FTC at Impasse With Microsoft/Activision Over Lawyers’ Access to Confidential Materials
The FTC seeks a protective order to prevent disclosure of the discovery taken in the commission’s investigation of Microsoft’s proposed Activision Blizzard buy and its administrative proceedings involving the transaction because the discovery contains confidential commercial information from Microsoft, Activision and third parties, said the agency’s motion Saturday (docket 3:23-cv-02880) in U.S. District Court for Northern California in San Francisco. Microsoft and Activision, in a joint response Monday, said they oppose the motion because the FTC refuses to allow their in-house counsel access to confidential trial exhibits.
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The FTC filed the lawsuit seeking orders temporarily and preliminarily enjoining the consummation of Microsoft’s proposed Activision buy. The court previously granted the FTC’s motion for a temporary restraining order blocking the transaction, and Wednesday is the start of an evidentiary hearing over portions of five days on the agency’s motion for a preliminary injunction (see 2306150001).
During its investigation into the proposed deal, the FTC “received hundreds of thousands of commercially sensitive documents from third parties, including direct competitors to Microsoft and Activision,” said the agency’s motion for a protective order. The documents contain “a wealth of competitively sensitive information,” it said. Included in the stash are estimates of market concentration, road maps for unreleased products, marketing plans, pricing decisions and strategy, analyses of potential mergers and acquisitions, customer surveys and licensing contracts, it said. The FTC also received “millions of documents” from Microsoft and Activision, many also containing commercially sensitive information, it said.
In preparation for Wednesday’s start to the evidentiary hearing, Microsoft and Activision sent the FTC a proposed draft protective order. The draft included a provision permitting them to identify four in-house counsel to be allowed access to confidential information, “provided they observe certain restrictions and execute an agreement requiring them to be bound by the terms of the protective order,” it said. But the draft is in “direct tension” with the court’s “already implemented and enforceable” administrative protective order, it said. Due to the impasse involving the four in-house counsel, the FTC submits its request for the court to enter its proposed protective order, it said.
Each in-house counsel already designated by Microsoft and Activision, said the companies’ opposition filing, “has submitted a declaration attesting to their work responsibilities and their non-involvement in competitive decisions.” The court should reject the FTC’s “needlessly restrictive” protective order proposal, it said.
Microsoft and Activision previously assured the FTC, in a meet and confer call Saturday, that the in-house designees “would have no responsibility for competitive decisions,” said their opposition. They also offered to disclose the names of the designees, indicating if receiving the names might resolve the dispute, Microsoft and Activision would be willing to provide them after the call, it said. The FTC filed its motion for a protective order hours later, it said.
The FTC wrongly speculates that granting Microsoft and Activision in-house litigation counsel access to trial exhibits could result in the disclosure of confidential information to “competitive” decision-makers at both companies, said their opposition. But their proposed protective order “expressly contemplates” that any individuals given access to confidential trial exhibits aren’t and won’t be involved in competitive decision-making, it said. Their proposed order also stipulates that those individuals “would view the exhibits either at outside counsel’s trial site or in a secure data room and sign an agreement to be bound by the protective order’s terms,” it said.