United States v. Omnipoint Corp.; United States v. 21st Century Bidding Corp.; United States v. Mercury PCS II, L.L.C.; Proposed Final Judgments and Competitive Impact Statements

Federal RegisterNov 25, 1998

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DEPARTMENT OF JUSTICE

Antitrust Division

United States v. Omnipoint Corp.; United States v. 21st Century

Bidding Corp.; United States v. Mercury PCS II, L.L.C.; Proposed Final

Judgments and Competitive Impact Statements

Notice is hereby given pursuant to the Antitrust Procedures and

Penalties Act, 15 U.S.C. Section 16 (b) through (h), that a proposed

Final Judgment, Stipulation and Order, and Competitive Impact Statement

have been filed with the United States District Court for the District

of Columbia in each of the following civil actions: United States v.

Omnipoint Corporation, Civil Action No. 1:98CV02750; United States v.

21st Century Bidding Corp.; Civil Action No. 1:98CV02752, and United

States v. Mercury PCS II, L.L.C., Civil Action No. 1:98CV02751. The

proposed Final Judgments are subject to approval by the Court after

expiration of the statutory 60-day public comment period and compliance

with the Antitrust Procedures and Penalties Act, 15 U.S.C. 16(b)-(h).

On November 10, 1998, the United States filed separate Complaints

against each defendant that allege that defendants used coded bids

during a Federal Communications Commission auction of radio spectrum

licenses for personal communications services. The Complaints further

allege that, through the use of these coded bids, defendants reached

agreements to stop bidding against one another in violation of Section

1 of the Sherman Act, 15 U.S.C. 1. The proposal Final Judgments, filed

the same time as the Complaints, prohibit defendants from entering into

anticompetitive agreements and from using coded bids in future FCC

auctions.

Public comment is invited within 60 days of the date of this

notice. Such comments, and responses thereto, will be published in the

Federal Register and filed with the Court. Written comments should be

directed to Roger W. Fones, Chief, Transportation, Energy, and

Agriculture Section, Antitrust Division, 325 Seventh Street, NW., Suite

500, Washington, DC 20530 (telephone: (202) 307-6351).

Copies of the Complaint, Stipulation and Order, proposed Final

Judgment, and Competitive Impact Statement are available for inspection

in Room 215 of the U.S. Department of Justice, Antitrust Division, 325

Seventh Street, NW., 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, NW., Washington, DC

20001. Copies of any of these materials may be obtained upon request

and payment of a copying fee.

Rebecca P. Dick,

Director of Civil Non-Merger Enforcement.

Stipulation and Order

It is hereby stipulated by and between the undersigned parties, by

their respective attorneys, as follows:

1. The Court has jurisdiction over the subject matter of this

action and over each of the parties hereto, and venue of this action is

proper in the United States District Court for the District of

Columbia.

2. The parties stipulate that a Final Judgment in the form hereto

attached may be filed and entered by the Court, upon the motion of any

party or upon the Court's own motion, at any time after compliance with

the requirements of the Antitrust Procedure and Penalties Act (15

U.S.C. Sec. 16), and without further notice to any party or other

proceedings, provided that plaintiff has not withdrawn its consent,

which it may do at any time before the entry of the proposed Final

Judgment by serving notice thereof on defendants and by filing that

notice with the Court.

3. The defendant shall abide by and comply with the provisions of

the proposed Final Judgment pending entry of the Final Judgment by the

Court and shall, from the date of the signing of this Stipulation by

the parties, comply with all the terms and provisions of the proposed

Final Judgment as though they were in full force and effect as an order

of the Court.

4. In the event that plaintiff withdraws its consent, as provided

in paragraph 2 above, then the parties are released from all further

obligations under this Stipulation, and the making of this Stipulation

shall be without prejudice to any party in this or any other

proceedings.

5. The parties request that the Court acknowledge the terms of this

stipulation by entering the Order in this Stipulation and Order.

Respectfully submitted,

For Plaintiff United States of America:

Jill A. Ptacek,

J. Richard Doidge,

Attorneys, Antitrust Division, U.S. Department of Justice, 325 Seventh

Street, N.W., Washington, D.C. 20004, (202) 307-0468.

For Defendant Omnipoint Corporation:

Michael F. Brockmeyer, Esq.,

Piper & Marbury L.L.P. Charles Center South, 36 South Charles Street,

Baltimore, MD 21201-3018, (410) 576-1890.

Order

It is so ordered, this ______ day of ________, 1998.

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United States District Court Judge

Certificate of Service

I hereby certify that I have caused a copy of the foregoing

Complaint, Competitive Impact Statement and proposed Final Judgment to

be served on counsel for the defendant in this matter in the manner set

forth below:

By first class mail, postage prepaid, and by facsimile:

Michael F. Brockmeyer, Esquire, Piper & Marbury L.L.P., 36 South

Charles Street, Baltimore, MD 21201-3018

Jill Ptacek,

Antitrust Division, U.S. Department of Justice, 325 Seventh Street,

N.W., Suite 500, Washington, D.C. 20530, (202) 307-6607, (202) 616-2441

(Fax).

Final Judgment

Plaintiff, United States of America, filed its Complaint on

November 10,

[[Page 65229]]

1998. Plaintiff and the Defendant, by their respective attorneys, have

consented to the entry of this Final Judgment without trial or

adjudication of any issue of fact or law. This Final Judgment shall not

be evidence against or an admission by any party with respect to any

issue of fact or law. Therefore, before the taking of any testimony,

without trial or adjudication of any issue of fact or law herein, and

upon consent of the parties, it is hereby ordered, adjudged, and

decreed, as follows:

I. Jurisdiction

This Court has jurisdiction of the subject matter of this action

and of each of the parties consenting hereto. Venue is proper in the

District of Columbia. The Complaint states a claim upon which relief

may be granted against the defendant under Section 1 of the Sherman

Act, 15 U.S.C. 1.

II. Definitions

As used herein, the term:

(A) ``Defendant'' means Omnipoint Corporation, its successors,

assigns, subsidiaries, divisions, groups, affiliates, partnerships and

joint ventures, directors, officers, managers, agents, and employees.

(B) ``Document'' means all ``writings and recordings'' as that

phrase is defined in Rule 1001(1) of the Federal Rules of Evidence.

(D) ``License-identifying information'' means any number, letter,

code or description that designates a license or that links licenses.

(E) ``Person'' means any natural person, corporation, firm,

company, sole proprietorship, partnership, association, institution,

governmental unit, public trust, or other legal entity.

III. Applicability

(A) This Final Judgment applies to the Defendant, to its

successors, and assigns, and to all other persons in active concert or

participation with any of them who shall have received actual notice of

the Final Judgment by personal service or otherwise.

(B) Nothing herein contained shall suggest that any portion of this

Final Judgment is or has been created for the benefit of any third

party and nothing herein shall be construed to provide any rights to

any third party.

IV. Prohibited Conduct

The Defendant is enjoined and restrained from:

(A) Entering into any agreement with any other license applicant to

fix, establish, suppress or maintain the price for any license to be

awarded by the FCC in an auction, or to allocate any such licenses

amongst competitors, provided, however, that nothing in this provision

shall prohibit the Defendant from participating in any bidding

consortium, teaming arrangement or other joint venture authorized under

the rules and regulations of the FCC pertaining to future auctions, and

disclosed to the FCC.

(B) In the course of any auction conducted pursuant to the rules

and regulations of the FCC, offering any price to the FCC for the

lease, purchase, or right to use any FCC-awarded license, that includes

within that price any license-identifying information, unless the

inclusion of such information is required by the FCC.

V. Compliance Program

The Defendant is ordered to maintain an antitrust compliance

program, which shall include the following:

(A) Designating, within 30 days of entry of this Final Judgment, an

Antitrust Compliance Officer with responsibility for accomplishing the

antitrust compliance program and with the purpose of achieving

compliance with this Final Judgment. The Antitrust Compliance Officer

shall, on a continuing basis, supervise the review of the current and

proposed activities of the Defendant to ensure that it complies with

this Final Judgment.

(B) The Antitrust Compliance Officer shall be responsible for:

(1) Distributing within 60 days of the entry of this Final

Judgment, a copy of this Final Judgment to (a) all officers and

directors of the Defendant, and (b) to all employees who have any

responsibility for formulating, proposing, recommending, establishing,

approving, implementing or submitting the Defendant's prices in FCC-

conducted license auctions;

(2) Distributing in a timely manner a copy of this Final Judgment

to any officer, director or employee who succeeds to a position

described in Section V (B)(1);

(3) Obtaining from each present or future officer, director or

employee designated in Section V(B)(1), within 60 days of entry of this

Final Judgment or of the person's succession to a designated position,

a written certification that he or she: (1) Has read, understands, and

agrees to abide by the terms of this Final Judgment; and (2) has been

advised and understands that his or her failure to comply with this

Final Judgment may result in conviction for criminal contempt of court;

(4) Maintaining a record of persons to whom the Final Judgment has

been distributed and from whom, pursuant to Section V(B)(3), the

certification has been obtained; and

(5) Reporting to the Plaintiff any violation of the Final Judgment.

VI. Certification

Within 75 days after the entry of this Final Judgment, the

Defendant shall certify to the Plaintiff whether it has complied with

Sections V (B)(1) and (B)(3) above.

VII. Plaintiff Access

(A) To determine or secure compliance with this Final Judgment and

for no other purpose, duly authorized representatives of the Plaintiff

shall, upon written request of the Assistant Attorney General in charge

of the Antitrust Division, and on reasonable notice to the defendant

made to its principal office, be permitted, subject to any legally

recognized privilege:

(1) Access during the Defendant's office hours to inspect and copy

all documents in the possession or under the control of the Defendant,

who may have counsel present, relating to any matters contained in this

Final Judgment, and

(2) Subject to the reasonable convenience of the Defendant and

without restraint or interference from it, to interview officers,

employees or agents of the Defendant, who may have counsel present,

regarding such matters.

(B) Upon the written request of the Assistant Attorney General in

charge of the Antitrust Division made to the Defendant's principal

office, the Defendant shall submit such written reports, under oath if

requested, relating to any matters contained in this Final Judgment as

may be reasonably requested, subject to any legally recognized

privilege.

Section VII shall be divulged by the Plaintiff to any person other than

a duly authorized representative of the Executive Branch of the United

States, except in the course of legal proceedings to which the United

States is a party, or for the purpose of securing compliance with this

Final Judgment, or as otherwise required by law.

(D) If at the time information or documents are furnished by the

Defendant to Plaintiff, the Defendant represents and identifies in

writing the material in any such information or documents to which a

claim of protection may be asserted under Rule 26(c)(7) of the Federal

Rules of Civil

[[Page 65230]]

Procedure, and Defendant marks each pertinent page of such material,

``Subject to claim of protection under Rule 26(c)(7) of the Federal

Rules of Civil Procedure,'' then 10 days' notice shall be given by

Plaintiff to the Defendant prior to divulging such material in any

legal proceeding (other than a grand jury proceeding) to which

Defendant is not a party.

VIII. Further Elements of the Final Judgment

(A) This Final Judgment shall expire ten years from the date of its

entry.

(B) Jurisdiction is retained by this Court for the purpose of

enabling the parties to this Final Judgment to apply to this Court at

any time for further orders and directions as may be necessary or

appropriate to carry out or construe this Final Judgment, to modify or

terminate any of its provisions, to enforce compliance, and to punish

violations of its provisions.

Dated: ________.

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United States District Judge

Competitive Impact Statement

The United States of America, pursuant to Section 2(b) of the

Antitrust Procedures and Penalties Act (``APPA''), 15 U.S.C.

Sec. 16(b)-(h), files this Competitive Impact Statement relating to the

proposed Final Judgment submitted for entry in this civil antitrust

proceeding.

I. Nature and Purpose of This Proceeding

On November 10, 1998, the United States filed a civil antitrust

complaint alleging that the defendant, Omnipoint Corporation

(``Omnipoint''), had violated Section 1 of the Sherman Act, 15 U.S.C.

Sec. 1. Omnipoint, through its affiliate Omnipoint PCS Entrepreneurs

Two, Inc., participated in an auction (the ``DEF auction'') of

broadband radio spectrum licenses for personal communication services

(``PCS'') that was conducted by the Federal Communications Commission

(``FCC'') between August 1996 and January 1997. The Complaint alleges

that during the DEF auction Omnipoint submitted bids that ended with

three-digit numerical codes to communicate with rival bidders and that,

through the use of these coded bids, Omnipoint and one of its rivals

reached an agreement to refrain from bidding against one another. As a

consequence of this agreement, the complaint alleges Omnipoint and its

competitor paid less for certain PCS licenses, resulting in a loss of

revenue to the Treasury of the United States.

On November 10, 1998, the United States and Omnipoint filed a

Stipulation and Order in which they consented to the entry of a

proposed Final Judgment that provides the relief that the United States

seeks in the Complaint. Under the proposed Final Judgment, Omnipoint

would be enjoined from submitting coded bids in future FCC auctions and

entering into any agreement related to bidding for FCC licenses that

violates Section 1 of the Sherman Act, 15 U.S.C. Sec. 1.

The United States and Omnipoint have stipulated that the proposed

Final Judgment may be entered after compliance with the APPA. Entry of

the Final Judgment would terminate the action, except that the Court

would retain jurisdiction to construe, modify, or enforce its

provisions and to punish violations thereof.

II. Description of the Events Giving Rise to the Alleged Violation

A. Background of the PCS Auctions

In 1993, Congress enacted legislation enabling the FCC to auction

licenses for radio spectrum that could be used to provide PCS. Based on

a wireless, digital technology, PCS offers an alternative to current

traditional telephone services.

The FCC designated six bands of broadband radio spectrum for PCS:

A, B, C, D, E and F. The A, B and C bands occupy 30 MHZ each, while the

D, E and F licenses are 10 MHZ each. The FCC divided the country into

51 geographic areas called Market Trading Areas (``MTAs''), which were

each allotted A and B licenses. The FCC subdivided the MTAs into 493

smaller geographic units called Basic Trading Areas (``BTAs''), which

were each allotted C, D, E, and F licenses. Each BTA was assigned a

number from 1 to 493.

The authorizing legislation required the FCC to adopt rules

ensuring competitive auctions, and the FCC considered numerous auction

formats for PCS, ultimately adopting a simultaneous, multiple-round,

open format. Under this format, numerous licenses were offered in a

single auction, staged over several rounds, with all licenses remaining

open for bidding until the auction closed. Auction participants could

observe all of the bidding activity in each round. The auction ended

only when a round passed in which no bidder submitted a bid on any

license.

To keep the auction moving forward, the FCC imposed eligibility

limits and activity rules. The FCC gave each license a population value

called ``MHZ-pops.'' Each bidder made down payments to the FCC, with

the size of the payment entitling it to bid for a certain amount of

MHZ-pops. A participant could bid on any combination of licenses as

long as the combined MHZ-pops of those licenses did not exceed the MHZ-

pops to which the bidder's down payment entitled it (eligibility).

Bidders also had to be ``active'' in each round (bid or have the high

bid from the prior round) on licenses representing a set percentage of

their MHZ-pops; otherwise, the FCC reduced their eligibility for the

next round. As the auction proceeded, the bidders had to bid an

increasing percentage of their MHZ-pops until in the final stages they

had to bid nearly all of their eligibility.

Each round in the auction began with a bid submission period during

which participants submitted bids electronically or by telephone for

any of the licenses in which they were interested. After each bid

submission period, the FCC published electronically to all bidders the

results for each license, including the name of each company bidding,

the amount of each bid, and the time each bid was submitted. The high

bidder for a license in a round became the ``standing high'' bidder for

that license with a tie going to the earliest bidder.

A bid withdrawal period then followed. During this period, bidders

were permitted to withdraw their standing high bids from any market,

subject to a withdrawal penalty specified by the FCC. The FCC then

published the results. The bid submission and withdrawal periods

comprised an auction round.

At the beginning of an auction, the FCC generally held one round

per day. As the auction progressed, the FCC increased the number of

rounds held in a single day, providing a period of time between rounds

for auction participants to analyze the bidding from the prior round

and to plan for the next round.

One goal of the FCC was to ensure the efficient allocation of

licenses, that is, that the licenses would go to the bidders who valued

them most highly. The simultaneous, multiple-round format of the PCS

auctions helped achieve this goal in several ways. It allowed bidders

to pursue different license aggregation strategies and change their

strategies as the auction proceeded. In addition, it allowed auction

participants to observe the value that other bidders placed on the

licenses and use that information to refine their own assessment of

license values. This was particularly useful

[[Page 65231]]

given that the technology used for PCS was new and bidders were

uncertain about both the costs of providing the services and the

prospective revenues. Ultimately, because the licenses were awarded to

the highest bidders, the PCS auction format allowed the marketplace to

determine the most efficient allocation of licenses.

Nothwithstanding these benefits of the auction format, the FCC

recognized the risk that ``collusive conduct by bidders prior to or

during the auction process could undermine the competitiveness of the

bidding process.'' Second Report and Order, FCC 94-61, para. 223 (Rel.

April 20, 1994). The FCC sought to mitigate the risk of collusion by

adopting rules restricting the disclosure of bidding strategies during

the auction. The FCC noted, however, that Federal antitrust laws

applied to the auctions and it would rely primarily on those laws to

deter and punish collusion in the auctions. Second Report and Order,

supra, at para. 225; Second Memorandum Opinion and Order, FCC 94-215,

para. 50 (Rel. August 15, 1994).

B. Illegal Agreement To Allocate Licenses in the DEF Auction

The auction of the D, E and F licenses for all 493 BTAs began in

August 1996. Because there were three bands being auctioned, the DEF

auction involved a total of 1479 licenses. Lasting 276 rounds, the

auction ended in January 1997.

Prior to the DEF auction, bidders analyzed which licenses (or

groups of licenses) would best enable them to provide effective and

competitive service, assessed the value they placed on those licenses,

and developed strategies to obtain the desired licenses for the lowest

possible prices. The bidders also speculated about their rivals'

business strategies and attempted to identify the key licenses for

those strategies, relying on an array of information, including

knowledge of the licenses bidders had acquired in prior auctions.

As the auction proceeded, bidders carefully observed their rivals'

actions and often adjusted their own market valuations and business

strategies, sometimes based on their assessment of their rivals'

objectives. Their rivals' bids however, did not necessarily reveal

their true objectives. An auction participant might bid for a

particular license during a particular round for a number of reasons:

It may have always wanted the license, but for strategic reasons

refrained from bidding until then; it may have changed its business

strategy and decided that it now wanted the license; it may have seen

an opportunity to acquire an undervalued license; it may have bid

simply to preserve its eligibility to bid on other licenses later in

the auction; it may have bid to raise a rival's cost to obtain the

license; or it may have bid to send a message to the standing high

bidder to refrain from bidding against it for a different license.

Thus, the purpose of a particular bid might be procompetitive or

anticompetitive.

A bidder's purpose is making a bid might, depending on the

circumstances, be ambiguous to its rivals. Where ambiguity remains, it

can be difficult to use a bid or bidding pattern alone to send clear

messages or invitations to collude. To eliminate or reduce any

ambiguity, Omnipoint sometimes placed bids during the DEF auction in

which the final three digits intentionally corresponded to the number

for a BTA (a ``BTA end code''). Knowing that other bidders could see

the bids and hence the BTA end codes, Omnipoint used the codes to

better explain the real purpose of certain bids it made--to reach an

agreement with a rival. In particular, Omnipoint used the BTA end codes

to link the bidding of licenses in two (or more) specific BTA markets,

highlight the licenses Omnipoint wanted, and convey to the competing

bidders' offers to agree with Omnipoint not to bid against each other

for the linked licenses.

Sometimes Omnipoint placed bids in one market with the BTA end code

of another market to send the message: ``I'm bidding for this license

because you bid for the one I want (indicated by the BTA code) and I'll

stop bidding in your market if you stop bidding in mine.'' Other times,

Omnipoint used the BTA end codes to tell its rival: ``If you don't stop

bidding for this license, I will bid for the one you want (indicated by

the BTA code).''

Ominipoint's use of the BTA end codes did not serve any legitimate

purpose of the auction. Omnipoint's purpose for using BTA end codes was

to send clear and unmistakable invitations to collude to rival bidders

and to reach agreements with those rivals to refrain from bidding

against each other. Such conduct was not authorized by the applicable

FCC rules and was inconsistent with the FCC's goal to encourage

competitive bidding.

Over the course of rounds 167 to 172, Omnipoint reached an

agreement with NextWave Telecom, Inc. (``NextWave'') to allocate

between them the F-band licenses for Toledo, OH (BTA #444), Salisbury,

MD (BTA #398), and Lancaster, PA (BTA #240). Omnipoint agreed to stop

bidding for the Salisbury and Lancaster-F licenses in exchange for

NextWave's agreement not to bid for the Toledo-F license. (The bidding

for the Toledo, Salisbury, and Lancaster-F licenses between rounds 167

and 172 is depicted in the table attached as Appendix A to this

Competitive Impact Statement.)

Prior to round 167, Omnipoint had the high bid in Salisbury-F and

had bid intermittently in earlier rounds for the F license in Lancaster

and Toledo. NextWave had the standing high bids for the Lancaster and

Toledo-F licenses. In round 167, NextWave placed the high bid for

Salisbury-F. Omnipoint bid for Toledo-F in round 168. NextWave won back

the Toledo license in round 169.

In round 170, Omnipoint placed bids for the Toledo, Salisbury and

Lancaster-F licenses. Omnipoint's bids for Salisbury and Lancaster

licenses ended in ``444''--the BTA number for Toledo. Omnipoint

withdrew its Salisbury and Lancaster bids that same round, only to bid

again for the two licenses in round 171, this time for lower prices

than it had bid in round 170. Ominpoint's use of the BTA end codes

established a link between the Salisbury and Lancaster-F licenses and

the Toledo-F license.

NextWave saw the BTA end codes and understood that Omnipoint

proposed to stop bidding in Salisbury and Lancaster in exchange for

NextWave ceasing to bid for the Toledo-F license. In round 171,

NextWave bid back over Omnipoint for the Salisbury and Lancaster-F

licenses. NextWave accepted Omnipoint's offer and stopped bidding for

Toledo-F even though it was willing to pay more for the Toledo-F

license than Omnipoint's standing high bid for that license. Observing

that NextWave had stopped bidding for Toledo-F, Omnipoint then stopped

bidding for Salisbury-F and Lancaster-F.

Omnipoint's purpose for using the BTA end codes was to link the

Salisbury, Lancaster and Toledo-F licenses, highlight the bids as

retaliatory, and communicate an offer to stop bidding for Salisbury and

Lancaster if NextWave stopped bidding for Toledo-F. Omnipoint believed

that the Salisbury and Lancaster licenses were important to NextWave.

The Salisbury and Lancaster licenses complemented the licenses that

NextWave was holding in the Philadelphia and Washington, D.C. areas.

As a consequence of Omnipoint's agreement with NextWave,

competition for the Toledo-F license was suppressed and the Treasury

received less revenue for the Toledo-F license. It was in NextWave's

economic self-interest to bid more for the Toledo-F license than

Omnipoint's winning bid and, but for

[[Page 65232]]

the illegal agreement, it would have done so.

III. Explanation of the Proposed Final Judgment

The provisions of the proposed Final Judgment are designed to

ensure that Omnipoint does not enter into anticompetitive agreements

when participating in future FCC auctions. The decree supplements any

prohibitions on bidding conduct set forth in the FCC's auction rules,

and the defendant may violate the decree even if its conduct does not

violate an agency statute or rule.

The proposed Final Judgment would enjoin Omnipoint from entering

into an agreement with another license applicant to fix, establish,

suppress or maintain the price of a license to be awarded by the FCC or

to allocate any such licenses among competitors (Section IV(A)). The

proposed Final Judgment would not prevent Omnipoint from entering into

any joint-venture or similar agreements regarding licenses to be

awarded by the FCC that are both disclosed to the FCC and authorized

under the FCC's rules and regulations. (Section IV(A)). However, such

bidding arrangements would still be subject to scrutiny under the

antitrust laws.

The proposed Final Judgment would also prevent Omnipoint from using

BTA end codes or any similar signaling mechanism to solicit

anticompetitive agreements in future FCC auctions. The proposed Final

Judgment would enjoin Omnipoint from submitting bids that contain

``license-identifying information'' in future FCC auctions, unless the

inclusion of such information is required by the FCC (Section IV(B)).

License-identifying information is defined as ``any number, letter,

code or description that designates a license or that links licenses.''

(Section II(D)).

The proposed Final Judgment would further require Omnipoint to

establish and maintain an antitrust compliance program (Section V). It

would also provide that the United States may obtain information from

Omnipoint concerning possible violations of the Final Judgment (Section

VII).

IV. Remedies Available to Potential Private Litigants

Section 4 of the Clayton Act, 15 U.S.C. Sec. 15, provides that any

person who has been injured as a result of conduct prohibited by the

antitrust laws may bring suit in federal court to recover three times

the damages the person has suffered, as well as costs and reasonable

attorneys' fees. Entry of the proposed Final Judgment will neither

impair nor assist the bringing of any private antitrust damage action.

Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C.

Sec. 16(a), the proposed Final Judgment has no prima facie effect in

any subsequent private lawsuit that may be brought against Omnipoint.

In this case, the injured person is the United States.

V. Procedures Available for Modification of the Proposed Final Judgment

The United States and Omnipoint have stipulated that the proposed

Final Judgment may be entered by the Court after compliance with the

provisions of the APPA, provided that the United States has not

withdrawn its consent. The APPA conditions entry upon the Court's

determination that the proposed Final Judgment is in the public

interest.

The APPA provides a period of at least sixty days preceding the

effective date of the proposed Final Judgment within which any person

may submit to the United States written comments regarding the proposed

Final Judgment. Any person who wishes to comment should do so within

sixty days of the date of publication of this Competitive Impact

Statement in the Federal Register. The United States will evalaute and

respond to the comments. All comments will be given due consideration

by the Department of Justice, which remains free to withdraw its

consent to the proposed Final Judgment at any time prior to entry. The

comments and the responses of the United States will be filed with the

Court and published in the Federal Register. Written comments should be

submitted to: Roger W. Fones, Chief, Transportation, Energy &

Agriculture Section, Antitrust Division, United States Department of

Justice, 325 Seventh Street, N.W., Suite 500, Washington, D.C. 20530.

The proposed Final Judgment provides that the Court retains

jurisdiction over this action, and the parties may apply to the Court

for any order necessary or appropriate for the modification,

interpretation, or enforcement of the Final Judgment. The proposed

Final Judgment would expire ten (10) years from the date of its entry.

VI. Alternatives to the Proposed Final Judgment

The United States considered, as an alternative to the proposed

Final Judgment, seeking damages in this case pursuant to section 4A of

the Clayton Act, 15 U.S.C. Sec. 15a. Doing so would likely have

required a full trial on the merits against Omnipoint. In the view of

the Department of Justice, undertaking the substantial cost and the

risk associated with such a trial is not warranted, considering that

the proposed Final Judgment provides full injunctive relief for the

violations of the Sherman Act set forth in the Complaint.

VII. Standard of Review Under the APPA for Proposed Final Judgment

The APPA requires that proposed consent judgments in antitrust

cases brought by the United States be subject to a sixty-day comment

period, after which the court shall determine whether entry of the

proposed Final Judgment ``is in the public interest.'' In making that

determination, the court may consider:

(1) The competitive impact of such judgment, including

termination of alleged violations, provisions for enforcement and

modification, duration of relief sought, anticipated effects of

alternative remedies actually considered, and any other

considerations bearing upon the adequacy of such judgment;

(2) The impact of entry of such judgment upon the public

generally and individuals alleging specific injury from the

violations set forth in the compliant including consideration of the

public benefit, if any, to be derived from a determination of the

issues at trial.

15 U.S.C. Sec. 16(e). As the Court of Appeals for the District of

Columbia Circuit recently held, the APPA permits a court to consider,

among other things, the relationship between the remedy secured and the

specific allegations set forth in the government's complaint, whether

the decree is sufficiently clear, whether enforcement mechanisms are

sufficient, and whether the decree may positively harm third parties.

See United States v. Microsoft, 56 F.3d 1448 (D.C. Cir. 1995).

In conducting that inquiry, ``the Court is nowhere compelled to go

to trial or to engage in extended proceedings which might have the

effect of vitiating the benefits of prompt and less costly settlement

through the consent decree process.'' \1\ Rather, absent a showing of

corrupt failure of the government to discharge its duty, the Court, in

making its public interest finding, should * * * carefully consider the

explanations of the government in the competitive

[[Page 65233]]

impact statement and its responses to comments in order to determine

whether those explanations are reasonable under the circumstances.

United States v. Mid-America Dairymen, Inc., 1977-1 Trade Case

para.61,508, at 71,980 (W.D. Mo. 1977).

---------------------------------------------------------------------------

\1\ 119 Cong. Rec. 24598 (1973); see also United States v.

Gillette Co., 406 F. Supp. 713, 715 (D. Mass. 1975). A ``public

interest'' determination can be made properly on the basis of the

Competitive Impact Statement and Response to Comments filed pursuant

to the APPA. Although the APPA authorizes the use of additional

procedures, 15 U.S.C. Sec. 16(f), those procedures are

discretionary. A court need not invoke any of them unless it

believes that the comments have raised significant issues and that

further proceedings would aid the court in resolving those issues.

See H.R. 93-1463, 93rd Cong. 2d Sess. 8-9, reprinted in 1974 U.S.

C.C.A.N. 6535, 6538.

---------------------------------------------------------------------------

Accordingly, with respect to the adequacy of the relief secured by

the decree, a court may not ``engage in an unrestricted evaluation of

what relief would best serve the public.'' United States v. BNS, Inc.,

858 F.2d 456, 462 (9th Cir. 1988), quoting United States v. Bechtel

Corp., 648 F.2d 660, 666 (9th Cir. 1981); see also, Microsoft, 56 F.3d

1448 (D.C. Cir. 1995). Precedent requires that:

[t]he balancing of competing social and political interests affected

by a proposed antitrust consent decree must be left, in the first

instance, to the discretion of the Attorney General. The court's

role in protecting the public interest is one of insuring that the

government has not breached its duty to the public in consenting to

the decree. The court is required to determine not whether a

particular decree is the one that will best serve society, but

whether the settlement is `within the reaches of the public

interest.' More elaborate requirements might undermine the

effectiveness of antitrust enforcement by consent decree.\2\

\2\ United States v. Bechtel, 648 F.2d at 666 (internal

citations omitted) (emphasis added); see United States v. BNS, Inc.,

858 F.2d at 463; United States v. National Broadcasting Co., 449 F.

Supp. 1127, 1143 (C.D. Cal. 1978); Gillette, 406 F. Supp. at 716;

see also United States v. American Cyanamid Co., 719 F.2d 558, 565

(2d Cir. 1983).

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The proposed Final Judgment, therefore, should not be reviewed

under a standard of whether it is certain to eliminate every

anticompetitive effect of a particular practice or whether it mandates

certainty of free competition in the future. Court approval of a final

judgment requires a standard more flexible and less strict than the

standard required for a finding of liability. ``[A] proposed decree

must be approved even if it falls short of the remedy the court would

impose on its own, as long as it falls within the range of

acceptability or is `within the reaches of public interest.' (citations

omitted).'' \3\

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\3\ United States v. American Tel. & Tel. Co., 552 F. Supp. 131,

150 (D.D.C. 1982), aff'd sub nom, Maryland v. United States, 460

U.S. 1001 (1983), quoting Gillette, 406 F. Supp. at 716; United

States v. Alcan Aluminum, Ltd., 605 F. Supp. 619, 622 (W.D. Ky.

1985).

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VIII. Determinative Materials and Documents

There are no determinative materials or documents within the

meaning of the APPA that were considered by the United States in

formulating the proposed Final Judgment.

Dated: __________.

Respectfully submitted,

Jill A. Ptacek

J. Richard Doidge,

Attorneys, Transportation, Energy, and U.S. Department of Justice,

Antitrust Division, Transportation, Energy, and Agriculture Section,

325 7th Street, Suite 500, Washington, D.C. 20530, (202) 307-6351.

Appendix A

[Bids for Lancaster-F, Salisbury-F, and Toledo-F in rounds 167 through 172]

----------------------------------------------------------------------------------------------------------------

Round Lancaster-F (BTA #240) Salisbury-F (BTA #398) Toledo-F (BTA #444)

----------------------------------------------------------------------------------------------------------------

166.................................. [Standing high bidder [Standing high bidder [Standing high bidder

as of round 47-- as of round 11-- as of round 146--

NextWave]. Omnipoint]. NextWave].

167.................................. ....................... NextWave 51,000....... .......................

168.................................. ....................... ....................... Omnipoint 1,251,015.

169.................................. ....................... ....................... NextWave 1,377,001.

170.................................. Omnipoint 513,444..... Omnipoint 67,444...... Omnipoint 1,515,002.

Omnipoint Withdrawal.. Omnipoint Withdrawal.. .......................

171.................................. NextWave 514,000...... NextWave 68,000....... .......................

Omnipoint 512,444..... Omnipoint 66,444...... .......................

172 and thereafter................... No further bids........ No further bids........ No further bids.

----------------------------------------------------------------------------------------------------------------

Stipulation and Order

It is hereby stipulated by and between the undersigned parties, by

their respective attorneys, as follows:

1. The Court has jurisdiction over the subject matter of this

action and over each of the parties hereto, and venue of this action is

proper in the United States District Court for the District of

Columbia.

2. The parties stipulate that a Final Judgment in the form hereto

attached may be filed and entered by the Court, upon the motion of any

party or upon the Court's own motion, at any time after compliance with

the requirements of the Antitrust Procedure and Penalties Act (15

U.S.C. Sec. 16), and without further notice to any party or other

proceeding, provided that plaintiff has not withdrawn its consent,

which it may do at any time before the entry of the proposed Final

Judgment by serving notice thereof on defendants and by filing that

notice with the Court.

3. The defendant shall abide by and comply with the provisions of

the proposed Final Judgment pending entry of the Final Judgment by the

Court and shall, from the date of the signing of this Stipulation by

the parties, comply with all the terms and provisions of the proposed

Final Judgment as though they were in full force and effect as an order

of the Court.

4. In the event that plaintiff withdraws its consent, as provided

in paragraph 2 above, then the parties are released from all further

obligations under this Stipulation, and the making of this Stipulation

shall be without prejudice to any party in this or any other

proceeding.

5. The parties request that the Court acknowledge the terms of this

Stipulation by entering the Order in this Stipulation and Order.

Respectfully submitted,

For Plaintiff United States of America:

Jill A. Ptacek

J. Richard Doidge,

Attorneys, Antitrust Division, U.S. Department of Justice, 325 Seventh

Street, N.W., Washington, D.C. 20004, (202) 307-0468.

For Defendant Mercury PCS II, L.L.C.:

Charles A. James, Esq.,

Jones, Day, Reavis & Pogue,

Metropolitan Square, 1450 G Street, N.W., Washington, D.C. 20005, (202)

879-3675.

Order

It is so ordered, this ______ day of ________, 1998.

----------------------------------------------------------------------

United States District Court Judge

[[Page 65234]]

Certificate of Service

I hereby certify that I have caused a copy of the foregoing

Complaint, Competitive Impact Statement and proposed Final Judgment to

be served on counsel for the defendant in this matter in the manner set

forth below:

By first class mail, postage prepaid, and by facsimile:

Charles A. James, Esquire, Jones, Day, Reavis & Pogue, Metropolitan

Square, 1450 G Street, Washington, D.C. 20005

Jill Ptacek,

Antitrust Division, U.S. Department of Justice, 325 Seventh Street,

N.W., Suite 500, Washington, D.C. 20530, (202) 307-6607, (202) 616-2441

(Fax).

Final Judgment

Plaintiff, United States of America, filed its Complaint on

November 10, 1998. Plaintiff and the Defendant, by their respective

attorneys, have consented to the entry of this Final Judgment without

trial or adjudication of any issue of fact or law. This Final Judgment

shall not be evidence against or an admission by any party with respect

to any issue of fact or law. Therefore, before the taking of any

testimony, without trial or adjudication of any issue of fact or law

herein, and upon consent of the parties, it is hereby ordered,

adjudged, and decreed, as follows:

I. Jurisdiction

This Court has jurisdiction of the subject matter of this action

and of each of the parties consenting hereto. Venue is proper in the

District of Columbia. The Complaint states a claim upon which relief

may be granted against the Defendant under Section 1 of the Sherman

Act, 15 U.S.C. Sec. 1.

II. Definitions

As used herein, the term:

(A) ``Defendant'' means Mercury PCS II, L.L.C., its successors,

assigns, subsidiaries, divisions, groups, affiliates, partnerships and

joint ventures, directors, officers, managers, agents, and employees.

(B) ``Document'' means all ``writings and recordings'' as that

phrase is defined in Rule 1001(1) of the Federal Rules of Evidence.

(D) ``License-identifying information'' means any number, letter,

code or description that designates or identifies a license or that

links licenses.

(E) ``Person'' means any natural person, corporation, firm,

company, sole proprietorship, partnership, association, institution,

governmental unit, public trust, or other legal entity.

III. Applicability

(A) This Final Judgment applies to the Defendant, to its

successors, and assigns, and to all other persons in active concert or

participation with any of them who shall have received actual notice of

the Final Judgment by personal service or otherwise.

(B) Nothing herein contained shall suggest that any portion of this

Final Judgment is or has been created for the benefit of any third

party and nothing herein shall be construed to provide any rights to

any third party.

IV. Prohibited Conduct

The Defendant is enjoined and restrained from:

(A) Entering into any agreement with any other license applicant to

fix, establish, suppress or maintain the price for any license to be

awarded by the FCC in an auction, or to allocate any such licenses

amongst competitors, provided, however, that nothing in this provision

shall prohibit the Defendant from participating in any bidding

consortium, teaming arrangement or other joint venture authorized under

the rules and regulations of the FCC pertaining to future auctions, and

disclosed to the FCC.

(B) In the course of any auction conducted pursuant to the rules

and regulations of the FCC, offering any price to the FCC for the

lease, purchase, or right to use any FCC-awarded license, that includes

within that price any license-identifying information, unless the

inclusion of such information is required by the FCC.

V. Compliance Program

The Defendant is ordered to maintain an antitrust compliance

program, which shall include the following:

(A) Designating, within 30 days of entry of this Final Judgment, an

Antitrust Compliance Officer with responsibility for accomplishing the

antitrust compliance program and with the purpose of achieving

compliance with this Final Judgment. The Antitrust Compliance Officer

shall, on a continuing basis, supervise the review of the current and

proposed activities of the Defendant to ensure that it complies with

this Final Judgment.

(B) The Antitrust Compliance Officer shall be responsible for:

(1) Distributing within 60 days of the entry of this Final

Judgment, a copy of this Final Judgment to (a) all officers and

directors of the Defendant; and (b) to all employees who have any

responsibility for formulating, proposing, recommending, establishing,

approving, implementing or submitting the Defendant's prices in FCC-

conducted license auctions;

(2) Distributing in a timely manner a copy of this Final Judgment

to any officer, director or employee who succeeds to a position

described in Section V(B)(1);

(3) Obtaining from each present or future officer, director or

employee designated in Section V(B)(1), within 60 days of entry of this

Final Judgment or of the person's succession to a designated position,

a written certification that he or she: (1) has read, understands, and

agrees to abide by the terms of this Final Judgment; and (2) has been

advised and understands that his or her failure to comply with this

Final Judgment may result in conviction for criminal contempt of court;

(4) Maintaining a record of persons to whom the Final Judgment has

been distributed and from whom, pursuant to Section VI(B)(3), the

certification has been obtained; and

(5) Reporting to the Plaintiff any violation of the Final Judgment.

VI. Certification

Within 75 days after the entry of this Final Judgment, the

Defendant shall certify to the Plaintiff whether it has complied with

Sections V(B)(1) and (B)(3) above.

VII. Plaintiff Access

(A) To determine or secure compliance with this Final Judgment and

for no other purpose, duly authorized representatives of the Plaintiff

shall, upon written request of the Assistant Attorney General in charge

of the Antitrust Division, and on reasonable notice to the defendant

made to its principal office, be permitted, subject to any legally

recognized privilege:

(1) Access during the Defendant's office hours to inspect and copy

all documents in the possession or under the control of the Defendant,

who may have counsel present, relating to any matters contained in this

Final Judgment; and

(2) Subject to the reasonable convenience of the Defendant and

without restraint or interference from it, to interview officers,

employees or agents of the Defendant, who may have counsel present,

regarding such matters.

(B) Upon the written request of the Assistant Attorney General in

charge of the Antitrust Division made to the Defendant's principal

office, the Defendant shall submit such written reports, under oath if

requested, relating to any matters contained in this Final

[[Page 65235]]

Judgment as may be reasonably requested, subject to any legally

recognized privilege.

Section VII shall be divulged by the Plaintiff to any person other than

a duly authorized representative of the Executive Branch of the United

States, except in the course of legal proceedings to which the United

States is a party, or for the purpose of securing compliance with this

Final Judgment, or as otherwise required by law.

(D) If at the time information or documents are furnished by the

Defendant to Plaintiff, the Defendant represents and identifies in

writing the material in any such information or documents to which a

claim of protection may be asserted under Rule 26(c)(7) of the Federal

Rules of Civil Procedure, and Defendant marks each pertinent page of

such material, ``Subject to claim of protection under Rule 26(c)(7) of

the Federal Rules of Civil Procedure,'' then 10 days' notice shall be

given by Plaintiff to the Defendant prior to divulging such material in

any legal proceeding (other than a grand jury proceeding) to which

Defendant is not a party.

VIII. Further Elements of the Final Judgment

(A) This Final Judgment shall expire ten years from the date of its

entry.

(B) Jurisdiction is retained by this Court for the purpose of

enabling the parties to this Final Judgment to apply to this Court at

any time for further orders and directions as may be necessary or

appropriate to carry out or construe this Final Judgment, to modify or

terminate any of its provisions, to enforce compliance, and to punish

violations of its provisions.

Dated: ________.

----------------------------------------------------------------------

United States District Judge

Competitive Impact Statement

The United States of America, pursuant to Section 2(b) of the

Antitrust Procedures and Penalties Act (``APPA''), 15 U.S.C.

Sec. 16(b)-(h), files this Competitive Impact Statement relating to the

proposed Final Judgment submitted for entry in this civil antitrust

proceeding.

I. Nature and Purpose of This Proceeding

On November 10, 1998, the United States filed a civil antitrust

complaint alleging that the defendant, Mercury PCS II, L.L.C.

(``Mercury''), had violated Section 1 of the Sherman Act, 15 U.S.C.

Sec. 1. Mercury participated in an auction (the ``DEF auction'') of

broadband radio spectrum licenses for personal communications service

(``PCS'') that was conducted by the Federal Communications Commission

(``FCC'') between August 1996 and January 1997. The Complaint alleges

that during the DEF auction Mercury submitted bids that ended with

three-digit numerical codes to communicate with rival bidders and that,

through the use of these coded bids, Mercury and one of its rivals

reached an agreement to refrain from bidding against one another. As a

consequence of this agreement, the complaint alleges Mercury and its

competitor paid less for certain PCS licenses, resulting in a loss of

revenue of the Treasury of the United States.

On November 10, 1998, the United States and Mercury filed a

Stipulation and Order in which they consented to the entry of a

proposed Final Judgment that provides the relief that the United States

seeks in the Complaint. Under the proposed Final Judgment, Mercury

would be enjoined from submitting coded bids in future FCC auctions and

entering into any agreement related to bidding for FCC licenses that

violates Section 1 of the Sherman Act, 15 U.S.C. Sec. 1.

The United States and Mercury have stipulated that the proposed