The U.S. Department of Justice put deal makers on notice last month with a very public rollout of a lawsuit blasting Bain & Co. for withholding documents regarding Visa Inc.'s latest mega-deal.
The lawsuit sought enforcement of a civil investigative demand, or CID, for documents the consulting firm generated advising the credit card giant on its $5.3 billion purchase of fintech company Plaid Inc. The move raised the specter the DOJ wanted to demonstrate its ire with third-party advisers that refuse to comply with information requests.
But the far quieter scuttling of the Bain lawsuit two weeks later generated new questions about the department's plans.
Some antitrust professionals had speculated the Antitrust Division was trying to make an example out of Bain when it filed an Oct. 27 petition accusing the company of improperly withholding the material.
But then the DOJ challenged the merger itself Nov. 5, and just four days later, quietly dropped the petition against Bain. The department justified this by stating it will seek the same documents as part of the bigger merger challenge now underway in California federal court.
So why file the petition in the first place, only to render it moot with a lawsuit nine days later? The DOJ didn't respond to a request for comment, but antitrust professionals have a few ideas.
. . .
In first contesting Bain's alleged noncompliance, the DOJ certainly seemed intent on highlighting broader frustrations with third parties that refuse to honor information requests. The petition itself derided Bain's claim that the documents were privileged and argued that employing "unfounded privilege claims to withhold client's documents is a pattern among consulting firms, accounting firms and investment banks."
According to the DOJ's petition, Bain itself referred to the document fight as a "familiar" row over privilege — but the department argues that consultants don't provide protected legal advice, but rather "business expertise" that cannot be withheld as privileged.
The head of the Antitrust Division has also offered a few tantalizing hints about the agency's broader concerns with CID compliance.
"The division's petition against Bain is aimed at securing relevant documents and making clear that the division will hold third parties to the deadlines and specifications in the CIDs we issue," Assistant Attorney General Makan Delrahim said in publicly announcing the petition.
Days later, but before the merger challenge was brought, Delrahim said during a Competition Policy International event Oct. 29 that he was "surprised" to learn the division hadn't sought to enforce a CID in court in more than 25 years.
"One of our important functions is to have the data to properly analyze transactions. And it's really important for parties to turn over the documents that we require," Delrahim said at the time. "And so if there's inappropriate claims of attorney-client privilege for some documents, we will challenge that in court. And in this matter, there's a particular set of documents that we thought was very relevant that we need to have for this important transaction."
As for the Bain case, antitrust professionals offered a mixed assessment as to whether it represents a one-time dispute with a single company, or if it's emblematic of a larger trend of noncompliance with information requests.
Joel Mitnick, a partner at Cadwalader Wickersham & Taft LLP and a former FTC trial attorney, said the Bain dispute is likely a one-off event. While Mitnick said some companies believe financial adviser communications are privileged and may balk at turnover deadlines, he has seen no broad problem with CID compliance.
It is common, however, to see some pushback on information requests, according to Benjamin Sirota, a Kobre & Kim LLP attorney and former DOJ Antitrust Division prosecutor. He says that discussions of CID scope and production are a recurring element in antitrust probes, and "it's rare that there's no negotiation whatsoever."
Those negotiations usually come to a halfway point between demands and pushback, according to Douglas Gansler, a former Maryland attorney general who now heads Cadwalader's state attorneys general practice and who focused his remarks on information demands from state enforcers.
"CIDs are almost always overbroad," Gansler said, with "a fishing expedition element." Recipients usually want to comply, he said, "but they want to do it in a reasonable way."
. . .
Daniel McCuaig, a longtime DOJ antitrust litigator who is now a partner at Cohen Milstein Sellers & Toll PLLC, similarly said CID compliance issues usually are resolved through negotiation or limited to the timeliness of responses. But he is also supportive of CID enforcement actions, lamenting a "hesitance" in the past to go to court.
In his own time at the DOJ, McCuaig said he and other trial attorneys asked several times to bring CID enforcement actions but were turned down or dissuaded from making formal requests.
"People were so concerned that we would get bad precedents that we sometimes acted as if those theoretical precedents already were on the books," he said.
The complete article can be viewed here.