June 27, 2017

Antitrust: 3rd Party Subpoenas in M&A Investigations

When a big deal’s brewing in your industry, it’s not unusual for other competitors to receive inquiries from antitrust regulators concerning the market impact of the potential deal.  Those inquiries sometimes turn into 3rd party subpoenas – and big headaches for the companies on the receiving end of them.

This Wilson Sonsini memo reviews Humana’s recent unsuccessful efforts to curb extensive discovery requests made by the FTC as part of its Walgreens/RiteAid investigation, and offers tips for companies in similar situations to effectively negotiate with regulators to lessen the burden.  Here’s an excerpt:

Be Prepared. Work with counsel to identify employees and shared files likely to have information covered by the subpoena. Having this information (and knowing what you do not have) at the outset can facilitate productive engagement with the antitrust agency.

Ask Questions About the Requests. Requests often appear to be duplicative, and engaging with the agency on their reasoning for specific requests may lend insight into additional ways the request can be narrowed or focused.

Offer a Counter ProposalOnce engaged in discussions with the agency, be proactive in identifying ways in which the subpoena that could be modified and/or reduced.

Specify the BurdenBe exact in describing the scope of the subpoena’s burden by specifying the number of employees’ records that would be impacted, whether any of the information requested is held in file storage, the volume of documents that would need to be collected, and the cost of reviewing the files.

While each investigation has its own unique circumstances, preparation & early discussions with the agency can help reduce the burden of 3rd party subpoenas and other discovery requests in antitrust investigations.

John Jenkins