The Antitrust Division of the US Department of Justice (DOJ) has announced revisions to its 2001 Merger Review Process Initiative (Initiative) designed to streamline further the agency’s investigations, pursuant to the Hart-Scott-Rodino Antitrust Improvements Act (HSR Act), of mergers and acquisitions that it believes will produce significant anticompetitive effects. The revisions are intended to enhance the efficiency of DOJ merger investigations while reducing the expense, delay and other burdens on parties to transactions that are subjected to the agency’s review. The revisions closely mirror those implemented in 2006 by the Federal Trade Commission (FTC), and to a large extent formalize practices that have been made available to merging parties for the past few years.
Principal among DOJ’s announced revisions is an option for parties to reduce significantly the scope of productions in response to a second request (the formal request for documents following a preliminary investigation) by entering into Process & Timing Agreements. Under such agreements, a party generally can limit to no more than 30 the number of individuals for which it is required to produce hard copy and electronic documents to DOJ. This option is conditioned upon timing commitments and provisions that preserve DOJ’s ability to conduct further discovery in the event that the transaction is challenged in court. The precise terms of Process & Timing Agreements will be fashioned according to such factors as the complexity of the transaction, the nature and magnitude of the predicted effects on competition, and DOJ’s familiarity with the markets affected by the transaction. Under DOJ’s announced revisions, parties may be required to agree to pretrial discovery lasting up to six months, considerably more time than typically granted by courts.
DOJ’s announced revisions also include amendments to its model second request, which is used by DOJ staff to tailor second requests to the characteristics and predicted effects on competition posed by a specific transaction. For example, the default period with respect to which documents created or received by the company must be produced is reduced to two years from the date of issuance of the second request, from the three to four years currently required. Additionally, companies that comply with the second request within 90 days of issuance generally will no longer be required to conduct a “second sweep” for responsive documents. Other revisions relate to the number of backup tapes required to be searched and to limitations on the types of documents required to be listed on a privilege log.
The revisions are intended to further the success achieved by the Initiative, which has been credited with reducing the average number of days between the agency’s opening of a preliminary investigation of a proposed transaction to the early termination or closing of the investigation from approximately 93 days to 57 days. Also, since the adoption of the Initiative, the average duration of second requests has been reduced from 248 days to 134 days in cases in which no challenge to the transaction is filed.