The Antitrust Division of the Department of Justice (“DOJ”) recently announced amendments to its Merger Review Process Initiative to further streamline the agency’s merger investigations and to reduce the burdens merging parties face in that process. The reforms generally formalize several “best practices” and procedures the DOJ staff has successfully used in the past. Most significant are a “Process and Timing Agreement” option that, if selected, will limit the number of employees’ files to be searched, and modifications to the Model Second Request that reduce document search and production burdens. A similar, but not identical, initiative was announced by the Federal Trade Commission (“FTC”) last February. Companies should be cognizant of these recent changes to evaluate their strategic options in working with the agencies in merger investigations.

Under the Hart-Scott-Rodino Act, parties of a specified size are required to notify the agencies about their proposed transaction and to wait a period of time (usually 30 days) before they can consummate their deal. If during that initial waiting period the agencies determine that additional information is needed, they can issue a “second request” which extends the parties’ waiting period and expands the agencies’ investigation of the proposed transaction. The second request process is usually very burdensome for companies because they must comply with extensive requests for information in a relatively short period of time, and it has become even more so in this era of electronic documents. Moreover, as companies produce more documents, the agencies’ burdens increase because they have to review more documents to locate those that are relevant to their investigation.

The DOJ’s Merger Review Reforms

Under the new voluntary Process & Timing Agreement option, merging parties adopting it can limit their second request productions to the files of a targeted list of 30 employees known as “custodians” and some central files. (A Division Section Chief can authorize a total of five additional custodians.) In return for limiting the number of custodians, parties would be required to provide certain information early in the investigation and agree to provide the DOJ sufficient time to conduct post-complaint discovery if the DOJ decides to challenge the transaction which could span as long as six months. According to the DOJ, this safeguard is in place “to protect the Division’s ability to obtain appropriate discovery should it decide to challenge the deal in federal district court.”

The DOJ staff will have considerable discretion in negotiating the terms of the Agreement with the parties based on the unique facts of the proposed transaction. While the FTC does not require entry of a specific Process and Timing Agreement, if certain information is provided and the parties agree to a 60-day discovery period if the FTC challenges a transaction, the FTC has a “presumption” that it will not require parties to search the files of more than 35 custodians. Moreover, to obtain the limitation, parties must agree to produce documents and data responsive to the second request 30 days before certifying substantial compliance or to agree to a “‘rolling’ production or other form of timing agreement.” The DOJ or FTC staff may increase the number of custodians when “reasonably necessary” such as when “the second request covers many different relevant products, services, or geographic markets, or if the transaction raises multiple complex issues.”

In addition, the DOJ has made several changes to its “model second request,” from which a second request is derived. First, the DOJ has reduced the relevant search period to two years from three or four years (depending on when the request is issued). Cutting back the length of time required to search can affect the size, cost, and length of the investigation. This change conforms to the FTC’s two-year presumption, although that presumption does not apply to empirical data or in certain instances where the transaction involves markets with long-term contracts. Second, the DOJ has reduced the parties’ obligations with respect to a “second sweep” or search for responsive documents, which parties are required to conduct before certifying substantial compliance with the second request, and which increases the cost and time of compliance. Parties will generally not be required to conduct a second sweep if they comply with the second request within 90 calendar days of its issuance but for a limited search for select documents (under Specification 16) up to 30 days prior to the date of their full compliance with the second request. The FTC’s reforms similarly limit the parties’ obligations to “refresh” the data they provide to the agency by limiting the relevant search period to 45 days prior to the date on which the party certifies substantial compliance with the second request.

Third, the DOJ has reduced the parties’ obligations with respect to searching and retrieving back-up tapes. Parties may elect to identify and preserve for the duration of the DOJ’s investigation a select subset of back-up tapes in lieu of searching all back-up storage media. The time period may be extended, however, when responsive documents are unavailable through more accessible sources. This change is similar to the FTC’s reform that limits the parties’ production of back-up tapes to two calendar days per relevant year. Similarly, the DOJ has eliminated the requirement that parties produce electronic documents in hard copy form, requiring electronic documents to be produced only in electronic form.

Finally, the DOJ has altered its requirements with respect to privilege logs to allow parties to omit certain documents from their log that were sent only between the company and its counsel. The FTC’s reform is somewhat different requiring parties to produce a partial privilege log for custodians in the search group, in conjunction with a complete privilege log for a small subset of custodians.


Many have argued that the document production required in a second request investigation far exceeds what Congress intended when it enacted the Hart-Scott-Rodino Act. In response, the agencies argue that merger analysis has become much more complicated and that more data and information is needed to do a competitive assessment, and to enable them to meet their burden of proof when they litigate merger cases. One suggestion to cure the problem has been to adopt a “two bites” of the apple approach, first giving the agency a limited amount of material to assess whether a transaction is likely to substantially lessen competition, then if a decision to challenge is made, giving the agency additional discovery. The agencies’ reforms appear to reduce the cost and time of the second request investigation and to create a second bite if there is litigation.

How much the initiatives will reduce burden, however, is yet to be seen. The agencies still obtain upfront a significant amount of information and data. And staffs have considerable discretion in implementing the proposals, which could undercut the initiative. Time will tell whether there is any real reduction in burden, and whether agency successor managers will adhere to the initiative. Parties will have to understand the options available at the agencies, and weigh whether they should use the new options, or negotiate the scope of the second request as usual. If litigation is unlikely to occur, the new options may speed the process. If litigation is more likely, parties may not want to give the agencies more time for discovery. As the DOJ’s proposal suggests a discovery period spanning six months, longer than typical cases, parties may not want to wait that long before getting their day in court.