Although FTC staff often rely on voluntary requests for information in the early stages of an investigation, the use of official subpoena and civil investigative demands authorized by the Commission is essential to uncover potential law violations, and when necessary, to pursue a law enforcement action in court to remedy any harm to competition.
In practice, the majority of companies and individuals who receive a subpoena or CID for documents, data, or testimony comply with the Commission’s request. Along the way, FTC staff typically negotiates whose files to search for information, modifies definitions, excludes certain categories of documents or information, and grants extensions for complying. Prompt compliance with these requests allows staff to determine if key facts exist that warrant further investigation—and of course, sometimes they don’t. But when parties refuse to produce requested information, fact-finding can get delayed, as does an assessment of whether the conduct under review violates the antitrust laws.
Under Commission Rules, the recipient of either a subpoena or a CID, whether a potential target or a third-party, may file a petition to limit or quash. It may also withhold documents based on attorney-client privilege or work product protection. If the FTC determines, however, that the recipient has refused to fully comply with a lawful CID or has withheld documents without a legitimate claim of privilege, it may seek to enforce the CID in federal court.
Last month, in a ruling in FTC v. Boehringer Ingelheim Pharmaceuticals, (12-5393 D.C.Cir 2015), the DC Circuit affirmed the FTC’s right to numerous financial analyses improperly withheld as work product. At issue was a 2009 FTC subpoena seeking documents from Boehringer to determine if the company had entered into anticompetitive agreements to pay generic drug manufacturer Barr Pharmaceuticals to drop its patent challenge and stay out of the market. The FTC requested—among other things—all of Boehringer’s business and financial analyses of these agreements. Boehringer argued that these documents were protected opinion work product because they had been prepared at the request of its in-house counsel.
The proper scope of the work product doctrine has particular impact on Commission investigations involving patent settlements. In order to assess whether the branded drug firm’s payments to the generic challenger are justified under the Supreme Court’s decision in FTC v. Actavis, Commission staff often reviews contemporaneous financial analyses of the parties’ business agreements. In the Boehringer investigation, for example, these analyses are probative of whether Boehringer’s payments to its generic challenger were for something other than avoiding the risk of competition.
The district court agreed with Boehringer that the financial analyses contained protected opinion work product. On appeal, however, the D.C. Circuit found that the district court had not correctly distinguished fact work product from the more highly protected opinion work product. Specifically, the court held that counsel’s mere request for financial analyses during settlement discussions did not make those analyses opinion work product. The court noted that these kinds of analyses are not likely to reveal the mental impressions of the company’s attorneys, only “counsel’s general interests in the financials of the deal.” Indeed, even when the attorney provides inputs or frameworks for the requested analysis, “[w]here it appears that the focus or framework provided by counsel is obvious or non-legal in nature, it is incumbent upon the party claiming opinion work product to explain specifically how disclosure would reveal the attorney’s legal impressions and thought processes.” Failing that showing, the materials are fact work product, which the FTC can obtain upon a showing of substantial need and undue hardship. In this case, the D.C. Circuit found that the FTC had substantial need for the withheld analyses because they “provide unique information about Boehringer’s reasons for settling in the manner than it did.”
This ruling makes clear that parties to an FTC investigation cannot claim opinion work product protection for standard financial or business analyses, even when those analyses were requested by counsel. We will take improper efforts to withhold information seriously and seek subpoena enforcement if necessary.