On August 4, 2015, the Federal Trade Commission (FTC) released a guide to best practices for merger investigations, its first update to the Guidelines for Merger Investigations since it published the Reforms to the Merger Review Process in 2006. The latest update addresses early voluntary submission of information, effective use of “pull and refile,” and issues in negotiating the Second Request, including the use of predictive coding and search terms.

1.  Early Voluntary Submission of Information

The FTC encourages parties to produce information with or soon after the Hart-Scott-Rodino (HSR) filing. Sharing additional information may assist the FTC in narrowly tailoring a Second Request to reduce the burden on the merging parties, or may obviate the need for a Second Request entirely.

To expedite the review process, the FTC recommends submitting the following key information during the initial waiting period:

• Strategic and marketing plans for the previous two years
• A list of all currently manufactured, marketed or sold products, and products in development
• A list of top 10 customers with contact information for customers of overlapping products
• A list of top competitors with contact information for competitors who provide overlapping products
• Market share information for overlapping products
• A list of the types of reports the company prepares on a regular basis
• An organization chart
• A data map of the types of data the party creates and stores

Submission of this information, however, may increase the likelihood of the government contacting key customers or suppliers during the initial waiting period. It is important to consult with antitrust counsel prior to submitting such voluntary information.

2.  Effective Use of Pull and Refile

The initial review period initiated by an HSR filing is short, and the FTC may require an additional few weeks to resolve certain issues. To extend the review period without a Second Request, the FTC encourages the acquiring person to “pull and refile” to reset the HSR timing provisions. Upon written notice, an acquiring person may withdraw its HSR filing and refile once without paying an additional filing fee. The FTC states that a pull and refile reduces the likelihood that a Second Request will issue, and increases the likelihood that any Second Request issued will be narrower in scope. The FTC, though, does not guarantee that extending the initial review period will avoid a Second Request altogether.

3.  Negotiating the Second Request

Finally, the FTC promises to continue negotiating Second Requests “in good faith” to reduce the burden on merging parties. Under the FTC’s Rules of Practice, the government staff should initiate a discussion with the merging parties addressing the competitive issues raised by the transaction and the most effective way to obtain information and documents related to those issues.

In particular, the FTC’s 2015 update addresses the use of search terms and predictive coding during the Second Request process. The FTC will not agree that a particular list of search terms is sufficient to comply with the specifications of a Second Request. However, the FTC will review proposed search terms and comment on the probability that the proposed terms will be sufficiently comprehensive. In the end, a party bears full responsibility for gathering and producing the necessary documents and information to comply with the Second Request, regardless of the method used. 

The FTC thus will allow search terms and predictive coding to assist in complying with a Second Request, but it refuses to state unequivocally that a particular set of search terms or predictive coding method will satisfy the specifications of a given Second Request. Merging parties may continue to use search terms and predictive coding at their own risk.

The FTC’s guidance can be found in “Best Practices for Merger Investigations” on its government website. The Antitrust Division of the Department of Justice has not released a corresponding policy and has not updated its merger review process guide since 2006.