Auction 109 Brings Anti-Collusion Citations

The FCC’s Auction 109 for several FM and AM radio frequencies began on July 23 and will continue for the next several days.  Bidders in the auction are bound by the FCC’s anti-collusion rules to be sure that bidders (or related parties) don’t collude to obtain a desired result in the auction.

As Auction 109 began, the FCC published two letters to bidders that had disclosed to the FCC a pre-auction meeting discussing a merger between the bidders, and also considered merging their upfront payments to have greater bidding eligibility in the auction.  Despite the bidders’ characterization of the meeting/discussion as not violating the anti-collusion rules, the FCC disagreed and found that the discussion of merging bidding credits implicated the applicants’ bidding strategy and therefore violated the rules.  The FCC referred the matter to the Enforcement Bureau for a complete investigation and warned that further participation in the auction could “exacerbate” this violation and possibly increase the likelihood and severity of possible sanctions.

As a reminder, since the Auction 109 short form filing deadline, applicants have been prohibited from cooperating or collaborating with respect to, communicating with or disclosing, to each other in any manner the substance of their own, or each other’s, or any other applicant’s bids or bidding strategies (including post-auction market structure), or discussing or negotiating settlement agreements, until after the down payment deadline.  Bidders are reminded to take precautions to avoid any 3^rd party employed for advice pertaining to its participation, bids or bidding strategies becoming a conduit for prohibited communications.  Certain business discussions might touch upon subject matters that could convey information related to bidding strategies, including management, sales, local marketing agreements, and other transactional agreements.  Be very careful — the penalties for violating the anti-collusion rules are substantial.