Since the Federal Trade Commission (FTC) last revisited its merger review process back in 2006, many new tools have emerged on the e-discovery scene. These changes are one of the main reasons the FTC published its memo on Best Practices for Merger Investigations in August, with the goal to “promote efficiency and balance the burden of merger investigations with the need for thoroughness.” It also published a new Model Second Request and a Production Guide. Organizations that follow the agency’s suggestions are likely to be rewarded with a smoother Second Request process that consumes less time and fewer resources—and that hopefully allows the transaction to go forward more quickly.
Here are five ways your organization can maximize its time and resources in responding to a Second Request.
1. Submit information as early as practicable to FTC staff.
Although the agency will set a deadline for providing information after you submit the Notification and Report filing required under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act, there is no reason not to share information about the transaction early—even before you file the required HSR notice. Providing information early can allow the investigative staff to take one of two burden-reducing steps: (1) to eliminate the need for a Second Request altogether or (2) to narrow the scope of the Second Request.
Typically, agency staff request certain types of information that you should gather as soon as you anticipate the need for a filing:
- strategic and marketing plans for the last two years;
- a list of all currently manufactured, marketed, or sold products and products in development;
- a list of the organization’s top 10 customers (and suppliers if relevant) with contact information for customers of overlapping products;
- a list of top competitors;
- market share information for overlapping products;
- a list of the types of reports the company regularly prepares;
- information that will assist agency staff in assessing the proposed merger and the markets involved;
- an organization chart; and
2. Prepare thoroughly to negotiate with the agency about the scope of the Second Request.
The agency believes the most productive negotiations occur when parties are well prepared. Organizations should come to negotiations ready to offer information that explains their hierarchy and decision-making structure; where and how they store information, including the names of custodians, the content and structure of files and databases; and their document storage and retention policies.
3. Construct and share a well-considered list of search terms.
One important issue that the FTC raises is search terms. The agency suggests that companies provide a list of search terms for comment by agency staff. While staff will not agree that a list of terms is sufficient to certify compliance with a Second Request, they will offer suggestions, and the memo suggests that disclosure “improves the likelihood that the search will be sufficiently comprehensive.”
4. Consider giving the agency a “quick look.”
The FTC also suggests the possibility of an informal “quick look” on a specific issue or on a subset of relevant products that supports the agency’s anticompetitive theory, which could ultimately limit the need for full compliance with a Second Request. With a quick look, the parties produce a limited set of core documents and information requested by agency staff, who quickly analyze the materials and advise the parties of the results.
5. Use technology-assisted review to lessen the burden of review.
The FTC’s new Model Second Request contemplates that parties will use advanced tools to respond to requests, including keyword searching, e-mail threading, deduplication, and technology-assisted review (TAR). Parties that use TAR should be prepared to provide additional information:
- Their collection and review methodology, including how they used the software to identify responsive documents, how they identified and validated the seed set of documents, how they validated the responsiveness results, how they handled documents that were not categorized, and how they handled foreign language documents
- The total number of documents they reviewed manually and the total number of documents that they determined nonresponsive using TAR
- The statistical analyses used to calculate the precision, recall, accuracy, validation, or quality of its document production
- Identification of someone who can testify on behalf of their organization about their use of this technology
As these five best practices demonstrate, success in limiting the burden and cost of a Second Request rests on the right combination of people, process, and technology.