What to Expect During Antitrust Merger Reviews and Investigations Under the Biden Administration (Part 2): Practice Tips if You are Served With a CID or Second Request

As explained in Part 1 of What to Expect During Antitrust Merger Reviews and Investigations under the Biden Administration, antitrust enforcers under the Biden Administration, the Federal Trade Commission (“FTC”) and U.S. Department of Justice (“DOJ”) Antitrust Division are pushing forward to promote competition and to stop anticompetitive mergers.  Part II of this primer provides practical tips that will  help you or your client respond efficiently to any FTC or DOJ Request for Additional Information and Documentary Materials (“Second Request”) or Civil Investigative Demand (“CID”).

Instructions Matter

Your subpoena or CID will usually include a cover letter and instructions—which should be taken seriously.  Read them thoroughly and multiple times before providing any response and producing any materials.  The agencies provide uniform instructions because they want them to be followed.  The agencies need the data to arrive in a proper format that is usable on their end, and are not concerned about the producing parties’ technologies and quirks.  They have a job to get done with finite resources.  The agencies also have understandable security concerns.  Data must be delivered in an encrypted form and be scanned by the respective agencies to safeguard their systems.

Confer with Counsel

You should also confer with in-house or outside counsel about how to respond and to develop a negotiation strategy.  While there is room for negotiation in certain areas of a governmental information request, as discussed below, other aspects must be followed meticulously.  Whether you are a target, a third party, or somewhere in between (i.e., the government is still investigating the matter), will determine how much leverage you may have in negotiations to narrow the scope of the requests.

Preservation of Documents and Data

Take adequate and immediate steps to ensure documents potentially responsive to a CID or a Second Request are preserved and not destroyed.  Impose a litigation hold to prevent the deletion of potentially responsive documents and data.  While you will likely have an opportunity to negotiate the scope of the subpoena or CID, one area where the government is less flexible is preservation.  The agencies are loathe to tell a company what it should retain when it is in the best position to know its own data.  Always take a defensible position—one that is likely to be perceived as reasonable—and move swiftly to avoid any potential spoliation.

Negotiate

Identify any requests that are overly burdensome or that request irrelevant documents.  If you determine that there are such problematic requests, ask the FTC or DOJ for a meet-and-confer to negotiate the scope.  The agency may be amenable to considering narrowing the number of custodians, subject matter, types of documents requested (email, text messages, etc.) and the temporal scope of the requests.   While the government will frequently agree to further negotiate the scope of such requests, it also retains the right to issue additional requests, or revisit a decision if it finds the productions inadequate.  For this reason, narrowing the scope of preservation in reliance on any modifications to these requests is risky.  Accordingly, most recipients focus on narrowing the scope of production.

Collecting, Reviewing and Producing Data

Responding to a CID or Second Request takes time and resources both internally and externally, including vendors and consultants.   Consider the approach that will be used for this entire process and contact the relevant agency to discuss the software, technology, or workflow (including search terms, predictive coding, email threading, de-duplication or similar technologies) you anticipate using in advance.  Be sure to include company personnel who are familiar with the company’s IT and data management systems in these conversations so that you or outside lawyers do not commit to anything that the company is unable to do.  Use of Technology Assisted Review (“TAR”) software can greatly decrease the amount of time and resources needed to comply with a CID or a Second Request.  Use TAR to prioritize review of documents more likely to be responsive and to begin rolling out productions to the FTC or DOJ.  For Second Requests, you must be able to comply with the new requirement of describing the TAR workflow to the FTC before starting the TAR process.[1]

In advance of any proposed merger, companies should first make sure their records and data management are in order.  A company may assign responsibilities for data collection to internal staff familiar with where materials are located (e.g. information systems personnel) in order to quickly collect the data or work with an outside vendor.  Data requested in a Second Request is often very broad and usually includes requests for organizational charts, personnel data, financial statements, sales and other data for relevant products and markets.  See e.g. Model Second Request.  Once your company begins the merger process, you should consider collecting the types of documents that could be responsive to a potential Second Request well before the request is even issued.

Privilege Logs

You should also allow for more time and resources for the creation of full privilege logs since partial logs are no longer allowed for responses to Second Requests.  Details about the full privilege log requirements with respect to Second Requests can be found in the FTC Model Second Request.[2]  You can also use TAR to help identify potentially privileged documents to withhold from production in both Second Requests and CIDs.

NDA Issues

If potentially responsive materials to a Second Request or a CID contain confidential data of non-parties, and are the subject of a Non-Disclosure Agreement (“NDA”), you may be required to provide those non-parties with notice that you are producing the data to the government.  Depending on the NDA, the non-party may also have to give consent prior to production.   You should review any NDAs with third parties as early as possible to see if there are any potential notice and consent requirements that could delay your production of data.

There is no need to panic if you or your company is served with a Second Request or a CID in a government investigation.  Following these tips should greatly reduce the burden and help ensure a complete and timely response.

Written by Alan Schwartz and Alysia Solow

Edited by Gary J. Malone

[1] See FTC Model Second Request at 12.

[2] See FTC Model Second Request at 23.

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