Parties responding to Second Requests are experiencing more burdensome and lengthy investigations, with more documents and information being requested than ever before. This outcome is a direct result of more active antitrust enforcement by the DOJ and FTC, as reflected by their revised Merger Guidelines issued in December 2023 and document preservation guidance issued in January 2024. And with the new HSR filing rules issued on October 10, 2024, parties will need to submit far more documents and information at the time of filing, early in the process.
To effectively manage these challenges, minimize costs and be adequately prepared to address the agencies’ substantive concerns, parties must proactively prepare for HSR filings and Second Requests. By understanding the latest data requirements and Model Second Request, taking steps to organize their documents, and implementing efficient review processes, they can streamline investigations and achieve substantial compliance earlier.
1. Assemble the right team.
The team is a critical part of the planning and execution process; developing the right team prior to receiving a Second Request, and even before making an HSR filings, can expedite the process. In addition to the deal team and antitrust counsel, eDiscovery providers experienced in large-scale investigations can advise on the most efficient approaches to collections, review approaches, and rolling productions–while supporting these activities through substantial compliance.
2. Create a clear and comprehensive data map.
A clear and accurate data map is essential for efficient HSR filing preparation and Second Request responses. This visual representation outlines the location and flow of your company’s data, from its origin to its destination (often an eDiscovery platform). By understanding your data landscape, you can quickly identify relevant documents and other potentially responsive ESI across various sources. Moreover, the FTC’s Model Second Request explicitly requires a data map, making it a crucial component of your preparation.
3. Proactively negotiate eDiscovery tools and methodologies.
The agencies have implemented stricter guidelines for the approval and use of eDiscovery tools in Second Requests. The FTC’s Model Second Request now requires companies to disclose their intended use of these tools before applying them to identify responsive documents.
To streamline the review process and avoid potential delays, proactively negotiate with the agencies regarding your proposed eDiscovery tools and methodologies. By demonstrating your approach aligns with their requirements, you can expedite the process.
4. Preserve and forensically collect data—including from collaboration and messaging applications.
The agencies have expanded their data preservation requirements to include collaboration tools and messaging applications, such as Microsoft Teams and Slack. This means that companies must now preserve and collect data from both ephemeral and non-ephemeral messages from these platforms, in addition to other potentially relevant data like email, network shares, social media, audio/visual recordings, and employee-owned devices.
It is important not to overlook employees’ personal devices that are used for work communications, and approaches for handling encrypted messages, audio/video, images, chat parsing and analysis, and other complex data—which necessitate the latest tools and expertise.
5. Leverage technology-assisted review (TAR) based on continuous active learning (CAL) for rapid first-pass review workflow.
With tight deadlines, parties must strike a balance between producing material quickly and having attorneys review every document. Both agencies are receptive to the use of TAR 1.0 and TAR 2.0. The latter, based on the continuous active learning protocol, most effectively strikes a balance between time constraints and thoroughness by defensibly eliminating large volumes of documents from eyes-on review while ensuring high precision and recall.
To comply with the FTC’s Model Second Request, you must document how TAR is used to identify responsive documents, including the process for identifying and validating the seed set documents subject to manual review, the validation process, exception handling (often more cost-effective with a dual-shore managed review team), language considerations (and how multi-language review will be conducted), and statistical analysis.
It is essential to have subject matter experts on CAL who help negotiate review protocols and can testify on behalf of your company regarding its use should that become necessary.
6. Identify potential deal risks at the start of first-pass review.
By leveraging analytics and AI during the initial stages of first-pass review, deal teams can uncover key documents that may pique questions from the agencies or may be used in support of arguments as to why the agencies should not have any significant antitrust concerns. This early identification allows for a more informed assessment of the transaction’s potential risks and enables proactive planning for making substantive arguments, as well as consideration of remedial measures, such as divestitures. And with the new HSR filing rules requiring that ordinary course of business documents be submitted with the HSR filings, along with a description of the rationale for the transaction, it is more important than ever for antitrust counsel to have time to consider these documents, even before any HSR filing is made.
7. Conduct concurrent workflows for privilege, PII, and other sensitive data protection.
In standard large-scale eDiscovery reviews, privilege, PII, and sensitive data identification and redaction often comes after first-pass review. But in a Second Request, concurrent secondary workflows to detect and protect privilege, PII, PHI, and other sensitive data can be used to expedite the review. For example, by using automated tools that identify thousands of proprietary privilege terms and hundreds of Regular Expression (RegEx) patterns for PII, PHI, and other sensitive information, this secondary workflow can be done concurrently with the primary workflow.
8. Create a full privilege log, expedited with Generative AI.
With the FTC’s discontinuation in 2021 of the option to submit a “partial privilege log,” companies now must submit a full privilege log in response to all Second Requests. Creating and defending privilege logs has traditionally been a time-consuming, manual process—one that can delay reaching substantial compliance.
In November 2023, the California Bar Association published an advisory, Practical Guidance for the Use of Generative Artificial Intelligence in the Practice of Law, that offers high-level guidance on the use of GenAI in the eDiscovery process. Using GenAI for privilege logging can streamline and save substantial time by generating short document summaries, increasing insight into the content to validate privilege log coding, and delivering swift analysis across large volumes of documents to accurately identify privileged and other sensitive information.
9. Execute high-quality rolling productions.
The sooner the parties produce, the sooner they can certify substantial compliance, shifting the pressure to the agencies to decide on the transaction. Thus, parties should plan for rolling collections, prioritizing and front-loading the most important documents first for quick production. The process should allow for ingesting collections into the review platform, rapid processing, and availability of new documents on a rolling basis—keyed to agency demands and timelines.
Quality matters. Hurried productions can lead to mistakes and cause the agencies to challenge your certification of substantial compliance, so documenting high quality is critical.
10. Be prepared for refreshed collections and review.
To ensure early substantial compliance, parties will need to refresh their data collections and produce documents near in time to certification. The ongoing process of collection, processing and review is essential to refreshed productions and for addressing any new information or questions that arise during the investigation.
Moving from chaos to efficiency
Making an HSR filing, and particularly responding to a Second Request, is incredibly time consuming and burdensome. By following these best practices, merging parties can significantly reduce the inefficiencies and costs of the merger review process, and reach substantial compliance quickly.
Explore strategies for efficient HSR filings discussed in this article and gain deeper insights into the new rules in our webinar on FTC and DOJ merger reviews.
Let’s talk about how UnitedLex can support your HSR filings and Second Requests.