FTC Reforms Praised by Communications Lawyers; Official Sees More Changes
The FTC will speed up merger antitrust reviews by sharing more information with companies with deals under scrutiny, capping the number of executives asked to provide information and relying more on newer technologies to get documents, it said. The agency will tell firms about the types of economic and other analyses they're using in their investigations, said a 31-page document released Thurs. Chmn. Deborah Majoras unveiled the guidelines after a year- long review by a task force. She said the rules will reduce costs and time when the FTC makes a 2nd request for information.
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Second information requests, occurring in less than 5% of all deals, are frequent in telecom and cable deals. The FTC said it wouldn’t block Comcast and Time Warner’s $17.6 billion purchase of Adelphia systems following a 7-month review (CD Feb 1 p12). The FTC is examining further tweaks to merger review rules to further streamline the process, said Jeffrey Schmidt, dir.-FTC Bureau of Competition.
Communications lawyers who spoke with us said the move was smart. They said it largely codifies existing practices at the agency, which they expect to make further reforms. The report said the agency should try to limit the use of backup computer tapes when requesting information and instead retrieve documents using e-mail. “They're looking for a way to ease the burden… It’s a good first step” said Womble Carlyle’s Michael Hazzard. The report may reduce the amount of data sought by the FTC, which would help clients, said Hazzard: “There’s so much information, electronic and otherwise, that it becomes burdensome.”
One of the changes centers around how to better seek company files to meet a data request. “Backup tapes are used for data recovery and generally are not configured for routine document review,” said the report. “The FTC will require a party to produce backup tapes only if responsive documents are not available through other more accessible sources.” Staff must also work closely with companies as they review deals, said the report. It seeks to “facilitate early and ongoing communication between staff and the parties’ business personnel, combined with the exercise of sound judgment about the types and volumes of data that are reasonably necessary.”
The FTC principles provide telecom companies with a guide of what to expect in merger reviews, said To-Quyen Truong, head of Dow, Lohnes & Albertson’s telecom practice. “It provides more certainty, which is good, because most parties only go into the transactions once in a while,” she said.
The reforms don’t entail special rules for telecom companies, said Schmidt. “The largest impact of this for the telecom companies ought to be the same impact that will apply to any company going through the merger review process, and that is to make the process more efficient,” Schmidt told us. “That’s going to be accomplished I think by what this process really drives, which is a greater level of communication and cooperation between the parties’ counsel and the agency… That’s not always the way it’s done.”
Observers expect further tweaks. “I think over time we're going to see further reforms,” said Hazzard: “The goal wasn’t to let the horse out of the barn too quickly.” The merger task force that provided input for the report isn’t finished, said Schmidt: “The merger reform task force effort is ongoing. My hope would certainly be that the task force would continue its efforts without delay… The effort will definitely continue to try to find additional ways to make the process more efficient.”