FTC’s Power to Investigate Settlements

by Dennis Crouch

The Federal Trade Commission (FTC) monitors litigation settlements for their potentially anti-competitive results.  Most settlements are kept confidential by the parties, but certain settlements are automatically required to be submitted for review and, in any event, the FTC has subpoena power.

When the German pharmaceutical company Boehringer Ingelheim settled with generic manufacturer Barr, the FTC opened an investigation looking at the settlement document and also subpoenaed further documents relating to the settlement.  In particular, the FTC demanded the financial analyses used to evaluate the potential settlement terms. Boehringer has begrudgingly turned over 270,000 pages of documents prepared in the ordinary course of business, but refused to turn-over those that were prepared as part of the litigation and settlement.  Those documents are obviously relevant to whether there was any anticompetitive intent, but Boehringer has argued that they are protected by both attorney-client privilege and the attorney work-product doctrines.

One problem with discovery-disclosure fights is that the legal ruling typically depends upon the document contents, but the content cannot be judged or argued-about without its disclosure.  Further, modern litigation typically involves an overwhelming number of documents – making their review logistically difficult.  Here, the district court solution was to select a small sample of contested documents and then review them in camera. The district court found that the vast majority of the sample documents were properly withheld.

On appeal, the DC Circuit has reversed in-part — finding that the district court overly protected documented “facts” that were sufficient distinct from the type of attorney-opinion protected under the attorney work-product doctrine.

[W]here a document contains both opinion and fact work product, the court must examine whether the factual matter may be disclosed without revealing the attorney’s opinions. . . . Much of what the FTC seeks is factual information produced by non-lawyers that, while … attorneys, does not reveal any insight into counsel’s legal impressions or their views of the case.

Here, the requested information was simply “the sort of financial analyses one would expect a company exercising due diligence to prepare when contemplating settlement options” and thus not protectable as attorney work-product.

[Read the decision].