Second requests can be expensive, time consuming and distracting to clients' employees. One way to ease the burden of a second request is to avoid it altogether. While second requests are inevitable for some transactions, certain strategies can help to lessen the likelihood of one being issued.
First, while the statutory waiting period for pre-merger notifications under the Hart-Scott-Rodino (HSR) Act is 30 days, staff attorneys at the Federal Trade Commission (FTC) and the Department of Justice Antitrust Division effectively have only approximately two weeks to make an initial recommendation as to whether to issue a second request. It should be anticipated that the first week of the waiting period will be lost to ministerial requirements, such as ensuring that the filing is complete and clearing the matter to either the FTC or the Antitrust Division. If the reviewing attorney recommends issuing a second request, agency management generally require about a week to review and act on that recommendation.
Know all documents inside and out
In order to use the two-week review period most effectively, the parties should be prepared with basic information well before the HSR filings are submitted. In preparing the HSR filings, the parties will review and submit documents in response to Items 4(c) and (d) of the HSR form – documents about the transaction that address topics such as competition, competitors and markets. At a minimum, the parties should know their client's Item 4 documents inside and out, particularly if any documents contain problematic language. The contents of the documents may also provide helpful evidence in favour of the transaction.
Knowing what is in the Item 4 materials will help to shape arguments and determine what additional documents and data should be gathered in anticipation of advocacy before the agencies. Beyond the Item 4 materials, the parties should consult the agencies' model voluntary access letter and have responsive materials on hand to respond quickly to any information requests from investigators. If the Item 4 materials do not provide support for major arguments, preparing supplemental materials in advance can help. For example, if certain geographic constraints exist but are not sufficiently described in the Item 4 attachments, preparing maps or other advocacy materials to demonstrate these conditions may help to bolster arguments that the merger parties do not compete with one another.
Consider stakeholder responses
Agency staff may reach out to market participants and other stakeholders as part of their investigation. The parties should think about how those stakeholders are likely to react to the news of the proposed merger. If the investigating agency requests lists of top customers and suppliers, the parties should consider calling the customers and suppliers in advance to inform them that they may receive a call from a staff attorney and that this is common in a pre-merger investigation. On a larger scale, the parties should also think about whether the proposed deal is likely to receive pushback from any of their customers, suppliers or even their competitors.
Parties should prioritise arguments that make the investigator's job easier to close the investigation rather than focusing on more granular and analysis-heavy arguments that may actually slow down the investigation. Parties should also consider having their business team members meet in person with agency staff, as some evidence is often considered more credible when delivered by employees rather than the parties' counsel.
Finally, in some instances, agency staff may need more than the statutory 30 days to close their investigation. The parties should consider whether 'pulling and refiling' under the HSR filings will give the investigators enough time to finalise their analysis or whether a pull and refile will simply delay an inevitable second request.
For further information on this topic please contact Amanda Wait or Andrew Eklund at Norton Rose Fulbright US LLP by telephone (+1 202 662 0200) or email ([email protected] or [email protected]). The Norton Rose Fulbright website can be accessed at www.nortonrosefulbright.com.
An earlier version of this article first appeared in the February 2019 issue of The Antitrust Source.
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