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LOSING BIDDERS CONTINUE CLAIMS OF COLLUSION IN C-BLOCK AUCTION

WASHINGTON-Antigone Communications L.P. and PCS Devco Inc. charged the Federal Communications Commission with ignoring their petition to deny GWI PCS Inc.’s C-block licenses and with granting GWI’s licenses in light of alleged collusion with Hyundai Electronics of America Inc.

“Petitioners were injured by the conduct of GWI and Hyundai in violating the anti-collusion rule during the C-block auction, which skewed the auction bidding from what it otherwise might have been, affected the levels of numerous bids and gave GWI an unfair advantage over petitioners, who were unable to obtain additional investment funds by means of violating [the rules] as GWI did,” the companies wrote in an application for review filed with the FCC. The argument is reminiscent of that filed by Antigone and Devco against NextWave Telecom Inc. earlier this year.

The petitioners wrote that the Wireless Telecommunications Bureau erred in granting GWI’s licenses based on a possible future change in auction rules. According to the petitioners, the bureau had in its possession drafts of agreements between GWI and Hyundai regarding additional funds based on whether certain markets were won, including West Palm Beach. According to Antigone and Devco, any such funding-for-markets deal would violate current commission rules, and accepting such an offer would compound the violation.

Stating that the bureau found Hyundai and GWI innocent of any collusion because “GWI supposedly did not change its bidding strategies,” the petitioners contended, “It is irrelevant whether GWI changed strategies. Even if GWI and Hyundai only discussed their respective bidding strategies to allow Hyundai to satisfy itself that it could financially support GWI’s pre-existing bidding strategies, they violated [the rules] and GWI’s applications must be dismissed. It is the discussion of bidding strategies that is prohibited, not the changing of strategies.”

On Feb. 28, after the C-block auctions had been over for many months, the bureau had proposed to possibly change the rule that prohibits any discussion between auction players any time during the bidding. A new rule would allow such conversations if one participant drops out of the auction. Antigone and Devco said the bureau used this possible future rule change as a reason to grant GWI’s licenses.

“The bureau’s reference to a potential future rule change to excuse GWI’s past conduct was not only contrary to precedent, it was especially capricious here,” they wrote, “given that the bureau refused a mid-auction request to wave this portion of [the rules] for all of the remaining C-block bidders.”

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