The objectives of the Association and Confidential Information Rules of preventing collusive arrangements and of preventing any one bidder from gaining superior information regarding its competitors mean that these rules do imply some restrictions on the day-to-day market activities of bidders and on possible supply arrangements. 

For example, if one bidder (Bidder A) transacts with another bidder (Bidder B) and in the process Bidder A learns Bidder B’s valuation for the auction product, then Bidder A would have gained superior information about a competitor, and this transaction could foster collusion (see, for instance, FAQ-39 and FAQ-40).  The fact that the Association and Confidential Information Rules aim to prevent a bidder from gaining superior information about its competitors that might affect the Auction Process implies that Bidder A cannot sell a full-requirements product to Bidder B.  Such a supply arrangement would provide Bidder A with reliable information regarding Bidder B’s valuation of the auction product.  This is an example of a restriction on supply arrangements implied by the Association and Confidential Information Rules.  As another example, each bidder is asked to certify that it has not entered into a supply arrangement that would provide explicit instructions on how to bid (see certification 5 of the Association and Confidential Information Rules portion of the Auction Rules, section VI.E.4 in the BGS-CIEP Auction Rules and section VII.E.4 in the BGS-RSCP Auction Rules).  This is a restriction on supply arrangements that aims to prevent coordination of bidding of several bidders if these bidders all entered into supply arrangements that provided bidding instructions. 

The Association and Confidential Information Rules attempt to place only necessary restrictions on supply arrangements and on day-to-day market activities.  Such restrictions are unavoidable if these rules are to meet their goals.  These rules may impact hedging activities and supply arrangements of bidders.  Each bidder should be aware of these rules at all times, should be aware of the entities that have become Qualified Bidders for the auction in which it is participating, and should be especially mindful of these rules from the start of the auction until the Board renders a decision on the auction results.  For additional information, see, for instance, FAQ-43, FAQ-44, and FAQ-45, as well as other questions and answers in the “Transactions and Hedging” section of this document.