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The Federal Trade Commission said June 22 it plans to speed merger reviews by expediting the so-called second-request process. In a report to Congress by the agency’s bureau of competition, however, the FTC gives itself generally high marks for reducing the burden associated with its demands for more details on deals. The FTC reviewed second requests issued in 1999, 2000 and the first quarter of 2001, which it noted has been a period of record-high mergers and acquisitions activity. The report included interviews with FTC staff and outside lawyers involved in mergers. “The bureau’s study indicates that the merger review process works reasonably well, particularly under the circumstances that prevailed during the study period,” the FTC said, “but room remains for further improvements.” The study was mandated as part of a 2000 law revamping the Hart-Scott-Rodino Antitrust Improvements Act of 1976. Lawmakers were worried that regulators imposed unnecessarily large document requests on merging parties. They had considered giving magistrate judges authority to narrow these requests, but dropped the idea at the behest of the antitrust agencies, which vowed to streamline the second-request process. To ensure that negotiations over what should be included in second requests do not drag on indefinitely, the FTC said it will conduct a formal status check on the progress of talks for each deal. This review will occur 20 days after the second request is issued and will be conducted by senior staff. “This will enable the bureau to ensure that these negotiations are completed as promptly as possible,” the agency said. Neil Imus, a partner at Piper Marbury Rudnick & Wolfe, said the 20-day review could help in a few cases. “A 20-day review process is probably a good idea,” he said. “That may be a way to keep the front office apprised of what is going on in the various second requests.” Yet, he said it will not address the fundamental problem, which he said is the unwillingness of some FTC staff to pare down their document demands. The FTC also said it will increase training related to the production of documents stored electronically. The goal is to educate agency staff on how to access such data and to help focus second requests on the data required to review a deal. In addition, the agency said it will alter its rules to ensure that company officials involved in electronic storage of data are involved in second-request negotiations. Among other changes the agency is studying are further tailoring the second request to the specific transaction under review and finding ways to make it less burdensome for companies to keep documents covered by attorney-client privilege out of the second request. Currently, the company must include a general description of the document in a privilege log submitted to the agency. Also under review is how companies may submit data used in econometric analyses or maps used to assess the geographic implications of a merger in the oil or retail sectors. The FTC said not a single company has resorted to an appeals process created to resolve second-request disputes. The procedure lets a company ask the FTC’s general counsel to narrow the request if it believes the staff is being unreasonable. Imus said he is not surprised no one has used the process. “I thought from the beginning it would be useful to have someone outside the agency be the reviewer rather than have it done internally,” he said. “Even though the agency has tried to put it in the hands of someone less interested than the staff, they are still part of the agency. There is a view in the bar that it would be hard to overcome the staff position when you are dealing with someone in the agency.” Copyright (c)2001 TDD, LLC. All rights reserved.

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