[Federal Register Volume 64, Number 53 (Friday, March 19, 1999)]
[Notices]
[Pages 13598-13600]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-6677]


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DEPARTMENT OF JUSTICE

Antitrust Division


Public Comments and Plaintiff's Responses; United States v. 
Mercury PCS II, L.L.C.

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. Sec. 16(b)-(h), that a public comment and 
plaintiff's response thereto has been filed with the United States 
District Court for the District of Columbia in United States v. Mercury 
PCS II, L.L.C., Civil Case No. 98-2751 (PLF).
    On November 10, 1998, the United States filed a civil antitrust 
complaint alleging that Mercury PCS II, L.L.C. (``Mercury) violated 
Section 1 of the Sherman Act, 15 U.S.C. 1. In its complaint, the 
plaintiff alleged that the defendant used coded bids during a Federal 
Communications Commission auction of radio spectrum licenses for 
personal communication services. The complaint further alleges that, 
through the use of these coded bids, the defendant reached an agreement 
to stop bidding against another bidder in violation of Section 1 of the 
Sherman Act, 15 U.S.C. 1. The proposed Final Judgment, filed the same 
time as the Complaint, prohibits Mercury from entering into 
anticompetitive agreements and from using coded bids in future FCC 
auctions.
    Public comment was invited within the statutory sixty-day comment 
period. One comment was received, and the response thereto, are hereby 
published in the Federal Register and filed with the Court. Copies of 
the comment and the response are available for inspection in Room 215 
of the U.S. Department of Justice, Antitrust Division, 325 Seventh

[[Page 13599]]

Street, N.W., Washington, DC 20530 (telephone: (202) 514-2481) and at 
the office of the Clerk of the United States District Court for the 
District of Columbia, 333 Constitution Avenue, N.W., Washington, DC 
20001. Copies of these materials may be obtained on request and payment 
of a copying fee.
Rebecca P. Dick,
Director of Civil Non-Merger Enforcement Antitrust Division.

    United States of America, Plaintiff, v. Mercury PCS II, L.L.C., 
Defendant. Civil Case No. 98-2751 (PLF).

Plaintiff's Response to Public Comment

I

Background
    Pursuant to section 2(d) of the Antitrust Procedures and Penalties 
Act (the ``APPA''), 15 U.S.C.A Sec. 16(d), the United States files this 
response to the single public comment received regarding the proposed 
Final Judgment submitted for entry in this case.
    Plaintiff filed a civil antitrust complaint on November 10, 1998, 
alleging that Mercury PCS II, L.L.C. (``Mercury) violated Section 1 of 
the Sherman Act, 15 U.S.C. 1. In its complaint, the plaintiff alleged 
that the defendant used coded bids during a Federal Communications 
Commission (``FCC'') auction of radio spectrum licenses for personal 
communication services. The complaint further alleges that, through the 
use of these coded bids, the defendant reached an agreement to stop 
bidding against another bidder in violation of Section 1 of the Sherman 
Act, 15 U.S.C. 1.
    The proposed Final Judgment, filed the same time as the complaint, 
prohibits Mercury from entering into anticompetitive agreements and 
from using coded bids in future FCC auctions. A competitive impact 
statement (``CIS'') filed by the United States describes the complaint, 
the proposed Final Judgment, and the remedies available to private 
litigants who may have been injured by the alleged violation. The 
plaintiff and the defendant have stipulated that the proposed Final 
Judgment may be entered after compliance with the APPA.
    The APPA requires a sixty-day period of the submission of public 
comments on the proposed Final Judgment following publication of the 
proposed Final Judgment in the Federal Register. 15 U.S.C. 16(b). The 
proposed Final Judgment was published in the Federal Register on 
November 25, 1998; the comment period terminated on January 25, 1999. 
The United States received only on comment, from High Plains Wireless, 
L.P. (``High Plains'').\1\
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    \1\ The comment is attached. The United States plans to publish 
promptly the comment and this response in the Federal Register. The 
United States will provide the Court with a certificate of 
compliance with the requirements of the Tunney Act and file a motion 
for entry of the Final Judgment once publication takes place.
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II

Response to the Public Comment
    In its comment, High Plains states that the factual descriptions in 
the complaint and CIS do not distinguish between the conduct of Mercury 
and High Plains--the two parties to the alleged illegal agreement. High 
Plains claims it was a ``victim of Mercury's scheme'' and notes that 
High Plains notified the FCC about Mercury's use of BTA numbers in its 
bids for the Amarillo and Lubbock licenses shortly after it detected 
the message contained within Mercury's bids. High Plains requests that 
the plaintiff amend the complaint and CIS to reflect its role as a 
victim and a whistle blower. High Plains' comment does not address the 
adequacy of the proposed Final Judgment.
    The complaint properly alleges an illegal agreement between High 
Plains and Mercury--indeed High Plains does not dispute the allegations 
that establish the agreement.\2\ And the complaint already 
distinguishes in a fundamental way between Mercury and High Plains--
only Mercury is named as a defendant. The complaint also reflects the 
different conduct engaged in by each party, it alleges that Mercury 
actively solicited the agreement through repeated use of BTA numbers, 
while High Plains eventually assented to Mercury's offer by ceasing to 
bid in a market Mercury wanted. That High Plains immediately complained 
to the FCC about Mercury's use of BTA numbers is a matter of public 
record.\3\ It is, however, irrelevant to the complaint against Mercury 
and for that reason was not included.
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    \2\ See United States v. Mercury PCS II, LLC (Civil Case No. 98-
2751 (PLF)), Paras. 19-21 (D.D.C.)(Complaint, filed November 10, 
1998).
    \3\ See, e.g., Notice of Apparent Liability for Forfeiture, FCC 
97-388 (Rel. October 28, 1997).
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    The sole concern of this Tunney Act proceeding is with the adequacy 
of the relief obtained to address the offense charged in the complaint. 
After careful consideration of the comment, the plaintiff concludes 
that High Plains' comment does not change its determination that entry 
of the proposed Final Judgment will provide an effective and 
appropriate remedy for the antitrust violation alleged in the complaint 
and is in the public interest. The relief obtained as to Mercury is 
fully adequate to address the complaint against that firm. The 
plaintiff will move the Court to enter the proposed Final Judgment 
after the public comment and this Response have been published in the 
Federal Register, as 15 U.S.C. Sec. 16(d) requires.

    Dated this 9th day of March, 1999.

        Respectfully submitted,
Jill Ptacek,
J. Richard Doidge,
U.S. Department of Justice, Antitrust Division, 325 7th Street, NW, 
Suite 500, Washington, D.C. 20530, (202) 307-6607.

Certificate of Service

    I hereby certify that I have caused a copy of the foregoing 
Plaintiff's Response to Public Comments, as well as the attached copy 
of the public comment received from Jonathan P. Graham on behalf of 
High Plains Wireless, L.P., to be served on counsel for the defendant 
by first class mail, postage prepaid, as the addresses set forth below.
Charles A. James, Esq.,
Jones, Day, Reavis & Pogue, Metropolitan Square, 1450 G Street, N.W., 
Washington, D.C. 20005.

    Dated: March 9, 1999.
Jill Ptacek

Williams & Connolly

725 Twelfth Street, N.W., Washington, D.C. 20005-5901, (202) 434-
5000, FAX (202) 434-5029

January 25, 1999.

By Hand

Mr. Roger W. Fones,
Chief, Transportation Energy and Agriculture Section, Antitrust 
Division, 325 Seventh Street, N.W., Suite 500, Washington, D.C. 
20530.

    Dear Mr. Fones: We represent High Plains Wireless, L.P. (``High 
Plains''). Enclosed, pursuant to the Tunney Act, 15 U.S.C. 
Sec. 16(b)-(h), please find the Comments of High Plains in 
connection with the antitrust complaint and competitive impact 
statement filed in United States v. Mercury PCS II, L.L.C., CA No. 
1:98CV02751 (D.D.C.).
    If you require any further information or have any questions, 
please write or call me at the address and number listed above.

        Very truly yours,
Jonathan P. Graham

Comments of High Plains Wireless, L.P. on the Proposed Final 
Judgment in United States v. Mercury PCS II, L.L.C., CA No. 
1:98CV02751

    High Plains Wireless, L.P. (``High Plains'') is a victim of the 
conduct engaged in by Mercury PCS II, L.L.C. (``Mercury'') in United 
States v. Mercury PCS II, L.L.C., CA No. 1:98CV02751 (D.D.C.). Because 
the Complaint and

[[Page 13600]]

Competitive Impact Statement do not provide all of the background facts 
necessary to understand High Plains' role in the matter and may harm 
High Plains by incorrectly suggesting that it willingly participated in 
an agreement to violate the antitrust laws, High Plains is making this 
Tunney Act submission. See 15 U.S.C. Sec. 16(b)-(h). High Plains 
respectfully requests that the Department amend its Complaint, and make 
corresponding modifications in its Competitive Impact Statement, to 
reflect accurately High Plains' role in this matter.
    High Plains is concerned that the Complaint and the Competitive 
Impact Statement filed by the Department of Justice neglect to explain 
fully the relevant circumstances. The Complaint alleges that Mercury 
and High Plains reached an agreement to refrain from bidding against 
one another for PCS licenses in certain markets in violation of Section 
1 of the Sherman Act. See Complaint Paras. 3, 19, 20, 21. Similarly, 
the Competitive Impact Statement filed with the Court alleges that High 
Plains reached an agreement with Mercury to cease bidding on particular 
PCS licenses. See Competitive Impact Statement at 1-2, 6-8. Although it 
is accurate that Mercury threatened, through bid-signaling, to outbid 
High Plains for the Amarillo F block license, and that in order to 
confirm Mercury's intention, High Plains ceased bidding on the Lubbock 
F block license, the Complaint and Competitive Impact Statement fail to 
explain that High Plains (1) was the object of Mercury's improper 
conduct, (2) immediately reported Mercury's wrongdoing to the FCC, and 
(3) did not benefit from Mercury's misconduct. The Complaint and 
Competitive Impact Statement thus incorrectly suggest that High Plains 
was a willing participant in a violation of the antitrust laws of the 
United States.

Relevant Facts

    From August 26, 1996 to January 14, 1997, both Mercury and High 
Plains participated in an auction conducted by the Federal 
Communications Commission (``FCC'') of licenses to use certain 
broadband radio spectrum in the operation of personal communications 
services (``PCS''). The auction comprised numerous rounds of bidding. 
As stated in the Competitive Impact Statement, High Plains had been the 
high bidder for the Amarillo F Block license since Round 68 and 
continuing through round 120. High Plains was also bidding for the 
Lubbock F block license. Mercury, on the other hand, had shown no 
interest in the Amarillo market, but was an active participant in the 
bidding for the Lubbock F block license.
    In round 117 of the auction, when only Mercury and High Plains were 
bidding, Mercury made the last three digits of its bid match the ``BTA 
code'' assigned to the Amarillo market (``013''), for which High Plains 
was then the high bidder. High Plains did not then understand that 
there was any connection between the Amarillo market and Mercury's bid 
amount for the Lubbock market containing the BTA code for Amarillo. 
High Plains continued bidding for the Lubbock F block license over the 
next three rounds. In round 121, Mercury for the first time placed a 
bid for the Amarillo F block license; its bid ended in the three digits 
that served as the BTA code for the Lubbock market (``264''). Still not 
understanding Mercury's intent, High Plains continued to bid for the 
Lubbock F block license. Mercury responded by making the message 
clearer--it placed bids ending in ``013'' in the Lubbock market in 
round 123, ``264'' in the Amarillo market in round 125, and ``013'' in 
the Lubbock market in round 127.
    After the conclusion of round 127, High Plains realized that 
Mercury was signalling High Plains to stop its bidding in Lubbock. In 
order to test its theory that Mercury was signaling it through the use 
of BTA code numbers, High Plains stopped bidding for the F block 
license in Lubbock. The theory was confirmed when Mercury immediately 
ceased bidding for the F block license in Amarillo. As soon as High 
Plains' fears were confirmed, it immediately contacted the FCC by 
telephone on November 22 and 25, 1996 and followed up on November 26, 
1996 by filing an Emergency Motion for Disqualification. That 
notification led to an investigation of Mercury's conduct by the FCC 
and to the FCC's referral of the matter to the Department of Justice.

Summary and Request for Amendment

    In light of this history, we believe it is both inaccurate and 
unfair to describe the conduct of High Plains as if that conduct were 
no different that of Mercury. High Plains respectfully requests that 
the Complaint and Competitive Impact Statement be amended to reflect 
that the conduct and actions of Mercury and High Plains were 
significantly different. High Plains was the party that first brought 
this matter to the attention of the FCC. Because High Plains promptly 
reported and later filed a formal complaint with the FCC identifying 
the illegal conduct of Mercury. Mercury's misconduct was exposed. If 
the only facts about High Plains were those alleged in the Complaint, 
then presumably the United States would have pursued the same judicial 
course of action against High Plains that it followed against Mercury. 
Unfortunately, the only facts in the record are those alleged in the 
complaint; High Plains, the good citizen that observed and reported the 
crime, is condemned by association.
    Having observed what it believed to be a violation of the FCC's 
rules and an apparent violation of Section 1 of the Sherman Act, High 
Plains was in the difficult position of no longer being completely free 
to pursue its own best interests and High Plains could not just ignore 
Mercury's misconduct. High Plains immediately reported Mercury's 
conduct to the FAA--the only thing it could have done in the 
circumstances to bring the improper conduct to a halt and to avoid 
being wrongly implicated in Mercury's scheme. Thus, we respectfully 
request that the Complaint and Competitive Impact Statement be amended 
to reflect that High Plains was a victim of Mercury's scheme, that High 
Plains promptly brought the scheme to the attention of the proper 
authorities, and that High Plains did not willingly participate in any 
agreement that violated the antitrust laws.

        Respectfully submitted,
Williams & Connolly

Steven R. Kuney
Jonathan P. Graham
[FR Doc. 99-6677 Filed 3-18-99; 8:45 am]
BILLING CODE 4410-11-M