Commission Anti-Collusion Guidance Tough on Smaller Law Firms
Guidance released by the FCC on how broadcasters and their lawyers can comply with the communication prohibitions in the incentive auction anti-collusion rules provide some flexibility to broadcasters in their daily operations but could make things difficult for smaller law firms, attorneys said in interviews Wednesday. The rules prohibit auction-eligible broadcasters from communicating information about their bidding strategies or specific plans in the reverse auction to other auction-eligible broadcasters. The clarification came in the form of a Tuesday evening public notice (see 1510060058).
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Individual attorneys that deal with more than one client's bidding strategy in the reverse auction are at risk of violating anti-collusion rules. The guidance is “extremely disappointing” and could be unworkable for many law firms, said broadcast attorney Jack Goodman, who requested clarification on the rules on behalf of the FCBA earlier this year.
A series of questions about how the anti-collusion rules affect day-to-day operations for broadcasters got more helpful answers, broadcast attorneys told us. Broadcasters don’t violate the rules if they communicate whether they will participate in the auction, the guidance PN said. “The mere fact that an application has been filed does not require the applicant to bid, nor does it reveal an applicant’s specific bids or bidding strategies.” This means noncommercial stations can indicate whether they are participating or not in fundraising efforts, and other broadcasters can reveal that information in business communications.
Broadcasters can’t reveal their specific auction plans, such as whether they will switch to VHF or when they have dropped out of bidding, the PN said. “The rule prohibits such communications whether direct or indirect, express or implied." These clarifications answer many broadcasters’ “practical concerns” about the effect of the communications prohibitions on their daily business, said Wilkinson Barker broadcast attorney Rosemary Harold, who had pushed for such guidance.
The problem could balloon for licensees involved in multiple channel sharing agreements with different companies, since the different sharees can’t be exposed to each other’s bidding strategies without risking a violation, Goodman said. That could translate to large companies involved in multiple sharing agreements having to employ teams of lawyers, he said. The FCC will judge violations on a case-by-case basis, the PN said. “Whether a prohibited communication has taken place in a given case will depend on all of the facts pertaining to the case, including who possessed what information, what information was conveyed to whom, and the course of bidding in the auction.”
The FCBA had asked the FCC to clarify its position on whether lawyers could represent multiple clients in the incentive auction, taking the position in a filing with the commission that attorneys' code of ethics allows them to do so. The guidance PN disagreed, saying law firms can represent multiple clients in the auction by taking precautions to “firewall” bidding information, but it’s more difficult for individuals. "In the case of an individual, the objective precautionary measure of a firewall is not available,” the PN said. “We caution that an individual practitioner that holds bids or bidding information of more than one covered party presents a greater risk” of engaging in prohibited communications, the PN said.
That is a problem because there aren’t enough experienced lawyers to cover all the clients who will need help with bidding in the auction, Goodman told us. While large firms might be able to deal with the issue, smaller firms -- such as Goodman’s own -- will have more difficulty, he said. Though Harold said most broadcast attorneys won’t be involved in making bidding decisions, Goodman said many clients will still want to consult with their longtime attorneys on such issues. “We are not persuaded that our interpretation will leave broadcast licensees without access to counsel,” the PN said. Broadcasters that don’t participate won’t need counsel for bidding strategies, and many firms will be able to handle the problem through firewalls, the PN said.
Competitive carriers had positive words to say about the guidance, on the sidelines of their meeting in Fort Lauderdale (see 1510070072).