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Most daily eDiscovery work today centers around litigation. However, certain eDiscovery requests require slightly different procedures. One such example occurs during a merger or acquisition.
The Hart-Scott-Rodino Antitrust Improvements Act of 1976 (15 U.S.C. § 18a), also known as the HSR Act, requires notifying the U.S. Federal Trade Commission (FTC) and the Department of Justice (DOJ) before completing certain mergers or acquisitions. And during this process, companies may receive a second request for information.
Keep reading to learn how eDiscovery works during regulatory audits, what an eDiscovery second request is, and how to handle the process effectively.
What Is a Second Request in eDiscovery?
A second request follows an initial voluntary request for information during a merger or acquisition. To illustrate, in June 2022, the FTC issued a second request for information for UnitedHealth Group’s $5 billion acquisition of LHC Group. The request follows a May shareholder suit claiming the company misled investors about its finances before the merger.
First, a company must notify the FTC and DOJ about an upcoming merger or acquisition. Then, the party must wait to hear back from the agencies while they review the request. This process generally takes 30 days.
During the waiting period, the party has the opportunity to voluntarily provide information to help the agencies make a decision. A voluntary request may involve information about the company, its competitors, the market, and the upcoming deal, among other things.
In some cases, the agencies may push the deal through without requiring any further insights. However, in other instances—particularly those involving high-profile companies or deals that could have a broad impact on the surrounding industry and competitors—the agencies may request further details.
Second request investigations vary in length depending on the companies and their industries. They generally take anywhere from three months to a year to complete.
What Is the Current Threshold for eDiscovery Second Requests?
The HSR Act requires a minimum dollar threshold to minimize the burden of premerger reporting. And in 2000, Congress amended the HSR to require an annual adjustment. The minimum size of transaction threshold started at $50 million but reached $101 million in 2022. So, mergers of companies that are worth less than $101 million don't have to be reported in this manner.
There’s also a filing fee for reporting qualified mergers. Ultimately, the filing fee depends on the value of the transaction at the time of filing.
Who Issues a Second Request?
Hart-Scott-Rodino enables the FTC or the Assistant Attorney General to request additional details during a merger or acquisition review. This request may come during the 30-day waiting period or a 15-day waiting period for a cash tender offer deal.
Why Is a Second Request Urgent?
It’s critical to act with a sense of urgency following a second request because it directly impacts the outcome of the deal.
Keep in mind that a second request doesn’t indicate a denial from the FTC or DOJ. However, it does indicate that the agencies need further information to make a decision. And for this reason, failing to respond promptly could result in a denial from one or both agencies.
Key Documents in a Second Request
It’s important to realize that a second request is typically much more intricate and comprehensive than an initial voluntary request.
For example, the FTC’s Guidance for Voluntary Submission asks for eight requests for information while the DOJ asks for nine. However, the FTC and DOJ second requests models call for 29 and 39 requests for information, respectively.
Topics vary slightly between the FTC and DOJ. For example, some FTC second request topics include items related to products and facilities, customers and sales, and competitors and entry. Some of the DOJ’s second request topics include items like marketing and strategy, pricing, and datasets or databases.
Also, note that both agencies may request various additional items during a second request. You may have to furnish physical items. Or, they might ask you to provide electronically stored information (ESI) like emails, blogs, text messages, chat histories, social media posts, word documents, images, and audio files, among others.
Furthermore, FTC and DOJ policies tend to vary from administration to administration. The Biden Administration is taking active measures to ensure a tighter HSR review process.
As a result, companies—particularly healthcare agencies—now face more questions. In addition, more second request investigations are taking place. A record 3,500-plus HSR notifications took place in 2021, with the agency cracking down to investigate whether mergers may impact competition and customers.
How to Handle a Second Request
A second request for information can be a challenging experience and stressful undertaking for legal teams. Failure to properly handle this type of request can potentially block a deal and lead to a range of negative repercussions.
With that in mind, here’s a breakdown of how to handle a second request for information.
Always Anticipate a Second Review
In general, it’s best to prepare early for a second review before filing for a merger or acquisition. By planning ahead, you can have documents ready to export and share and avoid scrambling for information at the last minute.
In addition, planning lets you identify potential issues that could arise during a request for information. This way, you can avoid potential roadblocks and barriers.
Organize Your Team
As part of the organizing and preparation process, it’s a good idea to round up your team and make sure everyone is up to speed with eDiscovery roles and responsibilities.
This is the time to review your plan and iron out any wrinkles it may have. It’s also necessary to make sure you have the human resources to assist with discovery extraction, requests, processing, and analysis.
Enforce Legal Holds
During a second request, the FTC and DOJ usually ask for access to private communications and documents. As such, it’s critical to issue a legal hold as soon as possible to protect and preserve information.
Failure to issue and enforce a legal hold could lead to potential conflicts during the review. For this reason, you’ll want to properly communicate and enforce the hold for all relevant parties across the organization.
Use Agency Templates
The FTC and DOJ provide templates that make it easy to comply with second requests. Make sure to request the latest templates and stick to them throughout the review process.
This can help to streamline reviews and avoid errors.
Maximize the Voluntary Submission Opportunity
While it isn’t always possible to avoid a second request, you can potentially reduce your chances of encountering one by providing thorough reporting and documentation during the voluntary submission period.
This is the chance to provide both agencies with all the necessary information that could come up during an investigation. By providing information upfront, you give your organization a better chance of gaining approval without encountering delays.
Centralize ESI Management
Staying organized is key to success when dealing with regulatory agencies like the FTC and the DOJ. But this can be very difficult for organizations with large datasets and distributed teams.
It helps to centralize ESI in a purpose-built platform like Venio Systems, which your team can access from any location. This is important for controlling access and producing clean, accurate, and reliable reports.
Supercharge Your eDiscovery Efforts With Venio Today!
With Venio, your legal team can expedite legal eDiscovery review and respond to any request faster and more thoroughly. To learn more about how Venio can help you transform your eDiscovery efforts and respond to second requests with ease, request a free demo today.
About the Author
Justin Reynolds, Akshita Singhal & Lianna Vaughan
This post was written by Justin Reynolds. Justin is a freelance writer who enjoys telling stories about how technology, science, and creativity can help workers be more productive. In his spare time, he likes seeing or playing live music, hiking, and traveling. This post was reviewed and published by Akshita and Lianna, the in-house team of Venio.