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U.S. Settles PCS Bid-Rigging Cases

November 11, 1998|Washington Post

The Justice Department signed settlements with three wireless communications firms after filing lawsuits alleging that the companies rigged bids during government auctions of radio spectrum licenses. The consent decrees, stemming from suits filed in U.S. District Court in Washington, settle allegations that 21st Century Telesis Corp. of Newport Beach; Omnipoint of Bethesda, Md.; and Mercury PCS II of Jacksonville, Miss., signaled one another through coded bids during Federal Communications Commission auctions of licenses for digital personal communication services, or PCS. Under terms of the order, the companies neither acknowledge nor deny guilt and agree that they won't engage in conduct to allocate markets in the future. The government alleged the scheme worked in the following way: Each of the more than 493 wireless regions was assigned a three-digit code. If one of the companies wanted the license in market 302, for example, and another of the companies had bid on it, the first company would submit a bid in a market important to the second, and end the bid with the numbers 302. The scheme was unusual, Justice Department attorneys said, in that it allowed the players to communicate without actually speaking. Instead, they turned the FCC into an unwitting participant in the scheme.

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