Responding to HSR Second Requests: A 5-Step eDiscovery Readiness Plan

Responding to HSR Second Requests: A 5-Step eDiscovery Readiness Plan

Under the Hart-Scott-Rodino Antitrust Improvements Act (HSR Act), parties to a merger, tender offer, or other acquisition that meets a certain minimum threshold (currently $84.4 million) must file a “Notification and Report Form” with the Federal Trade Commission (FTC) and the Antitrust Division of the Department of Justice (DOJ). While you must submit documents with the initial notice, in some cases, the government will ask for additional information to determine whether the merger will have anticompetitive effects. This is done through a “Request for Additional Information and Documentary Materials,” commonly called a “Second Request.”

Second Requests

The government only gets one bite at the apple, so Second Requests tend to be extremely broad. Second Requests use two discovery tools, interrogatories and requests for production, to ask parties for the following information:

  • documents related to the proposed transaction,
  • business plans,
  • organizational charts,
  • descriptions of products and marketing materials,
  • data about prices and sales,
  • documents related to competition in the product market and the geographic market, and
  • documents that address market entry or planned expansions.

Generally, fewer than 5 percent of reported transactions are subject to a Second Request: in fiscal year 2016, the government issued Second Requests in just 3 percent of cases. Though the risk may seem small, the burden can be onerous, particularly given the deadlines: typically, a party must respond to a Second Request within 30 days.

In addition to fully responding, the party must certify that it has substantially complied with the request. If it turns out that a company has intentionally withheld documents or information despite the certification, the government can pursue further action. This could take the form of a grand jury investigation, a claim of obstruction of justice, or civil penalties.

Developing a Second Request Readiness Plan

Given the short deadlines and stakes involved, organizations planning major transactions should be prepared to respond promptly to a Second Request. Start with these five steps:

  1. Prepare a data map that tracks all the information flowing through your organization. Be sure to locate and include the data on all servers, computers, and mobile devices, as well as data in cloud-based applications and legacy backups.
  2. Ensure that you are following your records retention protocol, keeping only information that is of current importance to the business. Keep in mind that it will appear suspicious if you haven’t been strictly adhering to your protocols yet you dump all of your aging documents as soon as you announce a merger.
  3. Establish a preservation plan, including a legal hold process, to ensure that you can issue holds to custodians as soon as you receive a Second Request.
  4. Build a relationship with an eDiscovery service provider, who will then be on call in case an investigation is triggered. Ensure that the provider can rapidly ingest and process large data volumes completely and correctly.
  5. Create a review plan. Work with your selected eDiscovery provider to choose the appropriate technology. You’ll want a review platform with analytics such as keyword searching, email threading, deduplication, and technology-assisted review. Establish a schedule for rolling collections and productions.

Following these steps can yield a number of benefits. First, it can prepare you for fruitful negotiations with the agency about the scope and timing of the production. It will also enable you to have informed discussions about your proposed search terms, which you may have to disclose for the agency’s review and feedback. Additionally, it can give you an opportunity to propose a “quick look,” where you produce a limited data set on a specific issue with the goal of obviating the requirement to fully comply with a Second Request.

Are you ready to create a more defensible, streamlined eDiscovery readiness strategy for responding to a Second Request? Contact us to learn more about how we can help your organization.

Reader Interactions

Leave a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.