Cartel Investigations: Selective Disclosures and Privilege Preservation by the Target Company Seller

Just over a year ago, your client's key operating subsidiary was invited to a party thrown by the United States Department of Justice, Antitrust Division. The invitation came in the form of a grand jury subpoena related to suspected price-fixing. It appears that another company in the industry blew the whistle, got amnesty, and left your client (and a few other competitors) holding the bag. The parent company has given you marching orders: defend the subsidiary at all costs.

So you go to work. You conduct the internal investigation; report to the Board and Special Committee; preserve, collect, and review documents; handle the eventual civil litigation in all of its forms; and coordinate with counsel and other 'cooperating' industry subjects of the investigation around the globe.

But just when you think you have it all under control, the parent company informs you that your new best client, the subsidiary, is for sale. Instead of laying low and allowing the criminal investigation to run its course, you are now asked to join the due diligence team in an effort to fetch the highest price for the subsidiary. The potential sale brings buyers, all of whom want information about the scope and extent of the subsidiary's criminal and civil antitrust liability. It now falls to you to disclose that which you have zealously guarded through the careful application of the attorney-client privilege and the attorney workproduct doctrine.

But this raises a serious dilemma. Should you disclose all of the subsidiary's secrets, both good and bad, thereby protecting the parent/seller from post-closing 'failure to disclose' claims? Should you deliver only what is public – and mostly uninteresting – but leave the potential buyer to assume the worst? Should you protect the subsidiary's litigation interests by remaining silent and avoiding the risk of claims of privilege waiver?

Balancing these competing considerations presents a challenge that is difficult, but not impossible, for antitrust counsel to navigate. While the law is far from clear, we believe that the following steps – taken in order – will best achieve the goal of providing potential suitors with the information they need while minimising the legal risks associated with waiver:

Insist on a confidentiality agreement

Prior to disclosing any non-public information, antitrust counsel should insist on a Confidentiality Agreement with particular provisions for this sort of disclosure. This will restrict access to disclosed information to those with a clear 'need to know'.

Disclose non-privileged facts first

Documents, interview statements that were previously provided to the Department of Justice, and sales data, for example, are all non-privileged. Disclosure of such information may be sufficient to allow the buyer to evaluate the antitrust risk and would not risk privilege waiver.

Insist on a common interest agreement

Prior to disclosing any potentially privileged information, antitrust counsel should insist that the buyer and seller enter into a common interest agreement. While such an agreement is no guarantee that the information disclosed pursuant to it will be forever protected from disclosure to others, certainly it will maximise the chances by documenting the seller's actual and the buyer's contingent common legal interests in the defence of the underlying pricefixing claims.

Limit disclosures of arguably privileged information

By making careful, selective decisions about what information to disclose and how best to disclose it, you can maximise the chances that critical attorney-client confidences and work-product remain privileged.

First, if possible, you should not disclose information that you would not want to share with future plaintiffs. While subject matter waiver is always a risk, it is certainly much easier to maintain the privilege over information that has not already been disclosed than over that which has been.

Secondly, where possible, you should limit your disclosures to high-level verbal discussions. And if no notes are taken, it will be difficult or impossible for future plaintiffs to take meaningful discovery of such discussions. Even if notes of such discussions are subject to production (assuming the common interest argument fails), they will likely be inadmissible in the underlying price-fixing case.

Thirdly, where written disclosures must be made, it would be best to prepare a memo specifically for the purpose of informing the buyer about the nature of the lawsuit, rather than disclosing work-product prepared during the investigation or other direct communications with the client. This gives the attorney greater control over what is disclosed, and reduces the risk of a broader subject matter waiver as to the entire investigative file.

If followed, we believe that these steps will maximise the company's interests in protecting privileged information, while adequately serving the company's need to provide potential suitors with enough information to evaluate the subsidiary's antitrust risks.

The buyer, seller, and the antitrust division criminal investigation.

For the purposes of this article, our target company is a subject of an antitrust division criminal investigation for suspected price-fixing. Having started months ago, the investigation is well underway. The company is 'cooperating' with the division; it has held extensive meetings with the division staff attorneys and produced all of its responsive documents. On behalf of the parent and subsidiary, counsel conducted a thorough internal investigation and prepared a written report to the parent's special committee. The report concluded that the subsidiary is likely to have participated in the conspiracy, but the evidence is mixed.

If convicted, the company faces crippling fines, far in excess of the enterprise value for sale purposes. Thus, there is no reserve or escrow that can be established by the parent / seller to compensate a willing buyer for the penalties that the subsidiary would face if convicted. To make matters worse, there have been civil suits filed against the company, but they have not progressed beyond the motion to dismiss stage.

The subsidiary is an attractive target for many private equity buyers and some strategic buyers. It has high quality assets, generates a steady cash flow, and is a market share leader. As befitting any industry that could arguably support collusive behaviour, there are merely a handful of competitors and entry barriers are reasonably high. The company suffers from weak management, strained by the distractions of the investigation and civil suits. These alluring qualities allow offers to be entertained, even though the criminal investigation is ongoing.

The parent has placed a disclosure of the 'fact of' the investigation in its initial schedules for potential buyers to review. It has also issued a simple three-line press release confirming that its subsidiary received a division subpoena, and that it is cooperating in the investigation. Potential buyers now want as much information as possible about the division's investigation, the internal investigation, and the subsidiary's exposure. And they want it now, before they submit any binding offer.

You must decide how to release the information, what information to release, and advise the parent and subsidiary about the risks of disclosure.

It's a high stakes poker game

In the sale of a company subject to an antitrust division criminal investigation, the stakes are extremely high for both the potential seller and buyer. An eager seller wants the deal to close; to do so, it must assure the buyer that the antitrust risk is measurable and controllable. Similarly, the buyer needs the facts to assess the risk involved. While they share the need to disclose and receive information; the risks for each are somewhat different.

The seller faces a classic Hobson's choice: tell too little and risk a post-closing suit for failing to disclose material facts about the spectre of liability; Tell too much, and risk a subject matter waiver of the privileged information contained within the entire case file.

Though less obvious, the potential buyer carries similar risk. If it does not get enough information, it may be too scared to go through with the deal. If it gets too much information, and the deal goes through, it faces the prospect that its newly-acquired business will have waived its privilege in the due diligence process; thereby materially increasing the litigation risk.

How real is the risk of waiver?

In the best of all worlds, the parent would be free to disclose as much information as necessary to get the deal done. It could then decide what to disclose and what to withhold, free from risk that the government or private plaintiffs could use the disclosures against it or the subsidiary. But the reality is that the world does not work that way. Any disclosure necessarily creates some risk of waiver, and thus, the parent must carefully balance benefits of disclosure against the risk of waiver.

To do that, antitrust counsellors in this situation must become experts in the law of privilege. There are technically three relevant types of privilege: the attorney-client privilege; the work-product privilege; and the common interest (or joint defence) privilege.

The attorney-client privilege

The attorney-client privilege protects confidential communications between a lawyer and his or her client. It is the oldest of the privileges for confidential communications known to the common law.1  The authoritative case on corporate attorney-client privilege is Upjohn Co vs United States,2 where the Supreme Court held that communications by corporate employees with counsel made under a superior's order and for a known corporate purpose of obtaining legal advice were privileged.3 While this rule may hamper the fact-finding mission, such considerations, the Supreme Court held, are outweighed by the need 'to encourage full and frank communication between attorneys and their clients and thereby promote broader interests in the observance of law and the administration of justice'.4

The privilege is particularly important in antitrust cases. As the Supreme Court recognised in Duplan Corp v Deering Milliken, Inc, 'it is not the federal government that is primarily responsible for enforcement of the federal antitrust laws but rather the lawyers who advise their corporate clients, [and] [u]nless corporate personnel on a fairly low level can speak to attorneys in confidence, the enforcement of the federal antitrust laws is likely to be adversely affected.'5

Criminal antitrust defence counsel, of course, depend on the privilege both to secure necessary information during the course of the internal investigation and to advise the client on the outcome of the investigation.The privilege protects many forms of defence-critical communications, including interviews of the seller's officers, written memos analysing the damaging facts, and presentations to the Board advising the company on the status of the litigation and the potential risks.

Although the attorney-client privilege provides a sturdy defence against third-party discovery, the client can waive the privilege, either through intentional or unintentional disclosure to others.

Moreover, once waived, courts frequently find broad subject matter waiver, which forces the company to turn over not just the information it had selectively disclosed to others but all communications related to that subject. Professor John Henr y Wigmore provided a basic description of the 'subject matter waiver' rule: '[t]he client's offer of his own or the attorney's testimony as to a specific communication to the attorney is a waiver as to all other communications to the attorney on the same matter.'6 Most courts similarly treat subject matter waiver as an 'all or nothing' proposition.7

For purposes of the scenario here, where antitrust counsel reveals its findings to third-parties, courts have found broad subject matter waiver. For example, in In re Martin Marietta Corp,8 a company accused of fraud had submitted a position paper to the United States Attorney asserting that the company had found no evidence of fraud. The Fourth Circuit rejected the privilege claim as to the underlying information that went into this report, and ordered production of all 'information revealed to others or details underlying the data that was published'.9 Martin Marietta is consistent with other cases that have similarly 'applied the traditional waiver doctrine to communications disclosed to government agencies'.10 

Other courts, however, have found that limited disclosures of specifically-prepared information do not necessarily effectuate a broad subject matter waiver. One such case is Diversified Industries, Inc v Meredith,11 where allegations of bribery prompted Diversified to hire outside counsel in order to conduct an internal investigation. After the investigation was complete, Diversified submitted a copy of the investigation report to the Securities and Exchange Commission. When third party litigants brought suit, however, Diversified claimed the investigation report was privileged, and therefore protected from discovery. The Eighth Circuit agreed with Diversified finding that: '[t]o hold otherwise may have the effect of thwarting the developing procedure of corporations to employ independent outside counsel to investigate and advise them in order to protect stockholders, potential stockholders and customers.'12

The work-product doctrine

Employing the attorney work-product doctrine is an alternative way to protect selective disclosures from third-party discovery. The work-product doctrine is, in some respects, 'broader than the attorney-client privilege; it protects materials prepared by the attorney, whether or not disclosed to the client, and it protects material prepared by agents for the attorney'.13 But the work-product doctrine is also narrower in that it only protects 'documents and other tangible things prepared in anticipation of litigation or for trial'.14 Memoranda detailing the obstacles of the criminal investigation, key themes, chronologies, and interview memoranda are all examples of work-product.

There are other significant, albeit esoteric, differences between the attorney-client privilege and the attorney work-product doctrine. First, the work-product doctrine is not necessarily waived by appropriate disclosures to third parties if such disclosure was in furtherance of the defence effort.15

While subject matter waiver may be found if the disclosure is used to give the disclosing party an unfair advantage in the litigation, courts generally find a broad waiver only in 'situations in which the party making the disclosure [is] seeking to use it affirmatively in the controversy without permitting its adversary to inquire about the basis or accuracy of the disclosure'.16 Because disclosing information to a potential buyer of the company does not give an 'unfair' advantage to the defendant in litigation, broad subject matter waiver of work-product is less likely in this scenario.

Secondly, the privilege can be pierced for certain work-product involving facts (rather than strategy and other mental impressions of counsel) if the opposing party can establish a substantial need.17

Nevertheless, because the work-product doctrine is a critical component of a corporation's effort to defend itself, the core work-product – consisting of an attorney's mental impressions, opinions, and strategies – is granted unconditional immunity from discovery. As the court in Upjohn stated, such information 'cannot be disclosed simply on a showing of substantial need and inability to obtain the equivalent without undue hardship.'18

The common interest privilege

The 'common interest' or 'joint defense' privilege is also relevant in deciding whether to disclose confidential information about a pending antitrust investigation to a potential buyer. As noted, a company can lose the attorney-client privilege, and possibly work-product protections, if it discloses such information to thirdparties. But if this waiver rule were strictly construed, it would be almost impossible for co-defendants and other companies that share a common legal interest in a matter from coordinating their legal strategies. This is where the joint defence or common interest privilege comes into play.

The common interest privilege is technically an 'exception' to the waiver rule, rather than a standalone privilege. In order for the privilege to apply, the underlying information that is disclosed among the parties to a common interest agreement must itself constitute privileged attorney-client communications or attorney work-product. If so, the courts will then find that the privilege has not been waived so long as the disclosure was made to further the parties' valid 'common' 'legal' interests.

Potential transacting parties, of course, may have many common business interests. Such interests will not typically support a valid common interest agreement. Rather, the common interest must be a legal one. As some courts have explained, 'the key consideration is that the nature of the interest … be legal, not solely commercial.'19

The most common legal interest is where both parties are co-defendants (or co-plaintiffs) in a case and have a common interest in obtaining a favourable verdict in pending litigation. As the Supreme Court explained in Union Carbide v Dow Chemical, 'third party communications do … retain a protective shield if the parties have a common legal interest, such as where they are co-defendants or are involved in or anticipate joint litigation.'20 Such 'joint defense' or 'joint prosecution' agreements are standard fare in most complex litigation cases.

Other legal interests, however, may also support a common interest agreement. For example, the desire to ensure adequate disclosures to the SEC may suffice to allow the buyer and the seller to exchange information concerning the proposed investigation to the extent such information is necessary to allow each of them to make appropriate SEC disclosures.

A tougher question is whether – as in the fact pattern discussed above – the business interest in getting the deal done suffices to support a common interest agreement. On the one hand, the interest is primarily business, not legal, in nature. The buyer needs the information, not to advance its own legal interests, but to decide how much to pay for the subsidiary or whether to do the deal at all. On the other hand, the buyer has a 'contingent' legal interest in the defence of the suit. If it were to acquire the subsidiary, it might bear the antitrust risk, and would have a legal interest in defending the suit.

Whether such contingent legal interests suffice to support a common interest agreement is an unsettled area of the law. Some courts appear to recognise the societal benefits of allowing potential buyers to know what they are getting into before they agree to buy a lawsuit-ridden business.

A key case favouring a broad application of the common interest doctrine is Hewlett Packard Co v Bausch & Lomb Inc.21 There, Bausch & Lomb disclosed an 'attorney opinion letter' to a potential merger partner, GEC. The merger did not close. And when Bausch & Lomb was later sued, the plaintiff claimed that the privilege had been waived by virtue of the disclosure of the opinion letter. In rejecting this argument, the court upheld the privilege, noting that when the disclosure was made, it seemed quite likely that (if the merger had gone through) Bausch & Lomb and GEC would both be sued by plaintiff and that their interests in that anticipated litigation would be identically aligned.22

Other courts view the situation differently. For example, in Cheeves v Southern Clays, Inc,23 the plaintiff sought to compel privileged documents from Southern Clays, which had previously produced these documents to the Freeport Kaolin company during the sale of the majority of Southern Clays' assets. The court rejected the privilege claim over the disclosed documents, noting that the disclosure 'was made voluntarily as part of an arm's length commercial transaction between parties with adverse interest' and that 'the mere interest …in legal transactions between the prime client and an outsider is not sufficient to prevent a waiver of the attorney-client privilege.'24

Similarly, in Oak Indus v Zenith Indus,25 the court rejected the defendant's privilege claim over information that had been disclosed to potential buyers. In doing so, the court held that 'Zenith did not share any common protected interest in this case with the potential buyers of its consumer electronics group'.26 Most relevant to our situation, the court held that 'of the cases addressing a party's disclosure of confidential information during negotiations, almost all have held that such disclosure waives the privilege'.27

Given this conflicting case law, it clear that any antitrust counsellor in this position should tread carefully.

Maximising your legal protections

There are a number of considerations that go into whether the parent, the subsidiary, or the buyer will be able to protect the disclosures from the prying eyes of the government investigators and plaintiffs' attorneys. Considerations such as the nature of the information disclosed, the source of the claimed privilege, the reasons for the disclosure, the procedures used to guard against inappropriate disclosures, and – in part – the jurisdiction where the privilege claims will be litigated all play a part in the analysis.

Certainly, it would be easiest for antitrust counselors to put their foot down and refuse to bless any disclosures to potential suitors in order to maximize privilege protections. But in many cases, such advice is not only overly conservative, but would frustrate your client's potentially paramount interests in selling the subsidiary.

A seller's antitrust counsel must, therefore, walk a narrow tightrope when selectively disclosing to the buyer. Although no steps can definitively guard against privilege waiver, we believe the following four steps can limit the downside risks of disclosing the information necessary to get the deal done.

Step one: insist on a confidentiality agreement

As a first step, counsel should insist upon, and carefully examine, the normally routine confidentiality agreement between the seller and the potential buyer. By ensuring that there is an appropriate confidentiality agreement, the antitrust counsellor can proceed to disclose non-public, non-privileged information that may be sufficient to alleviate the buyer's concerns about the subsidiary's antitrust exposure.

Common terms for these near-boilerplate documents include the identity of the parties, a recital clause confirming that the purpose of the disclosure of 'confidential material' is to allow the potential buyer to evaluate and affect closing on the transaction, a commitment by the potential buyer to maintain any information or material released by the seller as 'confidential', a definition of the people and entities that may receive and review 'confidential material,' provisions for notifying the seller in the event that a third party (including the government) seeks access to the 'confidential material'; and a provision for the return or destruction of the 'confidential material'. A limitation of the standard confidentiality agreement is its stated purpose, which appears to support only a commercial, but not necessarily, a legal interest. Thus, as an initial step the confidentiality agreement's purpose should be broadened to include the protection of confidential information exchanged between the parties from third party litigants or others, including the government.

Also, as noted below (in step three), if privileged information must be disclosed, additional protections (including a common interest agreement) may also be advised. Some of these protections can be rolled into the original confidentiality agreement. For example, counsel should limit information access to buyer's counsel and designated senior executives. Similarly, counsel should exclude any non-employees from receiving any investigative disclosures. Accountants, consultants, investment bankers, or other similar outsiders should be shielded from the disclosures. In addition, the effective length of the confidentiality commitment should also be extended indefinitely, and all notes or other records reflecting the investigative disclosure must be destroyed if the potential buyer is not selected.

Step two: disclose non-privilege information

Prior to disclosing any privileged information, antitrust counsel should first attempt to limit disclosures to non-privileged information. Once an antitrust investigation or lawsuit gets beyond the initial stages, there is often a wealth of relevant information that is not even-arguably privileged and should be the focus of a sale-based disclosure.

In that regard, it is important to note that the underlying facts concerning the alleged conspiracy are not privileged, only the communications and work-product of the attorney are. Thus, seller's counsel may freely disclose underlying business documents containing relevant, or even damaging, facts, since the company could not claim privilege over such documents even it did not disclose them to potential suitors. Moreover, these business documents have likely already been disclosed in the investigation and litigation, so any privilege claim relating to them may be quite weak, if not dead.

In general, a seller should feel reasonably confident that it could disclose the following information without materially affecting its discovery risks in future lawsuits or in the investigation:

? underlying business documents, especially those that have already been produced to the government or civil plaintiffs;

? any statement made by the Division. If the Division has classified seller as a 'target' or a 'subject', this could also be disclosed;

? data regarding subsidiary sales that can be used to determine the likely volume of commerce and potential criminal or civil penalties; and

? public information, including press releases by the Justice Department or the amnesty applicant and pleadings filed by civil plaintiffs.

Because all of this information can be freely disclosed to the buyer, seller's counsel should focus his or her initial disclosures on this material.

Hopefully, this information will suffice to reduce the buyer's fear of exposure. But, in most circumstances, the buyer will want more. And so, it is unlikely that a mere 'data dump' of transaction and sales summaries, expense reports, calendar entries, and vague memos will truly help the buyer assess the antitrust risks facing the subsidiary. The incriminating or exculpatory facts may only be found in privileged interview memos drafted by the company's attorneys. Details concerning the Government's specific allegations may also be found only in strategy memos prepared for the client by outside counsel, and other work-product, such as key document binders, chronologies, and memos. If the buyer is demanding the 'good stuff', the seller should proceed to step three.

Step three: enter into a common interest agreement

If privileged information – including inter view memoranda with key witnesses, as well as the attorney's thoughts and mental impressions concerning the relevance of underlying factual information and the strengths and weaknesses of the case – must be disclosed, we believe that antitrust counsel should insist that the buyer enter into a common interest agreement with the seller.

Why is a 'common interest agreement' necessary when there is already a confidentiality agreement? It is necessary because the two types of agreements serve two entirely different purposes. A confidentiality agreement is often designed not to further the parties' common legal interests, but simply to facilitate disclosure of relevant information so two potentially adverse parties (the buyer and the seller) may reach an agreement on valuation for a commercial transaction. Such confidentiality agreements actually may make it more difficult to establish a common interest privilege, since they allow the sharing of privileged information to a wide range of outsiders, such as consultants, accountants, and investment bankers. Such disclosures substantially increase the probability that additional third parties – like the government and civil plaintiffs – will gain access to it. Thus, a separate common interest agreement is, in our opinion, important, if not best practice.

There are two key provisions (in addition to the usual boilerplate and bells and whistles of a common interest or joint defence agreement) that we recommend be included in a common interest agreement. First, the parties must include a basis for the common interest in the situation. The law is not clear as to what constitutes a sufficient legal interest, as opposed to a business interest. But we believe that, at a minimum, the common interest agreement should make it clear that the seller has a current interest in the defence of the underlying lawsuit, that the buyer has an identical (albeit, contingent) interest in the defence, and that the exchange of common interest information would facilitate the parties in formulating their appropriate legal strategies in the underlying investigation or litigation and the allocation of resources in defending against such claims, both pre- and post-transaction.

We also strongly recommend that the joint defence agreement, like the confidentiality agreement, prevent disclosures to investment bankers, accountants, and / or consultants. Communications to these parties are certainly not privileged, and any privilege previously retained would be immediately extinguished. Disclosures should only be made from seller's counsel to buyer's counsel. No business people should be present when these disclosures occur.

Once the parties have executed a written common interest agreement, the next step – and perhaps the most difficult of all – is to determine what exactly should be disclosed and in what manner.

Step four: careful and limited disclosure of privileged information

If privileged information must be disclosed, how should counsel go about doing this? Should he or she rely entirely on the common interest privilege to guard against future claims of waiver and release the files wholesale? Or should counsel limit the disclosures, and if so, in what way?

As discussed above, the validity of a common interest agreement in this situation is far from clear. Thus, we believe that it is best for counsel to make a reasoned cost-benefit analysis prior to disclosing any privileged information to a potential buyer. How should counsel go about this?

First, antitrust counsel should try to limit disclosures to that which he or she would be willing – if required – to share with the government and civil plaintiffs. In that case, if disclosure to plaintiffs' is ultimately compelled, it is unlikely to materially affect the outcome of the case.

Again, underlying facts, such as statements from witnesses – especially if such statements could be compelled through compulsory process – may be appropriate. Similarly, memos concerning what the division attorneys have said in prior interviews or meetings could be disclosed. Such information, while arguably work-product, is the type of information plaintiffs could get in any event upon a showing of 'substantial need'. In such cases, however, it would be best to redact significant attorney thoughts and mental impressions about the witness or the strengths and weaknesses of the case.

Disclosure of other information, such as identification of the specific key documents in the case, may also be an appropriate calculated risk, on the theory that plaintiffs have (or will have) access to all the underlying documents and will be sufficiently competent to identify the key documents.

Disclosure of any privileged information, of course, raises the risk of a broad subject matter waiver. But as a practical matter it is much more difficult for plaintiffs to compel information that has not been previously disclosed than that which has been. Moreover, such fact-based disclosures do not readily lend themselves to broad-based claims of subject matter waiver over the attorneys' thoughts and mental impressions concerning the entire investigation.

Secondly, antitrust counsel should tr y to limit further disclosures to high-level verbal discussions analysing the case. Attorneys that discuss the case with third parties on behalf of their clients do not necessarily waive attorney-client protections. Just as a lawyer speaking to the press about the strengths of his or her client's case does not necessarily waive any privileges, a lawyer speaking to buyer's counsel does not necessarily waive any privilege. In both scenarios, the actual communication itself is not privileged (and so it is discoverable), but it does not effectuate a broad subject matter waiver. Moreover, by conducting these discussions verbally, the ability for plaintiffs' counsel to obtain discovery of – let along binding admissions from – such communications is diminished.

Thirdly, antitrust counsel should prepare specific disclosures for the buyer's counsel rather than simply providing pre-existing work-product or privileged documents. Why? Just as a pleading filed in court does not waive subject matter privilege (despite having been based on communications with counsel), it is not clear that documents prepared for the specific purpose of facilitating the buyer's evaluation of the legal claims in the underlying lawsuit will effectuate a broad-based subject matter waiver.

In part, this is because such a specifically-prepared document is less likely to contain waivable attorney client communications, as opposed to non-waivable work-product. For example, a memo to the client analysing the case constitutes attorney client privileged communication on its face. The same memo directed to the buyer does not necessarily reflect a communication between the client and its lawyer for the purpose of obtaining legal advice. While it may not be privileged, it also does not effectuate a broad-based waiver. In addition, by preparing specific documents, the seller's counsel can make a reasoned decision about what must be disclosed pursuant to the common interest agreement, and what should be withheld.

In short, it is far better to carefully craft a package consisting of well-thought out disclosures than to allow an outsider to have unfettered access to the entire case file, lest the common interest agreement fail to provide the protections the parties had anticipated.

Conclusion

It is no picnic to sell a company. Selling a company that is the subject of a criminal antitrust investigation is even more difficult. The sale-process disclosures about the investigation and subject company's exposure compound the already large risks incurred by the seller and buyer. The paradox of disclosing too little or too much information is present throughout the sale process. Even worse, there are no easy answers to the problem.

It is counsel's job, however, to advise the seller on the risks involved as best as he or she can. The recommended path described above recognises the inherent risks and should help minimise them. But in the end, like all lawyer-client situations, it is the client, not counsel, who must strike the final balance between disclosure and non-disclosure and most solve the real paradox, which is: to sell or not to sell – that is the question.

Notes

1 Upjohn Co v US, 449 U S 383, 389 (1981) (quoting 8 John Henry Wigmore, Evidence § 2290 (McNaughton rev 1961)).

2 Ibid

3 Ibid at 394-5.

4 Ibid at 389.

5 397 F Supp 1146, 1164 (D S C 1974).

6 Wigmore, supra note 1, at § 2327.

7 See Michael J Chepiga, 'Federal Attorney-Client Privilege and Work Product Doctrine' 583 PLI/Lit 473. 496 (1998).

8 856 F 2d 619 (4th Cir 1988).

9 Ibid at 623 (citations omitted).

10 Westinghouse Electric Corp v Republic of the Philippines, 951 F 2d 1414, 1424 (3d Cir 1991) (citations omitted) (demonstrating that disclosures to government agencies waives privilege as to facts disclosed and, in certain circumstances, as to subject matter); see also United States v Mendelsohn, 896 F 2d 1183, 1189 (9th Cir

1990) (illustrating that even inadvertent disclosures may create a subject matter waiver); Edwards v Whitaker, 868 F Supp 226, 229 (M D Tenn 1994) (citations omitted) ('[v]oluntary disclosure of the content of a privileged attorney communication constitutes waiver of the privilege as to all other such communications on the same subject'); In re Sealed Case, 676 F.2d 793, 818 (DC Cir 1982) (citations omitted) ('[w]hen a party reveals part of a privileged communication in order to gain an advantage in litigation, it waives the privilege as to all other communications relating to the same subject matter').

11 572 F 2d 596 (8th Cir 1977).

12 Ibid at 611.

13 In re Grand Jury Proceedings, 601 F 2d 162, 171 (5th Cir 1979) (citations omitted).

14 Fed R Civ P 26(b)(3).

15 See Continental Oil Co v United States, 330 F.2d 347 (9th Cir1964); In Re LTV Securities Litig, 89 F R D 595 (N D Tex.1981); Schachar v American Academy of Ophthalmology, 106 F R D 187 (N D Ill.1985).

16 Calvin Klein Trademark Trust v Wachner, 124 F Supp 2d 207, 210 (S D N Y. 2000).

17 See National Union Fire Ins Co of Pittsburgh, Pa vs Murray Sheet Metal Co, 967 F 2d 980, 984-85 (4th Cir 1992).

18 Upjohn, supra note 1, at 401.

19 Duplan Corp v Deering Milliken, Inc, 397 F Supp 1146, 1175 (D S C 1974).

20 Union Carbide v Dow Chemical, 619 F Supp 1036 (D Del 1985) (citations omitted).

21 115 F R D 308 (N D Cal. 1987).

22 Ibid at 309-10.

23 128 F R D 128 (M D Ga 1989).

24 Ibid at 131 (citations omitted).

25 Oak Indus v Zenith Indus, No 86 C 4302, 1988 WL 79614, at *4 (N D Ill. 27 July 1988)

26 Ibid.

27 Ibid.

This article first appeared in the October 2007 edition of Competition Law International, published by the International Bar Association.