Responding to an Anti-Trust Civil Investigative Demand (CID)
Experienced Federal Defense Counsel and Former Prosecutors for Responding to Anti-Trust Civil Investigative Demands from the DOJ and FTC
Anti-trust investigations can be high-risk propositions for the companies and individuals involved. While many of these investigations begin as “routine” inquiries into proposed mergers and acquisitions, they can quickly expand in scope if federal agents find evidence of civil or criminal anti-trust law violations. To mitigate their risk of prosecution, targeted companies and individuals need to defend themselves effectively, and in many cases this starts with submitting an appropriate response to an anti-trust civil investigative demand (CID).
Anti-Trust Civil Investigative Demands Present Significant Risks
Federal anti-trust investigations typically involve the U.S. Department of Justice’s (DOJ) Anti-Trust Division, the U.S. Federal Trade Commission (FTC), or both. Under federal law, both the Anti-Trust Division and the FTC have the authority to issue civil investigative demands. This authority is extremely broad in scope. For example, the DOJ Anti-Trust Division Manual provides that the Division may serve a CID, “on any natural or juridical person, including suspected violators, potentially injured persons, witnesses, and record custodians, if there is ‘reason to believe’ that the person may have documentary material or information ‘relevant to a civil antitrust investigation.'”
With this in mind, upon receiving a CID, there are several considerations that should guide the recipient’s response. Making informed decisions requires the advice and representation of experienced defense counsel. At Oberheiden P.C., our career federal defense lawyers and former DOJ prosecutors are highly experienced in handling anti-trust investigations from both sides, and we rely on this experience to protect our clients to the fullest extent possible.
5 Key Facts for Anti-Trust Civil Investigative Demand Recipients
If you or a representative of your company has been served with an anti-trust CID, you need to ensure that you have a clear understanding of the circumstances at hand. At this stage, assumptions can be costly, and mistakes during your response could have significant and long-term consequences. With this in mind, here are five key facts you need to know:
1. The Anti-Trust Division and FTC Serve CIDs on Targets, Suspects, and Witnesses
The first thing to know is that receiving an anti-trust CID does not necessarily mean you are the target of the Anti-Trust Division’s or FTC’s investigation. The Anti-Trust Division and FTC use civil investigative demands to obtain evidence from targets, suspects, and witnesses.
But, while it is important not to assume that you or your company is being targeted, it is equally important not to assume that you and your company are safe. Anti-trust investigations often target multiple entities and individuals; and, even if you are not currently on the Anti-Trust Division’s or FTC’s enforcement radar, this could change based on how you handle your CID response. Additionally, even as a witness, failing to comply with an anti-trust CID can lead to enforcement action and the possibility of being held in contempt or charged with impeding a federal investigation.
2. Anti-Trust CIDs Can Be Extraordinarily Broad in Scope
Anti-trust CIDs can request an extraordinary volume of records, and they can compel individuals to sit for hours of testimony before agents with the Anti-Trust Division or FTC (or both). As a result, upon receiving a CID, it is essential to begin response efforts immediately. As discussed in greater detail below, these response efforts should begin with identifying and preserving all relevant documents. They should also involve assessing any possible grounds for challenging the CID in court or seeking to negotiate the scope of the CID with Anti-Trust Division or FTC agents.
3. The Grounds for Challenging an Anti-Trust CID in Federal Court are Limited
While there are grounds for challenging an anti-trust CID in federal court, these grounds are limited. Generally, federal judges defer to the Anti-Trust Division’s and FTC’s expertise, and they will require a clear showing of undue hardship or other valid grounds before they will intervene. Successful challenges to anti-trust CIDs are also unlikely to result in recipients’ demands being quashed in their entirety. As a result, while challenging an anti-trust CID is certainly a path to consider—and to pursue if warranted—CID recipients should not rely on being absolved of their response obligations in most cases.
4. CID Recipients Can Negotiate Effectively with the Right Approach
Although judicial challenges to anti-trust civil investigative demands will often have limited utility, negotiating with Anti-Trust Division or FTC agents can prove highly effective—provided that recipients take the right approach. Ultimately, these agents want to get to the bottom of the relevant facts so they can file the right charges against the right parties. If an anti-trust CID is misguided or unnecessarily broad in scope, then engaging in strategic negotiations can offer a path toward a favorable resolution.
Perhaps the single most-important fact to know about responding to an anti-trust civil investigative demand is that the DOJ can use any information you or your company provides in unrelated civil or criminal proceedings. As the DOJ clarified in 2020: “[A]ll CIDs issued by the Antitrust Division — including CIDs for documentary material, written interrogatories, oral testimony, or any combination thereof — will now provide notice to all recipients that their documents, answers to interrogatories, and/or testimony may be used by the Department of Justice in other civil, criminal, administrative, or regulatory cases or proceedings.”
5 Preliminary Steps to Appropriately Respond to an Anti-Trust CID
Given the risks involved with responding to an anti-trust civil investigative demand, targets, suspects, and witnesses should take some key steps promptly upon receipt of their CIDs. Some examples of these steps include:
1. Assess the Anti-Trust CID’s Scope and Timeline
Anti-trust CID recipients should promptly assess the CID’s scope and timeline. Does the CID seek records, testimony, or both? What is the response deadline? These are critical questions to answer early, as the answers will inform virtually all aspects of the response process.
2. Institute a Litigation Hold
Anti-trust CID recipients should also promptly institute a litigation hold. This is a structured and coordinated effort to preserve all relevant records, whether stored in-house or externally. Not only is this essential for submitting a compliant response and evaluating all potential lines of defense, but it is also imperative for avoiding allegations of spoliation or obstruction.
3. Conduct an Internal Review
After receiving an anti-trust CID, it is necessary to conduct a comprehensive internal review. This review should cover matters including (but not necessarily limited to): (i) reviewing all relevant records, (ii) identifying any federal anti-trust violations that may need to be remedied, and (iii) identifying potential lines of defense.
4. Evaluate Your (or Your Company’s) Risk of Civil or Criminal Prosecution
Based on the information gathered during the internal review process, anti-trust CID recipients should evaluate their risk of civil or criminal prosecution. Even though CIDs are civil investigative tools by definition, mistakes made during the response process can—and frequently do—lead to criminal charges. When criminal prosecution is a possibility, anti-trust CID recipients will need to carefully weigh the benefits and drawbacks of asserting their Fifth Amendment privilege against self-incrimination.
5. Formulate a Defense Strategy
After evaluating their risk of civil or criminal prosecution, anti-trust CID recipients can then focus their efforts on formulating an effective defense strategy. Depending on the circumstances involved, this may mean cooperating with the Anti-Trust Division’s or FTC’s investigation (and potentially taking advantage of the Anti-Trust Division’s Leniency Program), challenging or negotiating the scope of the CID, or preparing to litigate the federal government’s allegations in court.
FAQs: Responding a Civil Investigative Demand from the DOJ’s Anti-Trust Division or the FTC
Am I (or Is My Company) Required to Respond to an Anti-Trust Civil Investigative Demand?
Yes, anti-trust CID recipients have an obligation to respond. The DOJ’s Anti-Trust Division and the FTC can enforce their CIDs in federal district court, and non-compliance can ultimately lead to being held in contempt.
What are the Risks of Submitting a Non-Compliant Response to an Anti-Trust CID?
Submitting a non-compliant response to an anti-trust CID presents several risks. Not only can it lead to a finding of contempt, but it can also lead to adverse inferences and enhanced scrutiny from the DOJ’s Anti-Trust Division and the FTC.
What is the Anti-Trust Division’s Leniency Program?
The Anti-Trust Division’s Leniency Program affords an opportunity for individuals and companies that have committed federal anti-trust law violations to avoid (or at least mitigate) the consequences of their mistakes. By cooperating with the Anti-Trust Division’s efforts to target other individuals and entities, program participants can avoid the risk of prosecution.
Do I Need to Engage Defense Counsel When Responding to an Anti-Trust CID?
Due to the challenges and risks involved with responding to an anti-trust CID, it is imperative that CID recipients rely on the advice and representation of experienced defense counsel. To minimize their risk of costly oversights and mistakes, CID recipients should engage counsel immediately.
Speak with a Federal Defense Attorney about Your (or Your Company’s) Anti-Trust CID Response
If you need defense counsel for a federal anti-trust investigation, we encourage you to contact us promptly. To discuss your anti-trust CID with an experienced federal defense attorney in confidence, call 888-680-1745 or request a complimentary consultation online today.