Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS—D.D.C.: FTC must disclose Hart-Scott-Rodino warning letters to extent Bloomberg showed pre-transaction filer self-disclosure, (Jan 19, 2024)

By Justin Marcus Smith, J.D.

The identities of filers of Hart-Scott-Rodino pre-transaction notice filers, who self-disclosed their filings, were disclosable under FOIA congruent with the D.C. Circuit’s public domain doctrine.

Certain information already in the public domain was not subject to Freedom of Information Act (FOIA) exemption 3, held the federal district court in the nation’s capital. Non-public, individualized content of pre-consummation warning letters the FTC transmitted to companies who filed pre-transaction notices pursuant to the Hart-Scott-Rodino Act was otherwise FOIA exempt. The district court accordingly partially granted and partially denied Bloomberg LP and FTC cross-motions for summary judgment, thus partially affirming and partially vacating the FTC’s final FOIA denial. The court said the FTC must provide Bloomberg with must “close at your own peril” letters, including the identity of the filing business, to the extent Bloomberg demonstrated the entity itself had publicly disclosed information in the filing of a pre-transaction notice (Bloomberg LP v. FTC, January 16, 2024, Contreras, R.).

Background. News organization Bloomberg LP (Bloomberg) sued the FTC in connection with the Freedom of Information Act (FOIA). Bloomberg sent FOIA requests to the FTC seeking “all pre consummation warning letters issued by the agency since July 2021.” The FTC sends such pre-consummation letters to business entities that have filed pre-transaction notices, where their proposed transaction exceeds a certain dollar amount, under the Hart-Scott-Rodino act, 15 U.S.C. § 18a(a). The FTC has thirty days to review filed pre-transaction notices to determine whether the transaction would violate the antitrust laws. Where the FTC cannot complete its investigation within the 30-day deadline, it sends “pre-consummation warning letters,” sometimes referred to as “close at your own peril” letters. These letters serve to alert recipients that the FTC’s investigation remains open and the FTC might seek antitrust enforcement at some later date.

The FTC determined the letters Bloomberg sought were “exempt” from FOIA disclosure under statutory exemptions 3 and 7. Bloomberg filed an administrative appeal. After the FTC affirmed its decision, Bloomberg sought to judicially compel the FTC to disclose the letters.

Exemption 3. The district court held the FTC must disclose the pre-consummation warning letters, including the identity of the filing business, only to the extent that Bloomberg showed the entity had itself disclosed it had filed a pre-transaction notice. However, the content of the letters, including filer identities, was otherwise exempt from disclosure under exemption 3 to the extent the information derived from non-public pre-transaction notice information.

The court ruled that FOIA exemption 3, pertaining to specifically exempted material, did not apply to the extent that information in the FTC’s pre-consummation warning letters had previously been made public by the corresponding pre-action notice filers. The court said its ruling here was consistent with the D.C. Circuit’s public domain doctrine. Those seeking to apply the doctrine would bear the burden of proving the information sought entered and remained in the public domain. Here, Bloomberg provided the court with a list of internet links to public announcements of transactions. To the extent the links publicly disclosed pre-transaction notice information, i.e., the identities of the businesses who announced the filed pre-transaction notices, that information was not exempt from FOIA disclosure and was “segregable.”

The court footnoted that the FTC was not required to search beyond the examples Bloomberg provided. Bloomberg could file new FOIA requests based on other public disclosures it did not supply for the decision in this case. The court also footnoted Bloomberg was mistaken in suggesting that the FTC must confirm the identities of filers disclosed by third-parties. Filer self-disclosure was what counted here.

In reaching this conclusion, the court disagreed with Bloomberg’s assertion that the fact of a Hart-Scott-Rodino pre-transaction notice filing was not itself information filed with the FTC. The court said Bloomberg’s assertion conflicted with the plain text of the statute because a pre-consummation recipient’s identity is information about who has filed a pre-transaction notice.

The court also discounted Bloomberg’s argument that the letters could not be FOIA exempt to the extent the FTC had published letters with similar information in the past. The court held, first of all, that the FTC’s past practice could not change the instant legal analysis. Second, the court noted the FTC’s past practice was inconsistent. On some past occasions, the FTC had explicitly refused to turn over information obtained from pre-transaction notices.

As to disclosure of the dates the FTC sent pre-consummation letters, the court disagreed with the FTC that the public could use such dates to deduce exemption 3 categorically protected information filed with the FTC. The court did not see how the dates such letters were sent could be used to determine the date a business entity filed its corresponding pre-transaction notice. The court said it deemed this FTC argument “conclusory” because it did not explain how deduction could occur. The court held the FTC could not redact the dates it sent its letters.

As to the “boilerplate” content of the letters, the court rejected the FTC’s argument that it would be unduly burdensome to redact exempt information while producing only the already public “boilerplate” language in the letters. The court reasoned it was already requiring the FTC to produce the dates the various letters were sent; therefore, not redacting the already public boilerplate language was not an additional burden on the FTC. Both the boilerplate language and the dates were “segregable” information that was not exempt under FOIA exemption 3.

Exemption 7. The court said its holding about the public domain doctrine, in the context of FOIA exemption 3, applied equally to FOIA exemption 7. Exemption 7 pertains to information expected to interfere with enforcement proceedings. This exemption was also inapplicable to information already public as well as the dates of the FTC letters. The court reasoned here that the business entities under FTC investigation were already aware of the investigation by the very pre-consummation letters Bloomberg sought. Such investigation targets already had all of the information the FTC wanted to withhold from Bloomberg. Again, the court found the dates of the letters would not reveal any information useful to identifying any investigation, and again, the FTC did not explain how it could be used that way.

The case is No. 1:22-cv-03309-RC.

Attorneys: Merrick Jason Wayne (Loevy & Loevy) for Bloomberg L.P. Tabitha Bartholomew for the FTC.

Companies: Bloomberg L.P.

Cases: AcquisitionsMergers Antitrust ConsumerProtection FederalTradeCommissionNews DistrictofColumbiaNews