclaimed. Finally, it is necessary to analyze whether the abstract correlation or rational ground is ‘in concrete’ and aligned with the values emphasized in the constitutional normative system”.
The Justice asserted that in the case of the Pay-TV Law it is not clear what criteria of imbalance would justify the privileged treatment conferred to national advertising agencies. On the contrary, there is not a scenario of disadvantage between national and foreign agencies to justify a market restraint. In fact, Brazil is ranked in third place at the most awarded countries in the festival Cannes Lions, which is considered the most important prize in the world of advertisement.
The Justice Dias Toffoli also pointed out that it is not possible to make a parallel with quotas of national and independent content – which has as legal basis the Article 221, item II, of the Federal Constitution(1) and the Pay-TV Law –, since these quotas are grounded on a factual circumstance in which independent national producers of audiovisual content that operate in Pay-TV market are subject to a serious disadvantage in relation to foreign producers. In addition, the Justice emphasized that no restraint rule was created within the domestic content quota, but only a percentage of national production to be complied by programmers and channels packers, within a definite term of 12 (twelve) years.
In addition, Justice Carmen Lúcia stressed that the quota for national audiovisual production is important for preserving Brazilian culture, but could not be applied to advertising content in Pay-TV. Justice Marco Aurélio, pointed out that the market restraint contradicts free competition, one of the general principles of economic order in Brazil, as set forth by Article 170 of the Federal Constitution.
1- Art. 221 The production and programming of radio and television stations shall comply with the following principles: II – promotion of national and regional culture and fostering of independent productions aimed at their diffusion.