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U.S. Antitrust Agencies Issue Revised Model Waiver of Confidentiality For Mergers and Non-Merger Civil Investigations




by:
Larissa C. Bergin
J. Bruce McDonald
Ryan C. Thomas
David P. Wales
Jones Day - Washington Office

 
October 8, 2013

Previously published on October 2013

The U.S. antitrust agencies recently issued a revised model waiver of confidentiality for individuals and companies to use in merger and civil non-merger matters that cross international borders. As more companies engage in activities that affect multiple jurisdictions, competition authorities are increasingly cooperating with each other to ensure some measure of consistency in how they conduct investigations. The subjects of these investigations are justifiably concerned about what this means for their confidential information. The joint model waiver provides the business community and their counsel with useful guidance so that they can make a more informed decision about whether or not to grant a waiver.

What are confidentiality waivers?

Information provided to the U.S. agencies during investigations is subject to strict statutory confidentiality protections. The U.S. agencies are prohibited from disclosing this information to others, including to foreign competition authorities, without prior consent.  Consent is obtained through the use of confidentiality waivers—agreements between the DOJ or FTC and the entity under investigation—that permit the U.S. agency to exchange investigation-related documents and information with one of more non-U.S. agencies. The decision whether to provide a waiver has always been, and remains, voluntary, and refusing to agree to an agency request does not prejudice the outcome of the investigation. Waivers have been used by the DOJ and the FTC for years, especially in merger cases, although each has used its own preferred model form.

What’s new about the U.S. model waiver?

The model waiver jointly issued by the U.S. antitrust agencies and the accompanying Frequency Asked Questions (FAQ) released by the FTC staff reflect the agencies’ recent experience with waivers, incorporates updated language and provisions, and provides a uniform approach that both agencies will use in future investigations. As a practical matter, the joint model waiver memorializes prior past practice.  A few things worth noting:

  • Treatment of privileged documents.  The DOJ and the FTC will not use a waiver as a "backdoor" to collect information from a foreign agency that would be privileged under U.S. privilege law. This is important because the scope of the legal privilege varies by jurisdiction. For example, advice from in-house counsel is generally privileged under U.S. law, but is not under European Community law or under the laws of several Asian countries. Because a privilege determination needs to be made up front, the FAQ provides that, "to the extent possible, [the producing party should] clearly identify any documents that are privileged under U.S. law, e.g., information subject to the attorney-client privilege, that are provided to non-U.S. competition authorities." Recognizing the difficulty in satisfying this recommendation, the FAQ goes on to state that, in the event the U.S. agencies receive privileged documents from a non-U.S. competition authority, they will return, sequester, or destroy the privileged information. 
  • Information obtained from non-U.S. competition authorities. The model waiver provides that, when the U.S. agencies receive confidential information from non-U.S. competition authorities pursuant to a waiver, it is treated as if they had requested the material directly from the entity under investigation, making it subject to the applicable U.S. confidentiality provisions. Entities can take some comfort in this position because U.S. agencies generally afford significant confidentiality protections to materials that they request during investigations.
  • Information provided to non-U.S. competition authorities. According to the model waiver, information that the U.S. agencies send to non-U.S. authorities listed in the waiver will be protected in accordance with the recipient non-U.S. competition authority’s statutes and rules. Although this is not new, it reaffirms that (i) entities need to understand the non-U.S. competition authority’s confidentiality protections and (ii) they should memorialize that understanding in a simultaneous waiver submitted to the non-U.S. competition authority.  

Are confidentiality waivers a good idea, and does the model waiver make the decision easier?

The model waiver provides useful guidance, especially concerning the treatment of privileged documents, but it does not meaningfully change the analysis about whether a party should grant a waiver. In general, waivers will remain more common in merger cases (where the parties are trying to work with agencies to obtain clearance) than in non-merger civil investigations (where a party may not be keen to help multiple agencies' with their investigation, which ultimately could result in liability). Regardless of the context, waivers are of questionable utility if a matter does not raise similar competition issues across jurisdictions. Other concerns include:  (i) if a non-U.S. agency is not able to provide sufficient confidentiality protections, (ii) if the substantive law in the receiving jurisdiction is more likely to result in enforcement action, and (iii) if the receiving jurisdiction could not access the materials but for the waiver (e.g., U.S. deposition transcripts).

In appropriate cases, however, granting a waiver makes sense. For example, merging parties in a cross border transaction often require regulatory clearance from several jurisdictions before they can close. Waivers can allow the parties to avoid duplicative productions to multiple agencies that are seeking the same documents, data, and information.  Further, by facilitating better coordination among regulators, providing a waiver may facilitate more efficient investigations and non-conflicting remedies (e.g., asset divestitures located in one or more jurisdictions). Moreover, the U.S. agencies and their foreign counterparts still may cooperate without a waiver, but may not exchange confidential information provided by the parties.  Finally, if after consulting with counsel a party is inclined to agree to a waiver, it should be mindful that the U.S. agencies’ model waiver is just that—a model. There could be circumstances when the party should try to negotiate a more limited waiver with DOJ or FTC.



 

The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
 

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