DealLawyers.com Blog

When the FTC issues an HSR Second Request, it may subsequently determine to modify that request if it “determines that a less burdensome request would be consistent with the needs of the investigation.”  Last week, the FTC amended Section 2.20(b)(3) of its Rules of Practice to clarify that it may take into account all “relevant factors” in determining whether to modify the request.

The amended rule specifies that relevant factors may include “timing agreement negotiations, the competitive issues involved, the manner in which information and documents are maintained by the recipient, the type of information available to the recipient, the relative burdens to the recipient(s) of producing the requested information, and whether a less burdensome request would be consistent with the needs of the investigation.”  This Gibson Dunn memo discussing the amendments offers some key takeaways for dealmakers. These include:

Greater Transparency in Second Request Negotiations. The amended rule codifies factors FTC Staff may consider when negotiating Second Request modifications, providing parties with a clearer framework for engaging with Staff on scope and burden. Notably, the amended rule now expressly states the linkage between modifications and timing agreements—a concept that has long been applied by FTC Staff but had not been codified until now. Parties and their counsel can now point to the enumerated factors—including the relative burden of production and timing agreement negotiations—when advocating for modifications that narrow the scope of a Second Request.

Proactive Engagement with FTC Staff Remains Critical. Parties receiving Second Requests should engage FTC Staff early and proactively regarding the scope of production. The codified factors, particularly those relating to how information and documents are maintained and the relative burdens of production, may provide avenues for productive dialogue about narrowing or tailoring requests.

The memo points out that the amendment applies only to FTC-issued Second Requests, but that it represents a continuation of updates to Second Request procedures by both the FTC & the DOJ.  It also notes that substantive standard for the information that the FTC may seek through the Second Request process remains unchanged.

– John Jenkins