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Federal Register / Vol. 86, No. 118 / Wednesday, June 23, 2021 / Rules and Regulations
auctioned that address or communicate, directly or indirectly, bidding at the auction, bidding strategies, including arrangements regarding price or the specific permits or licenses on which to bid, and any such arrangements relating to the post-auction market structure.
The rule allows for limited exceptions for communications within the scope of any arrangement consistent with the exclusion from the Commissions rule prohibiting joint bidding, provided such arrangement is disclosed on the applicants auction application.
Applicants may communicate pursuant to any pre-existing agreements, arrangements, or understandings relating to the licenses being auctioned that are solely operational or that provide for the transfer or assignment of licenses, provided that such agreements, arrangements, or understandings are disclosed on their applications and do not both relate to the licenses at auction and address or communicate bids including amounts, bidding strategies, or the particular permits or licenses on which to bid or the post-auction market structure.
47. In addition to express statements of bids and bidding strategies, the prohibition against communicating in any manner includes public disclosures as well as private communications and indirect or implicit communications.
Consequently, an applicant must take care to determine whether its auctionrelated communications may reach another applicant. OEA and WTB
remind applicants that they must determine whether their communications with other parties are permissible under the rule once the prohibition begins at the deadline for submitting applications, even before the public notice identifying applicants is released.
48. Parties subject to section 1.2105c should take special care in circumstances where their officers, directors, and employees may receive information directly or indirectly relating to any applicants bids or bidding strategies. Such information may be deemed to have been received by the applicant under certain circumstances. For example, Commission staff have found that, where an individual serves as an officer and director for two or more applicants, the bids and bidding strategies of one applicant are presumed to be conveyed to the other applicant through the shared officer, which creates an apparent violation of the rule.
49. Subject to the limited exceptions for communications within the scope of any arrangement consistent with the exclusion from the Commissions rule
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prohibiting joint bidding, section 1.2105c1 prohibits applicants from communicating with specified other parties only with respect to their own, or each others, or any other applicants bids or bidding strategies . . . . The Prohibited Communications Guidance Public Notice, 80 FR 63215, Oct. 19, 2015, released in advance of the broadcast incentive auction Auction 1000 reviewed the scope of the prohibition generally, as well as in that specific auctions forward auction of spectrum licenses and reverse auction to relinquish broadcast licenses. As the Commission explained therein, a communication conveying bids or bidding strategies including postauction market structure must also relate to the licenses being auctioned in order to be covered by the prohibition. Thus, the prohibition is limited in scope and does not apply to all communications between or among the specified parties. The Commission consistently has made clear that application of the rule prohibiting communications has never required total suspension of essential ongoing business. Entities subject to the prohibition may negotiate agreements during the prohibition period, provided that the communications involved do not relate to both: 1 The licenses being auctioned and 2 bids or bidding strategies or post-auction market structure.
50. Accordingly, business discussions and negotiations that are unrelated to bidding in Auction 110 and that do not convey information about the bids or bidding strategies, including the postauction market structure, of an applicant are not prohibited by the rule.
Moreover, not all auction-related information is covered by the prohibition. For example, communicating merely whether a party has or has not applied to participate in Auction 110 will not violate the rule. In contrast, communicating, among other things, how a party will participate, including specific geographic areas selected, specific bid amounts, and/or whether or not the party is placing bids, would convey bids or bidding strategies and would be prohibited.
51. While section 1.2105c does not prohibit business discussions and negotiations among auction applicants that are unrelated to the auction, each applicant must remain vigilant not to communicate, directly or indirectly, information that affects, or could affect, bids or bidding strategies. Certain discussions might touch upon subject matters that could convey price or geographic information related to bidding strategies. Such subject areas
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include, but are not limited to, management, sales, local marketing agreements, and other transactional agreements.
52. OEA and WTB caution applicants that bids or bidding strategies may be communicated outside of situations that involve one party subject to the prohibition communicating privately and directly with another such party.
For example, the Commission has warned that prohibited communications concerning bids and bidding strategies may include communications regarding capital calls or requests for additional funds in support of bids or bidding strategies to the extent such communications convey information concerning the bids and bidding strategies directly or indirectly.
Moreover, the Commission found a violation of the rule against prohibited communications when an applicant used the Commissions bidding system to disclose its bidding strategy in a manner that explicitly invited other auction participants to cooperate and collaborate in specific markets, and it has placed auction participants on notice that the use of its bidding system to disclose market information to competitors will not be tolerated and will subject bidders to sanctions.
53. Likewise, when completing a short-form application, each applicant should avoid any statements or disclosures that may violate section 1.2105c, particularly in light of the limited information procedures in effect for Auction 110. Specifically, an applicant should avoid including any information in its short-form application that might convey information regarding its PEA selections, such as referring to certain markets in describing agreements, including any information in application attachments that will be publicly available that may otherwise disclose the applicants PEA selections, or using applicant names that refer to licenses being offered.
54. Applicants also should be mindful that communicating non-public application or bidding information publicly or privately to another applicant may violate section 1.2105c even though that information subsequently may be made public during later periods of the application or bidding processes.
4. Communicating With Third Parties 55. Section 1.2105c does not prohibit an applicant from communicating bids or bidding strategies to a third party, such as a consultant or consulting firm, counsel, or lender. The applicant should take appropriate steps, however, to ensure
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