Proposed affirmation about collusion for the 3.4/3.7 GHz bands auction

We have reviewed submissions and reached an outcome for this consultation.

We have decided against including an additional affirmation on collusion for applicants. We consider that existing protections are robust and sufficient.

For more information, you can find the outcomes paper on the 3.4/3.7 GHz draft allocation and technical instruments consultation page.

Globally, spectrum in the 3400–4200 MHz frequency range is of great interest. It is suitable for many applications, including fixed satellite and wireless broadband (WBB) services, such as 5G.

On 14 July 2022, we made the Radiocommunications (Spectrum Re-allocation – 3.4 GHz and 3.7 GHz Bands) Declaration 2022 (the re-allocation declaration) for parts of the 3.4 GHz (3400–3575 MHz) and the 3.7 GHz (3700–3800 MHz) bands. We are preparing to allocate this spectrum both by auction and pre-determined price. This is expected to occur in the last quarter of 2023.

In preparation for the auction, we recently consulted on the draft allocation and technical instruments. In the consultation paper, we indicated that we intend to require each applicant in the allocation process to state that they have not colluded with another party in relation to the 3.4/3.7 GHz bands allocation process. This was intended to strengthen the integrity of the auction process and safeguard the auction against collusive behaviour, such as coordination of bidding strategies ahead of the auction, which may impact the auction outcome.

In responses to our consultation, some stakeholders requested that they be offered the opportunity to comment on the form and content of the proposal.

The ACMA sets out its auction rules in an allocation determination. We consulted on the draft version of the allocation determination during February and March 2023.

The allocation determination sets out rules preventing an applicant or bidder from disclosing confidential information to any person, other than in the case of specific exceptions. This confidentiality obligation also applies to a related person of an applicant or bidder, or a contractor of an applicant or bidder, who has knowledge of the applicant’s or bidder’s confidential information.

The definition of the term ‘confidential information’ forms the basis of the confidentiality rules imposed in the allocation determination. The definition includes information that could give rise to collusion or price-signalling (both deliberate or inadvertent) if disclosed, such as information about:

• a bid or proposed bids of an applicant or bidder
• an applicant’s or bidder’s bidding strategy
• the amount an applicant or bidder is willing to pay for a lot or group of lots in an auction.

It also includes information provided to a bidder by the ACMA for the purposes of participating in an auction. More generally, the definition also covers any information that, if disclosed, could be expected to affect or be capable of affecting an applicant’s or bidder’s activity before or during the allocation process, or that could affect the outcome of the allocation process.

The ACMA currently uses a deed of confidentiality to require each person who may have knowledge of an applicant’s or bidder’s confidential information to acknowledge that they understand:

• what is considered confidential information
• the rules set out in the allocation determination that prohibit the disclosure of confidential information.

It also represents an explicit commitment that they will comply with the rules regarding the disclosure of confidential information throughout the allocation process.

This deed takes effect from when it is executed, typically at the application deadline, until the ACMA publishes the results of the auction.

Noting the confidentiality obligation in the allocation determination applies from the time the bidder applies, we propose to strengthen these requirements to provide greater assurance to the ACMA and auction participants that the allocation process has not been affected by collusive behaviour in the lead-up to the allocation process being advertised. Such behaviour may be prohibited under the cartel conduct provisions of Division 1 of Part IV of the Competition and Consumer Act 2010.

Given the cartel conduct provisions apply generally, we do not consider it necessary that all other applicants be identified ahead of the new collusion requirement applying. Collusion between 2 parties about the allocation process may, for example, result in one or more parties not participating in the auction, which would reduce competition and may affect the auction outcome.

Proposed wording

Accordingly, we propose to require those seeking to apply to participate in the auction to give the ACMA a deed that contains the following clause:

1          Collusion and Anti-Competitive Conduct

1.1        The Applicant warrants that the Applicant, and, where acting on behalf of the Applicant, its officers, employees, agents, contractors, subcontractors and associates, have not engaged in any conduct that would, or might reasonably be construed to, contravene any provision in Division 1 of Part IV of the Competition and Consumer Act 2010 in relation to the allocation determination or the allocation of spectrum licences in the 3.4/3.7 GHz bands.

1.2        The Applicant further warrants that if, from the date of this Deed to the date of publication of allocation results under [section 90] of the Determination, the Applicant is put on notice of any actual or suspected contravention described in 1.1 above, the Applicant will notify the ACMA in writing of that contravention, within 48 hours of such notice.

1.3        The Applicant acknowledges and agrees that the ACMA may give documents or information, including confidential documents and confidential information, to a person where that information may be relevant to any actual or suspected contraventions described in 1.1, without notice to the Applicant. Without limiting this clause, the ACMA may give documents or information to the Australian Competition and Consumer Commission, and disclose any document or information in relation to that contravention. This clause does not limit or affect the exercise of any function or power the ACMA has to disclose documents or information to any person.

Proposed form and timing of the requirement

We considered the most suitable approach for imposing the collusion requirement on an applicant. The options considered were:

1. a statement in a separate form
2. an obligation in the deed of acknowledgement.

1. Separate form

To apply to participate in an auction, an application form, deed of confidentiality, deed of acknowledgement and the application fee must be submitted to the ACMA before the application deadline. The statement could be presented on a separate form, that the applicant has not colluded with another person in relation to the 3.4/3.7 GHz bands allocation process. To give effect to this option, the rules contained in the allocation determination would need to be amended to include the new form.

Requiring a separate statement on an isolated matter places further administrative burden on the applicant, which  is not a desirable outcome. Therefore, this is not our preferred option.

2. Deed of acknowledgement

The deed of acknowledgement is provided to the ACMA before the application deadline. The application deadline is the first milestone in the process for applying to participate in the auction.

The deed of acknowledgment contains clauses whereby an applicant affirms the statutory obligations imposed upon them regarding their participation in the allocation process conducted under the allocation determination. It requires an applicant to agree to be bound by the allocation determination, and make other promises and representations.

As the deed is already required to be provided by an applicant to participate in the allocation process, including a warranty in the deed regarding the absence of any collusion with any other person about the 3.4/3.7 GHz band auction minimises the administrative burden on applicants and the ACMA. On that basis, this is our preferred option.

Please note that the proposed wording above has been prepared separately from the entire deed. An applicant’s obligations and responsibilities in relation to the deed will need to take the entire deed into account, and the proposed text may be slightly modified to adapt better to the remainder of the deed.