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Civil Investigative Demands: Antitrust

Categories: Criminal Law & Process

antitrust law

Federal Defense Attorneys Offer Assistance Responding to Antitrust Civil Investigative Demands

Antitrust is a complex and constantly-evolving area of the law that few companies fully grasp, but which can lead to significant civil liability (and even criminal prosecution) in the event of a substantial violation. At the federal level, antitrust cases are investigated by the Antitrust Division of the U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC), often in conjunction with other state and federal law enforcement agencies. Like other federal authorities, the Antitrust Division and the FTC have broad jurisdiction over businesses that operate in the United States, and they have extensive powers that facilitate their investigation of companies suspected of engaging in federal antitrust violations.

One of powers is the ability to issue a civil investigative demand. A civil investigative demand is a form of administrative subpoena, and companies served with civil investigative demands must undertake adequate measures to respond in order to avoid potentially serious ramifications.  A civil investigative demand is often the first step in a federal antitrust investigation; and, while facing an investigation does not necessarily mean that a company will face charges, companies being targeted in investigations must understand what is at stake in order to avoid unnecessary (and potentially costly) consequences. According to the Antitrust Division Manual, the Antitrust Division will generally initiate an investigation only if:

  • “[T]here is reason to believe that an antitrust violation may have been committed.”
  • Commerce has been substantially affected.
  • Allocating resources from the Antitrust Division, “fits within the needs and priorities of the Division.”

When Can the Antitrust Division Issue a Civil Investigative Demand?

The provisions governing civil investigative demands in federal antitrust investigations are set forth in 15 U.S.C. Section 1312. Pursuant to subpart (a):

“Whenever the . . . Antitrust Division . . . has reason to believe that any person may be in possession, custody, or control of any documentary material, or may have any information, relevant to a civil antitrust investigation . . . [it] may, prior to the institution of a civil or criminal proceeding by the United States thereon, issue in writing, and cause to be served upon such person, a civil investigative demand . . . .”

In other words, the Antitrust Division can issue a civil investigative demand to any entity that it believes may have records that are relevant to an investigation – even if that entity itself is not under investigation. That said, companies that frequently get civil investigative demands from the Antitrust Division are being targeted in investigations; and, if someone within your organization has received a civil investigative demand (whether from the Antitrust Division or the FTC), your top priority needs to be to determine why you are being contacted by the antitrust arm of the DOJ.

What Types of Information Can Be Requested through a Civil Investigative Demand?

Under 15 U.S.C. Section 1312(a), the Antitrust Division can require companies to:

(i) produce documents for inspection, copying, or reproduction;

(ii) answer written interrogatories;

(iii) provide oral testimony regarding documents or information; or

(iv) any combination thereof.

The civil investigative demand should provide sufficient specificity to identify the type (or types) of information requested and the manner in which it is to be disclosed. The FTC has similar powers under the Section 9 of the Federal Trade Commission Act, including the power to, “require by subpoena the attendance and testimony of witnesses and the production of all . . . documentary evidence relating to any matter under investigation.”

Are Companies Required to Disclose Confidential Information in Response to Civil Investigative Demands from the DOJ?

Potentially, yes. Although the Antitrust Division’s administrative subpoena powers are not absolute, they are very broad. With respect to limits on the scope of information that can be requested, the law states:

“No [civil investigative] demand shall require the production of any documentary material, the submission of any answers to written interrogatories, or the giving of any oral testimony, if such material, answers, or testimony would be protected from disclosure under—(A) the standards applicable to subpoenas or subpoenas duces tecum issued by a court of the United States in aid of a grand jury investigation, or (B) the standards applicable to discovery requests under the Federal Rules of Civil Procedure, to the extent that the application of such standards to any such demand is appropriate and consistent with the provisions and purposes of this chapter.”

If confidential information is not excluded from production pursuant to a civil investigative demand under the plain language of the law, companies may be able to seek to protect their information from public disclosure. However, even in these circumstances, the Antitrust Division generally will not guarantee protection. A standard response letter available on the DOJ’s website states:

“In your letter of [Date] you requested additional assurances of confidentiality beyond those provided in the Civil Investigative Demand (“CID”) statute, 15 U.S.C. §§ 1311-1314, and the Freedom of Information Act (“FOIA”), 5 U.S.C. §552, for documents called for by the CID recently served upon [Company Name].

“I cannot promise to notify you in advance if a document [Company Name] provided will be used in a CID deposition of a witness not affiliated with your client. The Division is authorized to use CID material without the consent of the producing party in “connection with the taking of oral testimony.” It is, however, rare that we disclose a document in such a manner . . . [and] the Division has an interest in seeing that competitors do not receive access to each other’s confidential information, is sensitive to confidentiality concerns, and does not unnecessarily reveal such information.

“You have also represented that [Company Name] considers certain information requested in the CID to be proprietary and confidential. . . . It is the Department’s policy not to use confidential business information in complaints and accompanying court papers unnecessarily. The Department, however, cannot provide assurance that confidential business information will not be used in such papers, and cannot assure [Company Name] of advance notification of the filing of a complaint or its contents.”

Is it Possible to Challenge a Civil Investigative Demand from the Antitrust Division or the FTC?

Yes, a civil investigative demand can be challenged through the filing of a petition to limit, modify, or set aside (“quash,” in legal terms) the demand. However, there are strict timing and substantive limits on filing petitions to challenge civil investigative demands. Additionally, challenges to civil investigative demands are initially considered at the agency level; and, due to federal agencies’ broad investigative authority, federal courts are generally deferential to agency-level decisions regarding the propriety of civil investigative demands.

That said, companies should not simply assume that they are required to fully comply with civil investigative demands from the Antitrust Division or the FTC. The costs and burdens of compliance can be substantial, and it may be possible to negotiate a more-limited disclosure obligation depending upon the scope and status of the investigation. Upon being served with a civil investigative demand, a company’s executives or in-house counsel should promptly begin crafting an appropriate response with the help of outside federal defense attorneys.

What Should I Do if I Have Received a Civil Investigative Demand?

If someone within your organization has been served with a civil investigative demand from the Antitrust Division or the FTC, you need to seek experienced legal representation. Regardless of whether it is your company or another that is being targeted, you need to prepare a compliant response in order to avoid potential negative ramifications. If your company is the subject of the investigation, you also need to quickly begin building a strategic defense, and your goal should be to terminate the investigation before it leads to civil or criminal charges. For companies that are under investigation, a response to a civil investigative demand should – at a minimum – include all of the following actions.

  • You must prepare to meet all applicable deadlines established by the civil investigative demand or federal law.
  • You should institute an appropriate “legal hold” to prevent the deletion or destruction of potentially responsive documents.
  • Decisions regarding whether (and to what extent) you wish to challenge the civil investigative demand must be made.
  • You must determine what records and information within your company’s possession are subject to disclosure.
  • The impetus for the DOJ’s or FTC’s investigation should be determined.
  • All potential defenses to the allegations, and a comprehensive defense strategy must be identified.

What are the Potential Consequences of a Federal Antitrust Investigation?

There are multiple examples of federal antitrust violations that can lead to severe civil and criminal penalties. These penalties can include millions of dollars in fines, administrative remedies, and even federal incarceration. Companies charged with antitrust violations will frequently face charges for mail fraud, wire fraud, and other federal offenses as well – and these each carry the potential for substantial additional penalties.

Schedule an Initial Consultation with the Federal Law Defense Lawyers at Oberheiden, P.C.

For more information about how companies in health care and other industries need to respond to civil investigative demands, contact the law offices of Oberheiden, P.C.. To speak with our team of experienced federal defense lawyers in confidence, please call (888) 519-4897, or request an appointment online now.

Who Will Handle Your Case

When you hire us, you will not work with paralegals or junior lawyers. Each lawyer in our Healthcare Practice Group has handled at least one hundred (100) matters in the healthcare industry. So, when you call, you can expect a lawyer that immediately connects with your concerns and who brings in a wealth of experience and competence. For example, you need someone like Lynette S. Byrd, a former federal prosecutor in healthcare matters, who recently left the government and who is now sharing the valuable insights she gained as a healthcare prosecutor with our clients.

Bill C. McMurrey

Bill C.
McMURREY

Dr. Nick Oberheiden

Dr. Nick
OBERHEIDEN

Lynette S. Byrd

Lynette S.
BYRD

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