DOJ Announces Reforms to Merger Review Process

Shearman & Sterling LLP

Makan Delrahim, Assistant Attorney General for the U.S. Department of Justice Antitrust Division (“Division”), announced a series of reforms that aim to expedite the Division’s merger review process.

In a speech at the 2018 Global Antitrust Enforcement Symposium at Georgetown University Law Center on September 25, 2018, Delrahim announced reforms that apply to various stages of the merger review process. Given the current environment in which mergers are increasingly taking longer to review and clear, Delrahim announced that the Division “will aim to resolve most investigations within six months of filing,” provided parties cooperate throughout the process.

Initial Stages of Investigation. The Division Front Office will be open to an initial, introductory meeting with parties to discuss the deal rationale and facts that will be important to the Division’s analysis. The Division will also publish a model voluntary request letter that identifies key information so that merging parties can preemptively and proactively identify and collect information that the Division may request in an investigation.

Pull-and-Refile. The Division has implemented a new tracking system to ensure that it has an investigative plan in place to maximize the additional investigation time provided when parties pull-and-refile.

Second Request Investigation. The Division will publish a model timing agreement governing the process for compliance with the Second Request to facilitate negotiations over such agreements. The model timing agreement will reflect the following reforms: (i) fewer custodians to search generally assumed to be sufficient (20 per party); (ii) generally no more than 12 depositions; and (iii) reduction in the amount of time for the Division to make a decision following the parties’ respective certification of compliance with the Second Requests (typically no longer than 60 days).

In exchange for these reforms, Delrahim announced a number of corresponding expectations from parties: (i) document productions faster and earlier in the compliance period; (ii) earlier production of data; (iii) reduction/elimination in gamesmanship on privilege issues (e.g., withholding large numbers of documents based on claims of privilege, only to release them later in the process); and (iv) a longer period for the Division to conduct post-complaint discovery.

Additionally, Delrahim announced that the Division will have an increased focus on enforcing compliance by third parties with CID deadlines and specifications. The Division will also seek to improve coordination with foreign enforcers in parallel investigations.

Merging parties that proactively and cooperatively engage with the Division consistent with the announced reforms—such as through advanced preparation of document and data productions—should generally expect speedier resolutions of their transactions.

The Division’s announced reforms were done independently of the Federal Trade Commission ("FTC") and contrast with the FTC’s recently released model timing agreement, which grants FTC staff significant time to review proposed transactions—though FTC Chairman Joseph Simons has also stated that reducing the duration of merger investigations is a goal of the agency.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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