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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of ) ) MERCURY PCS II, LLC ) ) FOIA Control No. 98-85 on Request for Inspection ) of Records ) ) In the Matter of ) ) OMNIPOINT CORPORATION ) ) on Request for Confidential Treatment ) of Documents ) MEMORANDUM OPINION AND ORDER Adopted: July 3, 2000; Released: July 17, 2000 By the Commission: 1. The Commission has under consideration an application for review by Omnipoint Corporation of the decision of the Chief, Enforcement and Consumer Information Division, Wireless Telecommunications Bureau (the Bureau) granting in part and denying in part Omnipoint's request for confidential treatment of certain documents sought by Mercury PCS II, LLC (Mercury) pursuant to the Freedom of Information Act (FOIA). For the reasons discussed herein, the application for review is denied. 2. Omnipoint and Mercury were bidders in the Commission's broadband PCS D, E, and F block auction conducted in 1996 and 1997. Following the auction, the Bureau investigated allegations of misconduct during the auction by Omnipoint and Mercury. The Bureau sent two letters to Omnipoint inquiring about its conduct during the auction. Omnipoint replied by submissions dated November 3, 1997 ("the November 3 Response") and December 22, 1997 ("the December 22 Response"). Omnipoint requested confidential treatment of its responses. The Bureau ended its investigation of Omnipoint, finding "no basis for further action." The Bureau's investigation of Mercury, however, resulted in the issuance of a notice of apparent liability for forfeiture. The Commission later rescinded the proposed forfeiture. Subsequently, Omnipoint entered into a consent decrees with the United States Department of Justice (DOJ) that it will refrain from entering into anticompetitive agreements and from using license- identifying information (unless required by the FCC) in future FCC auctions. 3. At issue here are portions of the November 3 and December 22 Responses submitted by Omnipoint, both of which were accompanied by requests for confidential treatment. Mercury sought these documents under the FOIA. Omnipoint opposed release, asserting that portions of the November 3 and December 22 Responses contain significant details of Omnipoint's auction bidding strategies and techniques, as well as its business plans nationally and for certain markets, release of which would put it at a competitive disadvantage. Omnipoint urged that these materials be withheld pursuant to the FOIA Exemption 4, 5 U.S.C.  552(b)(4), and the Trade Secrets Act, 18 U.S.C.  1905. In reply, Mercury offered to undertake a limited, indirect review of the documents. 4. The Bureau decided to release most, but not all, of the November 3 and December 22 Responses. It determined that the Answers to Items Nos. 5, 6, and 7, and Exhibit 2 of the November 3 Response should be withheld pursuant to FOIA Exemption 4, 5 U.S.C.  552(b)(4), because those portions concerned Omnipoint's overall business strategy, disclosure of which "at this time could adversely affect Omnipoint's competitive position and ability to implement its business plan." However, the Bureau determined that the remainder of the November 3 Response could be released. The Bureau also determined that all of the December 22 Response could be released, noting that the information in the response, "as conceded by Omnipoint, was intended to be disclosed in the bidding process." 5. On appeal, Omnipoint asserts that the answer to Item No. 4 of the November 3 Response, and all of Part II and the attached affidavit of the December 22 Response should not be released. Omnipoint contends that these materials provide insight into its bidding strategies and techniques, which, if released, would put it at a severe competitive disadvantage in future PCS auctions. Omnipoint also argued that the Bureau's decision was internally inconsistent because it authorized withholding parts of the November 3 Response but ordered the release of similar and more detailed parts of the December 22 Response. Mercury opposes Omnipoint's application for review, arguing that Omnipoint has not met its burden under FOIA Exemption 4 and that the public interest favors release of the disputed portions of the responses. 6. The primary focus of Omnipoint's application for review rests on its claim that disclosure will place it at a serious competitive disadvantage by revealing its auction bidding strategies. Omnipoint contends that under the Trade Secrets Act and FOIA Exemption 4 the contested materials should be withheld. The Trade Secrets Act provides criminal and employment penalties for federal officers or employees who disclose trade secrets, except as "authorized by law." See generally CNA Financial Corp. v. Donovan, 830 F.2d 1132, 1151-52 (D.C. Cir. 1987), cert. denied, 485 U.S. 977 (1988) (CNA Financial.). Under the "competitive prong" test of FOIA Exemption 4, an agency may withhold from disclosure "commercial or financial information obtained from a person [that is] privileged or confidential" if the party seeking confidentiality demonstrates both actual competition and the likelihood of substantial competitive injury if disclosure is made. See Liberty Cable Company, Inc., 11 FCC Rcd 2475, 2475 (1996) (citing CNA Financial, 830 F.2d at 1152), aff'd sub nom. Bartholdi Cable Co., Inc. v. FCC, 114 F.3d 274 (D.C. Cir. 1997) (Bartholdi). If we conclude that the materials are not exempt from disclosure under FOIA Exemption 4, its disclosure is required by the FOIA and is "authorized by law" under the Trade Secrets Act. See CNA Financial, 830 F.2d at 1151-52; Bartholdi, 114 F.3d at 281; Southwestern Bell Telephone Co., 12 FCC Rcd 7770 4 (1997). As discussed below, we conclude that the records must be publicly disclosed. 7. Generally, business strategies or marketing plans that would enable competitors to devise counter-strategies are competitively sensitive materials within the meaning of Exemption 4. See, e.g., National Parks and Conservation Association v. Kleppe, 547 F.2d 673, 684 (D.C. Cir. 1976); Timken Co. v. United States Customs Serv., 491 F. Supp. 557, 559-60 (D.D.C. 1980); International Satellite, Inc., 57 RR 2d 460, 462-63 (1984) (applying FOIA Exemption 4 to documents containing "technical and commercial information regarding possible changes and expansion of Intelsat's operations" and "pertain[ing] to Intelsat's future business plans"); Western Union Telegraph Co., 2 FCC Rcd 4485, 4487 (1987) (withholding pension strategy information). However, to the extent records are already in the public domain, Omnipoint may not make any claim to confidentiality. See CNA Financial, 830 F.2d at 1154. 8. Omnipoint argues that disclosure of the Answer to Item 4 in the November 3 response would give insight into what it is likely to do during the auction bidding process, and how it would do it. This material, however, is a recitation of Omnipoint's bidding history in seven BTA regions in the F spectrum block. For example, in the Answer to Item 4, Omnipoint repeatedly refers to "the bidding history." As such, it is merely a compilation of what occurred in the auction, which is known to the public. This cannot be deemed to have an adverse effect on Omnipoint's future strategies. Omnipoint also suggests that this information, assembled together, reveals far more than the pieces, but never explains how the Responses do this or how the recitation of the public history of its bidding activities would put it at a future competitive disadvantage. Any entity, including a bidder in an auction, could draw the same information, conclusions, or inferences from a review Omnipoint's bidding history. Indeed, the public DOJ filings in United States v. Omnipoint contain descriptions of Omnipoint's bidding behavior. 9. Omnipoint also argues that Part II of the December 22 Response and the attached affidavit of Douglas G. Smith (Smith Affidavit) contain a description of Omnipoint's thinking process in bidding in ten BTA regions of the F spectrum block which, if made public, would have a significant adverse competitive impact. We have carefully reviewed these materials and conclude there is no basis for granting Omnipoint's request for confidentiality. The portions of Part II of the December 22 Response that Omnipoint still asserts should be withheld under FOIA Exemption 4 are simply descriptions of the bidding process in the concluded F spectrum block auction which, as we observed above in regard to the November 3 Response, are recitations of bidding history and are not entitled to confidential treatment. Moreover, in the December 22 Response, Omnipoint admits that it "does not have a specific recollection of placing the bids" and provided only "a possible explanation of its bidding behavior." Therefore, we do not believe that the responses to the questions provided in the December 22 Response deserve confidential treatment. 10. The Smith Affidavit describes Mr. Smith's contacts with Commission staff during the course of the D-E-F auction. We do not believe this affidavit is entitled to confidential treatment. In large part, the affidavit describes inquiries made by Omnipoint to Commission staff concerning the Commission's anti-collusion rules and hypothetical bidding techniques. Mr. Smith did not seek confidential treatment of these communications, and the staff did not indicate that the inquiries or their responses would be kept confidential. Such inquiries to Commission staff are not the type of communications normally afforded confidential treatment. We note that Omnipoint does not indicate that it sought confidentiality during the contacts with Commission staff, and thus can have no expectation that the inquiries and responses would be kept confidential. 11. Omnipoint also argues that portions of the November 3 and December 22 Responses reveal its "mental processes" and therefore should be kept confidential. However, this theory does not bring this material within the scope of FOIA Exemptions, and the cases cited by Omnipoint do not support its argument. Montrose is inapposite, as it involves memoranda revealing the thought processes of government employees withheld under the deliberative process privilege of the FOIA Exemption 5, 5 U.S.C.  552(b)(5). Exemption 5 is not applicable to Omnipoint. Sporck involved the attorney work product privilege in the context of civil discovery, and is likewise beside the point. Therefore, we affirm the Bureau's decision to deny Omnipoint's request that the Answer to Item 4 in the November 3 Response be kept confidential. 12. We also do not agree with Omnipoint that the Bureau acted inconsistently when it determined that the Answers to Item Nos. 5, 6, 7, and Exhibit 2 to the November 3 response were entitled to confidentiality, but the December 22 Response was not entitled to confidential treatment. The Answers state Omnipoint's plans in the auctions, and the exhibit states Omnipoint's strategic plan and business strategy for the D-E-F auction. The Bureau declined to disclose this information, and Mercury does not challenge this ruling. These materials are more akin to the materials found to warrant confidential treatment in National Parks, Timken, International Satellite, and Western Union. In contrast, as described above, the December 22 Response merely offered "possible explanations" of the actual bidding conducted by Omnipoint. 13. In sum, we affirm the Bureau's decision to deny Omnipoint's request for confidentiality of the Answer to Item No. 4 in the November 3 response, Part II of the December 22 Response, and the Smith Affidavit of the December 22 Response. 14. IT IS ORDERED that Omnipoint's Application for Review is DENIED. Omnipoint will be afforded five (5) working days in which to seek a judicial stay of this decision. See 47 C.F.R.  0.459(g). The Enforcement Bureau will notify Omnipoint by telephone of the denial of its request for confidentiality. Id. 15. The Officials responsible for this action are the following Commissioners: Chairman Kennard, Commissioners Ness, Furchtgott-Roth, Powell, and Tristani. FEDERAL COMMUNICATIONS COMMISSION Magalie Roman Salas Secretary