Second Requests and Antitrust Investigation: FTC and DOJ Process

The Hart-Scott-Rodino process has two distinct phases. In the first phase, the parties file their HSR notifications and observe the initial waiting period while the reviewing agency conducts a preliminary competitive assessment. For most transactions, the review ends here: the agency determines that the transaction does not raise competitive concerns that warrant further investigation, and the waiting period expires without agency action. In the second phase, which occurs when the agency issues a second request before the expiration of the initial waiting period, the transaction becomes the subject of a full-scale antitrust investigation. The second request converts what was a procedural filing requirement into an adversarial process with the character of complex litigation discovery.

This sub-article is part of the HSR Antitrust M&A Legal Guide. It addresses the initial thirty-day waiting period structure, how the agencies make clearance decisions during the initial period, the second request: its subject matter scope, timing mechanics, and clock restart upon substantial compliance certification, the substantial compliance standard and what it requires in practice, the 2021 Executive Order 14036 and the resulting changes in agency enforcement posture, the scope of document and data demands, deposition authority and how it is used, privilege log obligations and privilege waiver risk, the distinction between quick-look analysis and full economic trial preparation, litigation hold obligations that arise at HSR filing, negotiating timing agreements with the agency to manage the investigation timeline, Statement of Position and advocacy submissions to agency economists and staff, how agency economists model competitive effects and what data drives those models, divestiture offers during the review process and how they are evaluated, the architecture of consent decrees and behavioral remedies, Section 7 litigation timing and the preliminary injunction standard, FTC Part 3 administrative litigation, and international coordination including ICN frameworks and waiver of confidentiality agreements with foreign authorities. The companion article on HSR filing requirements and thresholds addresses the pre-filing analysis that precedes the review phase.

Acquisition Stars advises parties on antitrust merger review strategy, second request response management, divestiture negotiation, and coordination of federal and international review processes. The analysis below reflects the agencies' current practices and does not constitute legal advice for any specific transaction. Antitrust enforcement practice evolves, and parties should confirm current agency policies with counsel at the time of their transaction.

The Initial Waiting Period: Structure, Clearance Decisions, and Early Termination

The initial HSR waiting period is thirty calendar days for most transactions, beginning when the agencies receive both parties' completed filings. For cash tender offers, the initial period is fifteen calendar days. The timing difference reflects Congress's judgment that cash tender offer targets are particularly vulnerable to competitive harm during a prolonged review period and that a shorter initial review is appropriate. During the initial waiting period, the reviewing agency assigns the transaction to a staff team, conducts a preliminary competitive analysis, and contacts market participants including customers, competitors, and suppliers to gather information about the transaction's likely competitive effects. This market outreach, sometimes called the preliminary inquiry, involves telephone interviews and informal information requests. The agency uses market outreach responses to assess whether the transaction's competitive concerns are substantial enough to warrant a second request.

Clearance decisions during the initial period take three forms. The first is expiration of the waiting period without agency action, which allows the parties to close and which is sometimes informally referred to as clearance, though the agencies do not formally approve or disapprove transactions. The second is the issuance of a second request before the waiting period expires, which extends the period and opens the full investigation phase. The third is a consent decree or other negotiated remedy agreed to before the waiting period expires, allowing the transaction to proceed subject to conditions. The agency can also seek an injunction in federal district court to block the transaction before the waiting period expires, though this is rare at the initial waiting period stage.

Early termination of the waiting period, which historically allowed parties to close before the full period elapsed in non-controversial transactions, was suspended by the FTC in February 2021 citing administrative burden concerns. The FTC subsequently reinstated a modified version of early termination in 2023, but available early termination grants have been relatively limited, and parties should not plan transaction timelines around receiving early termination. Parties who want to assess whether early termination is feasible for a specific transaction should consult with counsel familiar with current agency practice. Even where early termination is available, the agencies' market outreach process means that the parties cannot be certain of early termination until they receive notice, and any planning for closing before the full period should include contingencies.

Second Request: Subject Matter Scope and Timing Clock Mechanics

A second request is a formal demand for additional information issued pursuant to the HSR Act's authority at 15 U.S.C. Section 18a(e)(1). It must be issued before the expiration of the initial waiting period. The second request imposes an obligation on the parties to produce documents and data described in the request and, in most cases, to make witnesses available for depositions. Upon receipt of a second request, the parties' waiting period is extended: the clock stops running and does not restart until the party that received the second request certifies substantial compliance to the agency.

The subject matter of a second request is defined by the agency's competitive concerns and tracks the markets in which the parties overlap. A second request in a horizontal merger between competitors in a specific product market will demand documents and data relating to competition in that market: pricing practices, customer contracts, cost structures, product development activities, competitive intelligence gathering, and strategic planning documents that discuss the competitive landscape. The demand will also typically cover the parties' rationale for the transaction and the projected competitive effects, including all documents reflecting any analysis of the transaction's effects on market competition. In mergers with vertical or conglomerate dimensions, the second request will extend to the vertical or adjacent markets at issue. The scope of a second request is typically broad, and parties should not assume that areas not explicitly identified in the demand are excluded from the agency's inquiry. Staff will often issue supplemental requests or additional document specifications after the initial second request.

The timing agreement negotiation is one of the most important strategic decisions following a second request. Parties can negotiate with the agency a schedule for completing the second request response, including milestones for custodian identification, collection, privilege review, and production. Timing agreements also typically include provisions addressing the agency's review of the production and any supplemental requests. A realistic timing agreement that accounts for the actual complexity of the data collection and document review protects the parties from certification pressure and from disputes about whether substantial compliance has been achieved. Parties who certify substantial compliance prematurely and then face agency disputes about the adequacy of the production are in a worse position than parties who negotiate realistic timelines from the outset.

Substantial Compliance: Standard, Mechanics, and Common Deficiencies

Substantial compliance is the benchmark that must be achieved before the waiting period clock restarts after a second request. The issuing agency determines whether substantial compliance has been achieved. The substantial compliance determination is made by agency staff reviewing the production against the second request's specifications and determining whether the documents, data, and other materials provided are complete and responsive in all material respects. The standard does not require perfection in every technical detail, but it does require that the production address all material categories of demanded information.

Common deficiencies that result in substantial compliance disputes include: incomplete identification of custodians, resulting in gaps in document collection from key personnel; inadequate search term protocols that fail to capture documents responsive to the demand's subject matter; privilege assertions that the agency views as overbroad, particularly privilege logs that describe documents too broadly to assess the privilege claim; data productions that do not conform to the technical specifications in the second request; gaps in date ranges for document collection; failure to produce foreign-language documents with adequate translations; and failure to produce documents from acquired entities or predecessor businesses that are covered by the demand. Working through the second request specifications in detail at the outset and establishing a systematic collection and review protocol that addresses each specification is the most effective way to minimize substantial compliance disputes.

Certification of substantial compliance is a significant legal step. The certifying officer signs a declaration under penalty of law that the production is substantially compliant. Before certification, counsel should conduct a certification review that confirms the adequacy of the document production, the completeness of the data productions, the accuracy of the privilege log, and the resolution of any outstanding agency comments on the production. Premature certification creates both legal risk, because the certification may be inaccurate, and strategic risk, because the agency may dispute the certification and refuse to restart the clock, creating uncertainty about the transaction's timeline. The timing agreement should include provisions for the agency to raise production concerns before the certification date so that parties can address identified gaps without disputing the certification.

2021 Executive Order 14036 and the Heightened Enforcement Environment

Executive Order 14036, "Promoting Competition in the American Economy," signed by President Biden in July 2021, directed federal agencies including the DOJ and FTC to revitalize antitrust enforcement and to scrutinize mergers more rigorously across the economy. The Order specifically noted that the agencies had not been sufficiently aggressive in challenging acquisitions in healthcare, technology, agriculture, and other concentrated industries, and directed the agencies to develop new guidelines and enforcement policies that would address these concerns.

The enforcement changes that followed the Order were significant and concrete. The agencies jointly rescinded the 2020 Vertical Merger Guidelines in September 2021, signaling that the prior administration's more permissive approach to vertical mergers would not govern going forward. Both agencies withdrew prior policy statements on remedies and committed to holding parties to more demanding remedy standards before agreeing to settlement. The agencies increased staffing dedicated to merger review and, in practice, issued second requests in a higher percentage of transactions in concentrated markets than in prior years. The DOJ challenged several high-profile mergers in federal court rather than negotiating settlements, demonstrating a willingness to litigate to a judicial determination rather than accept remedies the agencies viewed as inadequate.

The agencies jointly issued new Draft Merger Guidelines in 2023, which were finalized in December 2023. The 2023 guidelines departed significantly from the prior 2010 guidelines in several respects: they lowered the market concentration thresholds at which competitive harm is presumed, incorporated theories of harm based on effects on potential competition and nascent competitors, addressed labor market effects as an independent concern, and placed greater weight on qualitative evidence of competitive effects alongside quantitative economic analysis. The practical implications for parties planning transactions are that markets that might have been viewed as not highly concentrated under the 2010 standards may be viewed as concentrated under the 2023 standards, and that theories of competitive harm that were rarely pressed before 2021 are now more routinely raised in investigation. Pre-signing antitrust risk assessment should reflect the current guidelines and current enforcement posture. See also the companion analysis on HSR thresholds and filing requirements for how the 2024 rule changes complement the heightened review environment.

Document Demands, Depositions, and Litigation Hold Obligations

The document demands in a second request are comprehensive and typically cover multiple years of the parties' business records in the relevant markets. Standard document demands in horizontal merger second requests cover: strategic plans, competitive analyses, and pricing studies; documents discussing the rationale for the acquisition including board presentations, management presentations to acquirer leadership, and communications with financial advisors; documents discussing competitors, including competitive intelligence reports and win-loss analyses; customer contracts, pricing proposals, and bid documents; product development and innovation plans; and all documents relating to the parties' analysis of the transaction's competitive effects, including any economic studies or market analyses prepared in connection with the transaction.

Deposition authority under the HSR Act allows the agencies to compel witness testimony from officers, directors, employees, and other persons with relevant knowledge. Depositions are most commonly used to probe documents that raise competitive concerns, to understand the business rationale for the transaction, and to assess witness credibility and the weight to be given to various documentary evidence. Preparing witnesses for agency depositions requires careful coordination: deponents must understand the limits of privilege, the scope of the investigation, and the significance of the documents they are likely to be questioned about. Inconsistencies between deposition testimony and documents produced in the investigation can complicate the parties' advocacy and create additional litigation risk.

Litigation holds must be implemented at HSR filing, not upon receipt of a second request. Once an HSR filing is made, the parties are on notice that a government investigation may follow, and the obligation to preserve relevant documents arises at that point. A party that implements a litigation hold only upon receipt of a second request may have allowed the routine deletion of relevant documents during the interval between filing and second request receipt. If the agency discovers that documents were deleted after the HSR filing but before the hold was implemented, it can create adverse inferences or complicate certification of substantial compliance. The litigation hold scope should cover all custodians with knowledge of the relevant markets, the transaction, and the parties' competitive activities, and should include all forms of electronic and physical records.

Privilege Logs, Waiver Risk, and Common Privilege Disputes

Privilege log obligations in antitrust merger investigations are extensive and technically demanding. The agency typically specifies the format and content of privilege logs in the second request or in a subsequent specification. A compliant privilege log must identify each document withheld from production on privilege grounds, describe the document in sufficient detail to allow the agency to assess the privilege claim, identify the attorney and client involved, and state the specific privilege basis. Descriptions that are too general, such as "email discussion re: legal advice," are consistently rejected by agencies as insufficient.

Attorney-client privilege protects communications between a client and attorney made for the purpose of seeking or providing legal advice, provided the communication is kept confidential. Work product protection covers documents prepared by or at the direction of counsel in anticipation of litigation or government investigation. In the merger investigation context, work product protection is frequently asserted over economic analyses, competitive assessments, and strategic documents prepared by external counsel or at counsel's direction in anticipation of a second request or agency investigation. The protection applies to documents prepared after the parties reasonably anticipated a formal investigation, which in most cases means after the HSR filing or, in some cases, after the parties identified the transaction as likely to attract agency scrutiny.

Privilege waiver risk is a significant concern in complex productions. Selective disclosure of privileged information to support a party's advocacy position, producing some privileged documents while withholding others on related subjects, or sharing legal advice with third parties such as financial advisors in a manner that destroys confidentiality can all result in subject matter waiver that extends beyond the specifically disclosed documents. Parties should review their privilege log entries and their production for consistency and should ensure that any voluntary disclosures made in advocacy submissions to the agency do not inadvertently waive privilege over related communications. The agency will challenge privilege assertions it views as overbroad, and parties should be prepared to defend specific log entries in a meet-and-confer process.

Agency Economic Modeling, Advocacy Submissions, and Statement of Position

The antitrust agencies employ economists who conduct quantitative and qualitative competitive analysis of the transactions under review. Agency economic staff use the transaction data and documents produced in the second request response to construct competitive models, calculate market concentration measures, estimate the transaction's likely effects on pricing, and assess whether the parties' claimed efficiencies are credible and merger-specific. The agencies' economic analysis is central to the decision about whether to challenge a transaction, and parties who do not engage substantively with the agency's economic framework are at a strategic disadvantage.

Statement of Position and Advocacy submissions allow the parties to present their competitive analysis directly to the agency's economics and legal staff and, in appropriate cases, to agency leadership. These submissions are not required by the HSR rules but are an important tool for managing the investigation. A well-prepared advocacy submission presents the parties' view of the relevant market definition, the competitive dynamics in those markets, the absence of competitive harm from the transaction, and the procompetitive effects and efficiencies that the transaction will generate. Economic experts retained by the parties prepare economic reports that address the same questions the agency economists are analyzing, providing an independent competitive analysis that the agency can evaluate alongside its own internal analysis. Meeting with agency staff at the staff and management levels before the agency makes its charging decision is an important opportunity to present the parties' position and to identify any specific concerns the agency has that may be addressable through remedy or additional information.

Timing negotiations for advocacy submissions should be coordinated with the overall second request timeline. The parties' economic analysis typically cannot be completed until the full data production is available and the agency's areas of concern are identified through staff communications. Building adequate time for economic expert preparation and internal advocacy review into the second request timeline requires realistic scheduling from the outset. Rate-limited civil investigative demand interactions, where the agency issues additional demands in response to the parties' productions, can extend the investigation timeline and should be anticipated in transaction material adverse effect and termination rights provisions. See the discussion of deal protection provisions in the companion article on M&A transaction structure for how antitrust risk allocation is handled in purchase agreements.

Divestiture Offers During Review and Remedy Negotiation

Divestiture is the primary structural remedy available to parties seeking to resolve agency competitive concerns while preserving the core transaction. A divestiture involves the transfer of specific assets, businesses, or business lines to a third-party buyer who will operate them as an independent competitor, restoring the competition that the agency believes the transaction would eliminate. Divestitures are negotiated with the reviewing agency and must be acceptable to the agency before the transaction can proceed under a consent decree.

Timing of the divestiture offer is a strategic decision. Offering a divestiture too early, before the agency has fully developed its competitive concerns, may result in the agency expanding its remedy demands beyond what was initially necessary. Offering too late may leave insufficient time to identify and qualify a buyer, negotiate the divestiture agreement, and obtain agency approval of the buyer before transaction deadlines. Most experienced practitioners recommend that parties identify potential divestiture candidates as soon as the agency's areas of concern are understood through staff communications, typically during the second request phase, and that preliminary outreach to potential buyers be conducted confidentially to assess viability before making a formal offer to the agency.

The agency evaluates proposed divestitures against a standard of whether the divestiture is sufficient to restore the competition that the transaction would eliminate. An acceptable divestiture package must include all assets, personnel, intellectual property, customer relationships, and operational infrastructure necessary for the divested business to compete effectively as a standalone entity. Divestitures that exclude key competitive assets, divestitures that require ongoing supply or service relationships with the merged entity that could compromise the divested business's independence, and divestitures to buyers the agency views as financially weak or strategically misaligned are typically rejected. The agency approves the divestiture buyer before the consent decree is finalized, and parties should discuss buyer qualifications informally with agency staff before formally identifying a buyer.

Consent Decree Architecture and Behavioral Remedies

A consent decree is the formal instrument through which a merger investigation is resolved when the agency agrees to permit the transaction to proceed subject to specified conditions. Consent decrees in merger cases are filed in federal district court by the DOJ or in the FTC's own administrative tribunal by the FTC, and they are binding on the parties with the force of a court order. Violations of a consent decree can result in contempt proceedings and civil penalties. DOJ consent decrees are subject to the Antitrust Procedures and Penalties Act (Tunney Act), which requires a sixty-day public comment period and a judicial determination that the decree is in the public interest before it can be entered. FTC consent decrees are subject to a different procedural framework that does not require Tunney Act compliance but does involve a public comment period.

Structural remedies, primarily divestitures, are strongly preferred by both agencies over behavioral remedies. Behavioral remedies impose ongoing conduct obligations on the merged entity, such as prohibitions on certain pricing practices, requirements to supply competitors on specified terms, or obligations to license intellectual property. The agencies have been skeptical of behavioral remedies in recent years, particularly in the current enforcement environment, because behavioral remedies require ongoing monitoring and compliance verification, are difficult to enforce, and may not adequately preserve the competition that the merger eliminated. The agencies have pushed for structural divestitures even in cases where the parties proposed behavioral remedies as more proportionate to the competitive concern.

Hold-separate agreements, which require the parties to maintain the assets being divested as an independent, ongoing business until the divestiture is completed, are a standard component of merger consent decrees where the divestiture will not close simultaneously with the main transaction. The hold-separate obligation preserves the competitive viability of the to-be-divested business during the period between the main transaction closing and the divestiture closing. Parties who fail to comply with hold-separate obligations risk contempt proceedings and can be required to complete the divestiture at a price that does not reflect the deterioration of the divested business during the hold-separate period. Compliance programs and monitoring trustee arrangements are typically required as part of the consent decree to ensure ongoing compliance.

Section 7 Litigation Timing and the Preliminary Injunction Standard

When the agencies determine that a transaction violates Clayton Act Section 7 and the parties have not agreed to adequate remedies, the agencies can seek a preliminary injunction in federal district court to prevent the parties from closing while the substantive challenge proceeds. The preliminary injunction standard in merger cases under Section 13(b) of the FTC Act requires the agency to demonstrate that it has raised a serious question about whether the transaction is anticompetitive and that the equities weigh in favor of maintaining the status quo pending the agency's substantive proceedings.

The balance of equities in preliminary injunction proceedings typically favors the agency in direct competitor mergers where the competitive effects are substantial and the transaction cannot be easily unwound if anticompetitive effects materialize. Courts weigh the public interest in preserving competition against the private interests of the parties in completing the transaction. The FTC's burden in the preliminary injunction proceeding is lower than its burden in a full trial on the merits, which is why preliminary injunction proceedings can be a powerful enforcement tool. If the agency obtains a preliminary injunction, the parties must either abandon the transaction, propose adequate remedies, or litigate the full merits of the Section 7 challenge.

Transaction structure and deal protection provisions in the merger agreement are directly relevant to litigation risk. Parties whose merger agreement contains a "hell or high water" antitrust covenant, requiring the buyer to accept any remedy necessary to obtain antitrust clearance, are in a different position than parties whose agreement allows the buyer to walk away from the transaction if the required remedies exceed a specified threshold. Antitrust risk allocation in the merger agreement, including regulatory out provisions, break-up fees payable if the transaction fails for regulatory reasons, and the scope of the buyer's obligation to litigate with the agencies, must be negotiated carefully with the transaction's specific antitrust risk profile in mind. For more on this structuring, see the M&A due diligence framework.

FTC Part 3 Administrative Litigation

The FTC has authority to conduct its substantive merger challenge through its own internal administrative adjudication process, known as Part 3 litigation, in addition to or instead of seeking a federal court preliminary injunction. In a Part 3 proceeding, the FTC issues an administrative complaint before an FTC administrative law judge, who presides over the adjudicative proceeding under the FTC's procedural rules. The ALJ holds a trial-like hearing, receives evidence, and issues an initial decision. The FTC Commissioners review the ALJ's initial decision and issue a final order, which is then subject to review in the federal courts of appeals.

The FTC has used Part 3 proceedings as a complement to federal court preliminary injunction practice. In a typical FTC merger challenge, the Commission files for a preliminary injunction in federal district court under Section 13(b) to prevent closing, and simultaneously initiates a Part 3 administrative proceeding on the merits. If the district court grants the preliminary injunction, the transaction is blocked pending the outcome of the Part 3 proceeding. The Part 3 proceeding then determines the merits of the Section 7 challenge. Parties who prevail in the preliminary injunction proceeding, successfully arguing that the agency has not raised a serious question about competitive effects, may find that the Part 3 proceeding continues even after the transaction closes, because the Commission can seek divestiture or other relief after closing in a Part 3 proceeding.

The structural fairness of Part 3 proceedings has been a recurring controversy. The FTC's role as investigator, prosecutor, judge, and appellate reviewer in the administrative process raises process concerns that parties consistently raise in litigation. The Supreme Court's decision in Axon Enterprise v. FTC (2023) held that parties could raise structural constitutional challenges to the FTC's administrative process in federal court rather than waiting for the administrative process to conclude, which has opened new avenues for challenging the FTC's enforcement procedures. The current legal landscape around FTC administrative authority is evolving, and parties facing Part 3 proceedings should assess available structural challenges with counsel.

International Coordination: ICN Framework, Waiver of Confidentiality, and Multi-Jurisdictional Strategy

Transactions requiring antitrust notification in multiple jurisdictions present coordination challenges that, if poorly managed, can result in inconsistent agency approaches, conflicting remedy demands, and delays that threaten the overall transaction timeline. The International Competition Network, established in 2001, provides a forum for cooperation among antitrust authorities across jurisdictions and has developed recommended practices for multi-jurisdictional merger review that many ICN member agencies have adopted, though implementation varies significantly across jurisdictions.

Waiver of confidentiality is a foundational tool for international agency coordination. U.S. agencies cannot share confidential HSR filing information with foreign authorities without the parties' consent. When parties provide waivers allowing the U.S. agencies to share information with, for example, the European Commission's Directorate General for Competition, the agencies can conduct parallel economic analyses using shared data, coordinate on remedy design, and avoid requiring the parties to present separate and potentially inconsistent submissions in each jurisdiction. Waivers must be carefully scoped: the parties should specify which jurisdictions are covered, what categories of information may be shared, and whether the shared information can be further shared with other authorities. Broad, uncircumscribed waivers create risk that information shared in one jurisdiction reaches other authorities in ways the parties did not intend.

Developing a coordinated global antitrust strategy requires mapping the transaction's competitive footprint across all relevant jurisdictions, identifying the jurisdictions where competitive concerns are most significant, sequencing the agency submissions and remedy negotiations to allow the most complex jurisdictions to drive the overall timeline, and coordinating counsel across jurisdictions to present consistent competitive narratives. Inconsistent submissions, where the parties characterize the competitive effects differently in different jurisdictions, create risks in all jurisdictions and provide agencies with grounds to question the parties' credibility. Parties to multi-jurisdictional transactions should establish a global coordination team early in the process and should develop a single, coherent competitive narrative that is adapted appropriately for each jurisdiction's substantive standards. Acquisition Stars coordinates with international counsel and advises on U.S. antitrust strategy in cross-border transactions. Contact us to discuss how multi-jurisdictional antitrust review should be structured for your transaction.

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