Summary of the FTC's Model Second Request - Part 1

As noted in the Tip of the Night for April 29, 2015, businesses preparing for a merger will often need to use advanced e-discovery techniques like Technology Assisted Review in order to be able to make document productions quickly in response to a Second Request under the Hart-Scott-Rodino Act. As discussed in the Tip of the Night for last night, the FTC and the DOJ post model second requests on their sites. Here's a review of the Federal Trade Commission's Model Request for Additional Information and Documentary Material, part of its Hart-Scott-Rodino Premerger Notification Program.

Parties have the right to appeal a Second Request. A conference can be scheduled within 7 days of the receipt of a petition for an appeal, and the petitioner and the investigating staff must submit briefs 3 days prior to the conference that are to be no longer than 5 double spaced pages. The FTC's general counsel issues a decision 3 days after the conference. Appeals may also be made asking that the second request be modified to be less burdensome or for certification that the company has already substantially compiled with the request.

The FTC's model second request specifies that among other things the following information be produced:

1. Organizational charts for the company as a whole and each of its subdivisions.

2. A list of and contact information for all agents and representatives of the company, as well as attorneys, investment bankers, and other agents assigned to work on the proposed transaction.

3. A data map for the company.

4. Detailed product descriptions.

5. Sales data for customers in specific areas and the estimated market shares of the company and its competitors in relevant areas.

6. Information about facilities which manufacture relevant products.

7. Advertising materials.

8. Documentation of the company's business plans, R&D programs, budgets, and presentations to executive committees.

9. Market studies and forecasts.

10. Price lists and policies.

11. Information on electronic databases with product, pricing, sales, costs, intellectual property, and customer data. The model specifically asks the company to:

(a) identify the (i) database type, i.e., flat, relational, or enterprise; (ii) fields, query forms, and reports available or maintained; (iii) software product(s) or platform(s) required to access the database;

The actual data from the databases on sales, discounts, win/loss reports, customer relationships and other subjects must also be produced. The model includes a demand for a data dictionary which provides definitions for field names and codes, and also identifies primary keys.

12. Financial statements.

13. Plans for the construction of new facilities or the closing of current facilities.

14. Documents relating to imports and exports.

15. Information about the company's notification of the transaction to non-U.S. competition authorities.

16. Documents relating to other acquisitions, joint ventures, or mergers involving relevant products other than the proposed transaction.

17. Documents relating to the benefits, risks and costs of the proposed transaction.

18. All documents provided to the Board of Directors relating to the relevant product, and minutes and recordings of board meetings regarding the relevant product.

19. Document retention and destruction policies.

20. A list of the federal judicial districts in which the company has an agent to receive service of process.

Notably the list of requested information in the model concludes with a request for information about the electronic discovery process itself. Electronic discovery software and search terms must be identified, and an expert must be named that can testify about the review:

Identify any electronic production tools or software packages utilized by the Company in responding to this Request for: keyword searching, Technology Assisted Review, email threading, de-duplication, and global de-duplication or near-de-duplication (please note that the use of all forms of de-duplication requires advance approval from Commission staff per Instruction I(4)(e)), and: (a) if the Company utilized keyword search terms to identify documents and information responsive to this Request, provide a list of the search terms used for

each custodian; (b) if the Company utilized Technology Assisted Review software:

(i) describe the collection methodology, including: (a) how the software was utilized to identify responsive documents; (b) the process the Company utilized to identify and validate the seed set documents subject to manual review; (c) the total number of documents reviewed manually; (d) the total number of documents determined nonresponsive without manual review; (e) the process the Company used to determine and validate the accuracy of the automatic determinations of responsiveness and nonresponsiveness; (f) how the Company handled exceptions (“uncategorized documents”); and (g) if the Company’s documents include foreign language documents, whether reviewed manually or by some technology-assisted method; and (ii) provide all statistical analyses utilized or generated by the Company or its agents related to the precision, recall, accuracy, validation, or quality of its document production in response to this Request; and

(c) identify the Person(s) able to testify on behalf of the Company about information known or reasonably available to the organization, relating to its response to this Specification.