1038-00001 · Cascade Retail Holdings · Correspondence

letter-ftc-meet-and-confer.docx DOCUMENT Antitrust

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CALDERWOOD & HARKNESS LLP Attorneys at Law

1401 K Street NW, Suite 1200 Washington, D.C. 20005 Telephone: (202) 551-8400 Facsimile: (202) 551-8401 www.calderwoodharkness.com

July 21, 2025

Via Email and U.S. Mail

Claire Dunmore, Esq. Lead Trial Attorney Bureau of Competition, Mergers IV Division Federal Trade Commission 600 Pennsylvania Avenue NW Washington, D.C. 20580

Samuel Ortega, Esq. Senior Trial Counsel Bureau of Competition, Mergers IV Division Federal Trade Commission 600 Pennsylvania Avenue NW Washington, D.C. 20580

Re: FTC v. Cascade Retail Holdings Inc. et al., Case No. 2:25-cv-01087-RAJ (W.D. Wash.); FTC Administrative Docket No. 9438 — discovery Disputes — Defendants' First Set of Interrogatories and First Set of Requests for Production

Dear Ms. Dunmore and Mr. Ortega:

1. Introduction and Purpose

We write on behalf of our client, Defendant Cascade Retail Holdings Inc. ("Cascade"), in the above-captioned action pending before the Honorable Richard A. Johannsen in the United States District Court for the Western District of Washington, Seattle Division. This letter addresses several outstanding discovery disputes arising from the Federal Trade Commission's (the "FTC" or the "Commission") objections and deficient responses to Defendants' First Set of Interrogatories (Interrogatory Nos. 1–25) and Defendants' First Set of Requests for Production (Request Nos. 1–30), which were served on the Commission on July 7, 2025. The FTC served its responses and objections on or about July 18, 2025. As discussed in detail below, those responses contain sweeping objections, materially incomplete answers, and significant gaps in the FTC's document production that must be resolved immediately in light of the compressed litigation schedule in this matter.

This letter is sent in compliance with Local Civil Rule 37 of the Western District of Washington and Federal Rule of Civil Procedure 37(a)(1), both of which require the parties to engage in a good-faith meet-and-confer effort before any motion to compel may be filed. We are writing to identify the disputes clearly, explain our position, and propose a prompt meet-and-confer conference so that the parties may attempt to resolve these issues without burdening the Court.

We wish to emphasize the urgency of this matter. The Court's scheduling order establishes the following critical deadlines:

• Fact discovery closes: August 4, 2025

• Cascade's opposition to the FTC's motion for preliminary injunction: August 11, 2025

• Expert reports: August 18, 2025

• Preliminary injunction evidentiary hearing: September 8, 2025 (estimated five court days)

Given these compressed timelines, any further delay in the FTC's production of complete and substantive discovery responses will materially prejudice Defendants' ability to mount an effective defense, prepare their opposition brief, and develop expert testimony for the evidentiary hearing. We note further that Diana Whitfield and Kenneth Oshiro of Whitfield, Greer & Tanaka LLP, counsel for co-Defendant Pinnacle Market Group Inc. ("Pinnacle"), join in the concerns raised in this letter and have authorized us to state that Pinnacle shares these objections in full.

2. Background on discovery Served

On or about July 7, 2025, Defendants served on the FTC two sets of written discovery: (1) Defendants' First Set of Interrogatories to the Federal Trade Commission, consisting of Interrogatory Nos. 1 through 25; and (2) Defendants' First Set of Requests for Production to the Federal Trade Commission, consisting of Request Nos. 1 through 30. These discovery requests were properly served in accordance with the Federal Rules of Civil Procedure and the Court's scheduling order, and the FTC's responses were due no later than July 18, 2025, the date on which the Commission served its responses and objections.

Interrogatories. The interrogatories were directed at the core factual underpinnings of the FTC's case and were tailored to the issues that will be adjudicated at the September 8, 2025 evidentiary hearing. Among other topics, the interrogatories sought information concerning:

(a) The factual basis for the FTC's definition of the relevant product market as "online marketplace platform services for third-party sellers in the United States," including the evidence and analyses supporting that market definition;

(b) The Commission's analysis of conditions of entry and expansion in the alleged relevant market, including its assessment of new and emerging marketplace platforms;

(c) The identities of third-party sellers, competitors, trade associations, and other entities that communicated complaints, concerns, or opposition regarding the proposed Cascade-Pinnacle merger during the FTC's pre-complaint investigation;

(d) The factual basis for the economic analysis conducted by Dr. Nathaniel Hargrove of the Bureau of Economics, including the data, models, and methodologies employed in connection with the Bureau's internal competitive effects assessment; and

(e) The FTC's consideration of procompetitive efficiencies during its investigation, including Cascade's projected merger-specific efficiencies of approximately $340 million annually by Year 3 of the combined entity's operations.

Requests for Production. The requests for production sought documents in several broad categories, including:

(a) Documents relating to the FTC's pre-complaint investigation (File No. 251-0089), including staff memoranda, recommendations, and analyses prepared in connection with the Bureau of Competition's investigation of the proposed merger;

(b) Communications between the FTC — including staff of the Bureau of Competition and the Bureau of Economics — and third parties, including marketplace sellers, competing platforms, trade associations, and their counsel;

(c) Internal analyses, reports, models, and memoranda prepared by the Bureau of Economics, including materials prepared or supervised by Dr. Nathaniel Hargrove, relating to market definition, market shares, HHI calculations, competitive effects, and efficiencies; and

(d) Documents reflecting or relating to the Commission's deliberations and the 3-to-2 vote authorizing the filing of the complaint in this action, including any dissenting statements or analyses.

The FTC served its responses and objections on or about July 18, 2025. Those responses are, in critical respects, inadequate. The FTC has asserted blanket objections — including overbreadth, undue burden, relevance, work-product protection, the deliberative process privilege, and the law-enforcement investigative privilege — to numerous interrogatories and requests for production, often without providing any substantive answer whatsoever. Where the FTC has responded substantively, the responses are incomplete, evasive, or limited to bare cross-references to the complaint or to the forthcoming expert report of Dr. Wallace Keenan of Thornfield Research Group. The FTC's document production to date consists of a small number of documents, many of which are heavily redacted, with the vast majority of responsive documents withheld on privilege grounds without the benefit of a sufficiently detailed privilege log.

We address the most significant disputes below.

3. Specific discovery Disputes

A. Interrogatory Disputes

i. Interrogatory No. 3 — Basis for Relevant Market Definition. Interrogatory No. 3 asked the FTC to identify all facts, analyses, documents, and evidence supporting its definition of the relevant product market as "online marketplace platform services for third-party sellers in the United States," as alleged in paragraphs 35 through 46 of the Complaint. This interrogatory goes to the heart of the FTC's case. Market definition is the threshold issue in any merger challenge under Section 7 of the Clayton Act, and the FTC bears the burden of establishing a well-defined relevant market at the preliminary injunction stage. Defendants are entitled to know the factual predicate for the Commission's market definition so that they may prepare their opposition and develop responsive expert testimony.

The FTC's response to Interrogatory No. 3 is deficient. Rather than identifying the facts and evidence supporting its market definition, the FTC's response is limited to citing paragraphs of the Complaint (¶¶ 35–46) and stating that the "factual support for the Commission's relevant market definition will be set forth in the expert report of Dr. Wallace Keenan of Thornfield Research Group." This response is inadequate for several reasons.

First, a party may not respond to a contention interrogatory by merely pointing to the allegations in its own pleading. The Complaint is not evidence, and the purpose of a contention interrogatory is to require the responding party to identify the evidentiary support for its contentions. See Fed. R. Civ. P. 33(a)(2); In re Convergent Techs. Sec. Litig., 108 F.R.D. 328, 337 (N.D. Cal. 1985). Second, the FTC cannot defer its response entirely to a forthcoming expert report. Dr. Keenan's expert report is not due until August 18, 2025 — two weeks after the close of fact discovery — and Defendants are entitled to know the factual basis for the FTC's market definition now, independent of what Dr. Keenan may or may not opine. The FTC undoubtedly gathered substantial evidence from marketplace participants, conducted internal analyses within the Bureau of Economics, and prepared staff memoranda during its investigation. That evidence exists independently of the retained expert's work, and Defendants are entitled to its identification.

Third, the FTC's market definition is far from uncontested. Defendants intend to argue that the FTC has gerrymandered its relevant market to exclude competing channels — including direct-to-consumer e-commerce, social commerce platforms, and brick-and-mortar retail — thereby artificially inflating concentration levels. Defendants cannot effectively challenge the FTC's market definition without understanding the evidence the Commission actually gathered and relied upon.

We therefore request that the FTC provide a substantive supplemental response to Interrogatory No. 3, identifying the specific facts, documents, and analyses supporting its relevant product market definition, including but not limited to evidence gathered from marketplace participants, internal Bureau of Economics analyses, and staff memoranda concerning market definition.

ii. Interrogatory No. 7 — Identification of Complaining Third Parties. Interrogatory No. 7 asked the FTC to identify all third parties — including sellers, competitors, trade associations, and other entities or individuals — who communicated complaints, concerns, or opposition regarding the proposed Cascade-Pinnacle merger to the FTC during its investigation.

The FTC objected to this interrogatory on the ground that the identities of "confidential informants" are protected from disclosure and that the information sought is shielded by the law-enforcement investigative privilege. The FTC did not provide any substantive response.

We acknowledge that the FTC has a legitimate interest in protecting the confidentiality of certain communications with third parties during the course of a merger investigation. However, the FTC's blanket assertion of the law-enforcement investigative privilege is overbroad and unjustified in the circumstances of this case, for several reasons.

First, the law-enforcement investigative privilege is a qualified privilege that must yield when the need for the information outweighs the government's interest in non-disclosure. See In re Sealed Case, 856 F.2d 268, 272 (D.C. Cir. 1988). Here, the identities of third parties who communicated with the FTC about the merger are directly relevant to Defendants' ability to prepare their defense. These are potential witnesses at the September 8, 2025 evidentiary hearing, and Defendants must have adequate time to identify, investigate, and, where necessary, depose such witnesses before the close of fact discovery.

Second, many of the third parties who communicated with the FTC have not done so confidentially. Indeed, several entities have taken public positions regarding the merger or have taken affirmative steps to participate in this litigation. The Independent Online Sellers Alliance ("IOSA"), through its counsel Martina Galloway of Galloway & Peck LLP, has filed a motion to intervene in this action, publicly stating its opposition to the merger. IOSA's communications with the FTC are thus not entitled to any confidential treatment. Similarly, Vertex Commerce Inc. — which holds 35.7% of the FTC's alleged relevant market by gross merchandise volume ("GMV") and is the combined entity's closest competitor post-merger — has a significant competitive interest in opposing this transaction. Any communications between Vertex Commerce and the FTC are highly relevant to evaluating the Commission's allegations and the reliability of its market share evidence. We further note that Nomad Shops LLC, another significant marketplace participant, has publicly commented on competitive conditions in the online marketplace platform industry.

Third, the FTC's blanket assertion of the privilege, without any differentiation among categories of communicants, fails to satisfy the Commission's burden of establishing the applicability of the privilege on a document-by-document or communication-by-communication basis.

We request that the FTC supplement its response to Interrogatory No. 7 at a minimum with respect to third-party entities whose communications with the FTC cannot reasonably be deemed confidential by virtue of those entities' own public statements, litigation positions, or other conduct manifesting a waiver of any expectation of confidentiality. At a minimum, the FTC should identify IOSA, Vertex Commerce Inc., Nomad Shops LLC, and any other entity that has publicly commented on or participated in proceedings relating to the merger.

iii. Interrogatory No. 12 — FTC's Analysis of Entry Conditions. Interrogatory No. 12 asked the FTC to describe its analysis of barriers to entry and expansion in the alleged relevant market, including its assessment of the competitive significance of new entrants such as Brevity Social Commerce Inc. (launched in 2023) and Trove Marketplace Inc. (launched in 2024).

The FTC's response stated only that the Commission "considered entry conditions as part of its pre-complaint investigation" and referred generally to the Complaint's allegations regarding barriers to entry. The FTC did not provide any substantive analysis, identify any specific evidence, or describe its evaluation of actual or potential new entrants.

This response is plainly insufficient. The issue of entry is a critical element of the FTC's prima facie case under Section 7 of the Clayton Act. If entry is timely, likely, and sufficient to counteract the competitive effects of the merger, the FTC cannot sustain its burden. See 2023 Merger Guidelines § 7; United States v. Tarvick Hughes Inc., 908 F.2d 981, 987 (D.C. Cir. 1990). Defendants intend to present substantial evidence at the evidentiary hearing that the online marketplace platform market has experienced significant and successful entry in recent years, with platforms such as Brevity Social Commerce and Trove Marketplace gaining meaningful market share and attracting billions of dollars in investment capital. The FTC's refusal to disclose what evidence it gathered and what analysis it conducted regarding these new entrants during its investigation impedes Defendants' ability to develop their entry defense.

We request that the FTC provide a substantive supplemental response identifying all facts and analyses it considered regarding conditions of entry and expansion, including any staff memoranda, recommendations, or Bureau of Economics analyses concerning the competitive significance of Brevity Social Commerce Inc., Trove Marketplace Inc., and other emerging or potential marketplace platforms.

iv. Interrogatory No. 18 — FTC's Consideration of Efficiencies. Interrogatory No. 18 asked the FTC to identify all facts, analyses, and evidence it considered regarding the procompetitive efficiencies of the proposed Cascade-Pinnacle merger, including Cascade's projected merger-specific efficiencies of approximately $340 million annually by Year 3 of the combined entity's operations. These projected efficiencies consist of approximately $195 million in logistics and fulfillment cost savings and approximately $145 million in technology and platform synergies, as set forth in the parties' submissions to the FTC during the Second Request process.

The FTC's response was a blanket objection that the interrogatory was "premature" and sought information protected by the attorney work-product doctrine. The FTC provided no substantive response.

This objection is without merit. First, there is nothing "premature" about asking the FTC to identify the facts and analyses it considered regarding efficiencies during its pre-complaint investigation. The investigation is complete; the complaint has been filed; and the Commission has voted 3-to-2 to authorize this action. The FTC necessarily evaluated the parties' efficiency claims as part of its pre-complaint analysis, and the results of that evaluation are a factual matter, not work product.

Second, the FTC's treatment of efficiencies evidence during the investigation is directly relevant to the preliminary injunction hearing. Under FTC v. H.J. Heinz Co., 246 F.3d 708 (D.C. Cir. 2001), and the Section 13(b) preliminary injunction standard, the court is required to weigh the equities, including the potential procompetitive benefits of the merger. If the FTC's own staff analysis concluded that the parties' efficiency projections were cognizable, verifiable, and merger-specific — or if the FTC's staff disagreed about the magnitude or likelihood of claimed efficiencies — that evidence is highly probative and must be disclosed.

Third, to the extent the FTC contends that its internal analysis of efficiencies constitutes work product, that protection does not extend to the underlying facts. See Fed. R. Civ. P. 26(b)(3); Upjohn Co. v. United States, 449 U.S. 383, 395–96 (1981). The FTC must, at a minimum, identify the facts it considered — i.e., which efficiency claims it evaluated, what data it reviewed, and what evidence it gathered from the parties and third parties regarding efficiencies — even if it may withhold the mental impressions of its attorneys.

We request that the FTC withdraw its objection and provide a substantive supplemental response to Interrogatory No. 18.

B. Requests for Production Disputes

i. Request No. 4 — Communications with Third-Party Complainants. Request No. 4 sought all documents and communications between the FTC — including staff of the Bureau of Competition and the Bureau of Economics — and third parties concerning the proposed Cascade-Pinnacle merger, the competitive conditions in the online marketplace platform market, or the merger's potential effects on sellers or consumers. This request encompasses communications with marketplace sellers, competing platforms, trade associations, industry analysts, and any other third parties who provided information to the FTC during the course of its investigation.

The FTC produced a small number of documents in response to this request, consisting primarily of heavily redacted excerpts from public comments and form letters. The FTC withheld the vast majority of responsive communications on the basis of the law-enforcement investigative privilege and the deliberative process privilege.

These privilege assertions are overbroad. Communications between the FTC and third parties during a merger investigation are generally not privileged, particularly where the third parties themselves have no expectation of confidentiality or have waived any such expectation through their own conduct. Moreover, the deliberative process privilege does not protect factual communications between the government and outside parties; it protects only the internal deliberative process of the agency. See NLRB v. Sears, Roebuck & Co., 421 U.S. 132, 150 (1975).

Defendants request that the FTC produce, at a minimum, the following categories of communications:

(a) All non-privileged communications with the Independent Online Sellers Alliance ("IOSA"), located at 1025 Vermont Avenue NW, Suite 600, Washington, D.C. 20005, and its counsel Galloway & Peck LLP. IOSA has publicly opposed the merger and has filed a motion to intervene in this action; it cannot claim any expectation of confidentiality in its communications with the FTC;

(b) All non-privileged communications with Vertex Commerce Inc., located at 2100 North First Street, San Jose, California 95131. Vertex Commerce is the largest marketplace platform in the FTC's alleged relevant market, holding 35.7% market share by GMV. Vertex Commerce has a direct competitive interest in blocking this transaction, and its communications with the FTC are highly relevant to evaluating the reliability of the FTC's allegations and market share evidence;

(c) All non-privileged communications with Nomad Shops LLC, located at 45 Main Street, Suite 700, Brooklyn, New York 11201. Nomad Shops is another significant marketplace platform, and its communications with the FTC are relevant to the competitive effects analysis in this case.

We note that Defendants have separately served third-party subpoenas duces tecum on Vertex Commerce Inc. and Nomad Shops LLC, and are entitled to receive the FTC's side of those communications as well. The production of the FTC's own records of these communications is necessary to ensure completeness and to enable Defendants to evaluate any discrepancies between the FTC's records and the third parties' records.

To the extent the FTC maintains privilege objections over any communications with third parties, Defendants request that the FTC produce a detailed privilege log that identifies each withheld document or communication by: (1) date; (2) author or sender; (3) recipient(s); (4) a description of the subject matter sufficient to evaluate the privilege claim; and (5) the specific privilege or protection asserted. The FTC's current privilege log, to the extent one has been provided, is insufficiently detailed to permit Defendants to assess the validity of the FTC's privilege assertions or to seek judicial resolution of any dispute.

ii. Request No. 8 — Bureau of Economics Internal Analyses. Request No. 8 sought all economic analyses, memoranda, models, data compilations, and reports prepared by or on behalf of the Bureau of Economics, including materials prepared or supervised by Dr. Nathaniel Hargrove (a staff economist in the Bureau of Economics), relating to market definition, market shares, Herfindahl-Hirschman Index ("HHI") calculations, competitive effects, entry analysis, or efficiencies in connection with the FTC's investigation of the proposed Cascade-Pinnacle merger (FTC File No. 251-0089).

The FTC's Complaint contains specific HHI calculations and market share figures that necessarily were derived from internal Bureau of Economics analyses. Specifically, the Complaint alleges a pre-merger HHI of 2,361, a post-merger HHI of 2,856, and an HHI increase (delta) of 495 in the alleged relevant market. The Complaint further alleges the following market shares by GMV: Cascade at 8.2%, Pinnacle at 30.1%, the combined entity at 38.3%, Vertex Commerce at 35.7%, Nomad Shops at 14.6%, and all other competitors at 11.4%. These calculations did not materialize from thin air. They were necessarily based on internal Bureau of Economics analyses — including data compilations, market share calculations, and econometric models — that are distinct from the work of the FTC's retained outside expert, Dr. Wallace Keenan of Thornfield Research Group.

The FTC withheld all responsive documents on the basis of the deliberative process privilege. This assertion is improper for two reasons.

First, factual analyses and data compilations prepared by Bureau economists are not protected by the deliberative process privilege. The privilege shields only the agency's deliberative process — that is, the exchange of opinions and recommendations that are part of the decision-making process. It does not protect the factual inputs to that process. See Mapother v. DOJ, 3 F.3d 1533, 1539 (D.C. Cir. 1993); Petroleum Info. Corp. v. DOI, 976 F.2d 1429, 1434 (D.C. Cir. 1992). Bureau of Economics analyses calculating market shares, HHIs, and competitive effects based on data gathered from the parties and third parties are factual materials, not deliberative communications. They must be produced.

Second, the FTC has waived the deliberative process privilege to the extent it has placed the Bureau of Economics' analyses at issue in this litigation. The FTC has cited specific market share figures and HHI calculations in its Complaint. It relies on those figures in seeking a preliminary injunction. Having affirmatively placed the results of its internal economic analysis before the Court, the FTC cannot now shield the underlying analyses from discovery. See In re Sealed Case, 121 F.3d 729, 741 (D.C. Cir. 1997) (deliberative process privilege may be waived by the agency's conduct); Cobell v. Claveth, 213 F.R.D. 1, 5 (D.D.C. 2003).

We request that the FTC produce all factual economic analyses, data compilations, market share calculations, HHI computations, and empirical models prepared by the Bureau of Economics in connection with this investigation. To the extent any responsive documents contain intertwined deliberative and factual material, the FTC should produce the documents with appropriate redactions limited to purely deliberative content, consistent with its obligations under the Federal Rules of Civil Procedure.

iii. Request No. 14 — Commission Deliberations and Vote. Request No. 14 sought documents reflecting or relating to the Commission's deliberations and the vote to authorize the filing of the Complaint in this action. The Complaint was authorized by a 3-to-2 vote of the Commission.

The FTC objected on deliberative process privilege grounds and did not produce any responsive documents.

Defendants acknowledge the sensitivity of Commissioner deliberations and do not seek to intrude upon the core decisional process of the Commission. However, the close 3-to-2 vote to authorize this action is itself a relevant factual matter. A closely divided Commission vote bears on the weight of the FTC's likelihood-of-success showing under Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), because it reflects a divided assessment within the Commission itself regarding the merits of the challenge. Courts have considered the closeness of the Commission's vote in evaluating preliminary injunction motions. See FTC v. Sysco Corp., 113 F. Supp. 3d 1, 22 (D.D.C. 2015) (noting the Commission's vote in assessing the weight of the FTC's case).

Moreover, the dissenting Commissioners may have articulated analyses favorable to Defendants' position regarding market definition, competitive effects, entry, or efficiencies. In many FTC merger challenges, dissenting Commissioners have issued public statements explaining their votes, and those statements are part of the public record. Defendants are entitled to know whether dissenting statements were issued in this case and, if so, to receive copies of those statements.

We request, at a minimum, that the FTC: (1) identify the Commissioners who voted in favor of and against the filing of the Complaint; and (2) produce any publicly available dissenting statements or separate statements issued by any Commissioner in connection with the vote to authorize this action.

iv. Request No. 22 — Documents Concerning the Second Request Investigation. Request No. 22 sought all documents generated, received, or reviewed by the FTC during the Second Request investigation, including analyses of the parties' document productions, summaries of depositions and third-party interviews conducted during the investigation, and data analyses performed on the parties' transactional data. The Second Request was issued by the FTC on May 7, 2025, and Cascade and Pinnacle certified substantial compliance with the Second Request on June 10, 2025.

The FTC produced a limited set of documents in response to this request, consisting primarily of administrative correspondence regarding the scheduling of depositions and custodian negotiations. The FTC withheld substantial portions of responsive documents on work-product grounds, asserting that the documents were prepared in anticipation of litigation.

While we acknowledge that certain materials prepared by the FTC's litigation team after the commencement of this action may be protected by the work-product doctrine, the Second Request investigation is, by its nature, a pre-litigation investigative process. Much of the material generated during the Second Request process — including summaries of third-party interviews, analyses of document productions, and data compilations — constitutes factual material that is not protected by the work-product doctrine. The FTC cannot shield all materials gathered during the investigative phase of a merger review simply by characterizing them as litigation work product.

We request that the FTC supplement its production to include all non-privileged factual materials gathered or generated during the Second Request process, including but not limited to summaries or memoranda of third-party interviews, data analyses performed on the parties' transactional data (including any analyses performed by the Bureau of Economics), and factual summaries or indices of the parties' document productions. To the extent the FTC asserts work-product protection over specific documents, it must provide a privilege log entry for each such document, identifying the document with sufficient specificity to permit Defendants to assess the validity of the assertion.

4. Supplemental Production Regarding IOSA and Vertex Commerce Communications

Separate and apart from the specific requests discussed above, Defendants specifically request that the FTC supplement its production to include all communications between the FTC (including all staff in the Bureau of Competition and the Bureau of Economics) and the Independent Online Sellers Alliance ("IOSA") and its counsel, Galloway & Peck LLP. As noted above, IOSA has filed a motion to intervene in this action, which Defendants have opposed on the grounds that IOSA's interests are adequately represented by the FTC and that intervention would unduly complicate the proceedings and delay the preliminary injunction hearing. The extent and nature of IOSA's coordination with the FTC during the investigation and this litigation is directly relevant both to the merits of the FTC's case and to the pending intervention motion. If IOSA and the FTC have coordinated their litigation strategy or shared evidence, that coordination bears on whether IOSA's interests are truly "inadequately represented" by the FTC — a prerequisite for intervention as of right under Federal Rule of Civil Procedure 24(a)(2).

Similarly, Defendants request all communications between the FTC and Vertex Commerce Inc. Vertex Commerce holds 35.7% of the FTC's alleged relevant market and is the combined Cascade-Pinnacle entity's closest competitor post-merger. Vertex Commerce has a direct and substantial competitive interest in blocking this transaction: the merger would create a combined entity with 38.3% market share, narrowing Vertex Commerce's competitive advantage and intensifying competitive pressure in the marketplace platform sector. Any ex parte communications between Vertex Commerce and the FTC — including any provision of data, analyses, or competitive intelligence by Vertex Commerce to the Commission — are highly relevant to evaluating the credibility and reliability of the FTC's complaint, the foundation for its market share calculations, and the motivations of the third-party sources upon which the Commission has relied.

We note that the FTC has an affirmative obligation under its own rules and the Federal Rules of Civil Procedure to disclose materials provided by third parties that form part of the evidentiary basis for its claims. See Fed. R. Civ. P. 26(a)(1)(A)(ii) (requiring disclosure of documents that the disclosing party may use to support its claims). To the extent any communications from IOSA or Vertex Commerce informed the FTC's complaint allegations, market share calculations, or competitive effects analysis, those communications must be produced.

5. Proposal for Meet-and-Confer Conference

Pursuant to Federal Rule of Civil Procedure 37(a)(1) and Local Civil Rule 37(a)(2) of the Western District of Washington, Defendants propose an in-person or telephonic meet-and-confer conference during the week of July 28, 2025, to attempt to resolve the disputes identified in this letter without the need for motion practice. We suggest the following dates and times, at your convenience:

• Monday, July 28, 2025

• Tuesday, July 29, 2025

• Wednesday, July 30, 2025

We are available at any mutually convenient time on any of these dates. The conference may be held in person at Calderwood & Harkness's Washington, D.C. office at 1401 K Street NW, Suite 1200, Washington, D.C. 20005, or by videoconference, at the FTC's preference.

We note that Diana Whitfield and Kenneth Oshiro of Whitfield, Greer & Tanaka LLP, counsel for Pinnacle, wish to participate in the meet-and-confer conference and have authorized us to extend this invitation on their behalf.

We hope to resolve these disputes amicably and cooperatively. However, we must be candid: if the parties are unable to reach agreement at the meet-and-confer conference, Defendants intend to file a motion to compel promptly thereafter, given that fact discovery closes on August 4, 2025. Any delay beyond that date will directly and irreparably prejudice Defendants' ability to prepare their opposition to the FTC's motion for preliminary injunction (due August 11, 2025), develop their expert reports (due August 18, 2025), and present their defense at the evidentiary hearing (September 8, 2025).

Defendants reserve the right to seek expedited relief from Judge Johannsen, including an emergency motion to compel or an order shortening time, if the FTC does not agree to a timely meet-and-confer conference or otherwise fails to engage in the good-faith discussions required by the Federal Rules of Civil Procedure and the Local Rules.

6. Reservation of Rights

Defendants expressly reserve all rights and remedies available under the Federal Rules of Civil Procedure, the Local Rules of the Western District of Washington, and applicable law, including but not limited to:

(a) The right to file a motion to compel under Federal Rule of Civil Procedure 37(a);

(b) The right to seek an award of reasonable expenses, including attorneys' fees, under Federal Rule of Civil Procedure 37(a)(5), if a motion to compel is granted;

(c) The right to seek sanctions for discovery abuses, including under Federal Rule of Civil Procedure 37(b) and the Court's inherent authority;

(d) The right to raise the FTC's discovery deficiencies at the September 8, 2025 evidentiary hearing, including by arguing that adverse inferences should be drawn from the FTC's failure to produce relevant evidence; and

(e) The right to seek additional discovery, including through motions to extend the discovery period, if the FTC's belated production of documents or supplementation of interrogatory responses necessitates additional time.

Nothing in this letter, or in any meet-and-confer discussions that may follow, shall constitute a waiver of any objection, privilege, defense, or right available to Defendants in this action or in any other proceeding.

7. Conclusion

We respectfully request that the FTC respond to this letter no later than Friday, July 25, 2025, confirming the Commission's availability for a meet-and-confer conference during the week of July 28, 2025, and indicating whether the Commission will agree to supplement its interrogatory responses and document production voluntarily in advance of or concurrent with the meet-and-confer conference.

We are genuinely committed to working cooperatively with your office to resolve these discovery disputes without the need for court intervention. We recognize that both sides are operating under significant time pressure, and we believe that prompt and productive discussions can narrow the areas of disagreement and, ideally, eliminate the need for motion practice. At the same time, we must emphasize in the strongest terms that the current state of the FTC's discovery responses is inadequate, and that the compressed schedule in this matter does not permit further delay.

We appreciate your attention to this letter and look forward to hearing from you promptly.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Howard Bellamy Partner, Antitrust & Competition Practice Group

1401 K Street NW, Suite 1200 Washington, D.C. 20005 Telephone: (202) 551-8427

Email: hbellamy@calderwoodharkness.com

cc (via email):

Jerome Weston, Esq. General Counsel & Corporate Secretary Cascade Retail Holdings Inc. 2200 Westlake Avenue North, Suite 3400 Seattle, WA 98109

Diana Whitfield, Esq. Whitfield, Greer & Tanaka LLP 100 Congress Avenue, Suite 2200 Austin, TX 78701

Kenneth Oshiro, Esq. Whitfield, Greer & Tanaka LLP 100 Congress Avenue, Suite 2200 Austin, TX 78701

Rebecca Yun, Esq. Staff Attorney, Bureau of Competition Federal Trade Commission 600 Pennsylvania Avenue NW Washington, D.C. 20580

Elaine Forsythe, Esq. Calderwood & Harkness LLP

Elliot Nguyen, Esq. Calderwood & Harkness LLP

Aaron Liu, Esq. Calderwood & Harkness LLP

CALDERWOOD & HARKNESS LLP Attorneys at Law
1401 K Street NW, Suite 1200 Washington, D.C. 20005 Telephone: (202) 551-8400 Facsimile: (202) 551-8401 www.calderwoodharkness.com
July 21, 2025
Via Email and U.S. Mail
Claire Dunmore, Esq. Lead Trial Attorney Bureau of Competition, Mergers IV Division Federal Trade Commission 600 Pennsylvania Avenue NW Washington, D.C. 20580
Samuel Ortega, Esq. Senior Trial Counsel Bureau of Competition, Mergers IV Division Federal Trade Commission 600 Pennsylvania Avenue NW Washington, D.C. 20580
Re: FTC v. Cascade Retail Holdings Inc. et al., Case No. 2:25-cv-01087-RAJ (W.D. Wash.); FTC Administrative Docket No. 9438 — discovery Disputes — Defendants' First Set of Interrogatories and First Set of Requests for Production
Dear Ms. Dunmore and Mr. Ortega:
1. Introduction and Purpose
We write on behalf of our client, Defendant Cascade Retail Holdings Inc. ("Cascade"), in the above-captioned action pending before the Honorable Richard A. Johannsen in the United States District Court for the Western District of Washington, Seattle Division. This letter addresses several outstanding discovery disputes arising from the Federal Trade Commission's (the "FTC" or the "Commission") objections and deficient responses to Defendants' First Set of Interrogatories (Interrogatory Nos. 1–25) and Defendants' First Set of Requests for Production (Request Nos. 1–30), which were served on the Commission on July 7, 2025. The FTC served its responses and objections on or about July 18, 2025. As discussed in detail below, those responses contain sweeping objections, materially incomplete answers, and significant gaps in the FTC's document production that must be resolved immediately in light of the compressed litigation schedule in this matter.
This letter is sent in compliance with Local Civil Rule 37 of the Western District of Washington and Federal Rule of Civil Procedure 37(a)(1), both of which require the parties to engage in a good-faith meet-and-confer effort before any motion to compel may be filed. We are writing to identify the disputes clearly, explain our position, and propose a prompt meet-and-confer conference so that the parties may attempt to resolve these issues without burdening the Court.
We wish to emphasize the urgency of this matter. The Court's scheduling order establishes the following critical deadlines:
• Fact discovery closes: August 4, 2025
• Cascade's opposition to the FTC's motion for preliminary injunction: August 11, 2025
• Expert reports: August 18, 2025
• Preliminary injunction evidentiary hearing: September 8, 2025 (estimated five court days)
Given these compressed timelines, any further delay in the FTC's production of complete and substantive discovery responses will materially prejudice Defendants' ability to mount an effective defense, prepare their opposition brief, and develop expert testimony for the evidentiary hearing. We note further that Diana Whitfield and Kenneth Oshiro of Whitfield, Greer & Tanaka LLP, counsel for co-Defendant Pinnacle Market Group Inc. ("Pinnacle"), join in the concerns raised in this letter and have authorized us to state that Pinnacle shares these objections in full.
2. Background on discovery Served
On or about July 7, 2025, Defendants served on the FTC two sets of written discovery: (1) Defendants' First Set of Interrogatories to the Federal Trade Commission, consisting of Interrogatory Nos. 1 through 25; and (2) Defendants' First Set of Requests for Production to the Federal Trade Commission, consisting of Request Nos. 1 through 30. These discovery requests were properly served in accordance with the Federal Rules of Civil Procedure and the Court's scheduling order, and the FTC's responses were due no later than July 18, 2025, the date on which the Commission served its responses and objections.
Interrogatories. The interrogatories were directed at the core factual underpinnings of the FTC's case and were tailored to the issues that will be adjudicated at the September 8, 2025 evidentiary hearing. Among other topics, the interrogatories sought information concerning:
(a) The factual basis for the FTC's definition of the relevant product market as "online marketplace platform services for third-party sellers in the United States," including the evidence and analyses supporting that market definition;
(b) The Commission's analysis of conditions of entry and expansion in the alleged relevant market, including its assessment of new and emerging marketplace platforms;
(c) The identities of third-party sellers, competitors, trade associations, and other entities that communicated complaints, concerns, or opposition regarding the proposed Cascade-Pinnacle merger during the FTC's pre-complaint investigation;
(d) The factual basis for the economic analysis conducted by Dr. Nathaniel Hargrove of the Bureau of Economics, including the data, models, and methodologies employed in connection with the Bureau's internal competitive effects assessment; and
(e) The FTC's consideration of procompetitive efficiencies during its investigation, including Cascade's projected merger-specific efficiencies of approximately $340 million annually by Year 3 of the combined entity's operations.
Requests for Production. The requests for production sought documents in several broad categories, including:
(a) Documents relating to the FTC's pre-complaint investigation (File No. 251-0089), including staff memoranda, recommendations, and analyses prepared in connection with the Bureau of Competition's investigation of the proposed merger;
(b) Communications between the FTC — including staff of the Bureau of Competition and the Bureau of Economics — and third parties, including marketplace sellers, competing platforms, trade associations, and their counsel;
(c) Internal analyses, reports, models, and memoranda prepared by the Bureau of Economics, including materials prepared or supervised by Dr. Nathaniel Hargrove, relating to market definition, market shares, HHI calculations, competitive effects, and efficiencies; and
(d) Documents reflecting or relating to the Commission's deliberations and the 3-to-2 vote authorizing the filing of the complaint in this action, including any dissenting statements or analyses.
The FTC served its responses and objections on or about July 18, 2025. Those responses are, in critical respects, inadequate. The FTC has asserted blanket objections — including overbreadth, undue burden, relevance, work-product protection, the deliberative process privilege, and the law-enforcement investigative privilege — to numerous interrogatories and requests for production, often without providing any substantive answer whatsoever. Where the FTC has responded substantively, the responses are incomplete, evasive, or limited to bare cross-references to the complaint or to the forthcoming expert report of Dr. Wallace Keenan of Thornfield Research Group. The FTC's document production to date consists of a small number of documents, many of which are heavily redacted, with the vast majority of responsive documents withheld on privilege grounds without the benefit of a sufficiently detailed privilege log.
We address the most significant disputes below.
3. Specific discovery Disputes
A. Interrogatory Disputes
i. Interrogatory No. 3 — Basis for Relevant Market Definition. Interrogatory No. 3 asked the FTC to identify all facts, analyses, documents, and evidence supporting its definition of the relevant product market as "online marketplace platform services for third-party sellers in the United States," as alleged in paragraphs 35 through 46 of the Complaint. This interrogatory goes to the heart of the FTC's case. Market definition is the threshold issue in any merger challenge under Section 7 of the Clayton Act, and the FTC bears the burden of establishing a well-defined relevant market at the preliminary injunction stage. Defendants are entitled to know the factual predicate for the Commission's market definition so that they may prepare their opposition and develop responsive expert testimony.
The FTC's response to Interrogatory No. 3 is deficient. Rather than identifying the facts and evidence supporting its market definition, the FTC's response is limited to citing paragraphs of the Complaint (¶¶ 35–46) and stating that the "factual support for the Commission's relevant market definition will be set forth in the expert report of Dr. Wallace Keenan of Thornfield Research Group." This response is inadequate for several reasons.
First, a party may not respond to a contention interrogatory by merely pointing to the allegations in its own pleading. The Complaint is not evidence, and the purpose of a contention interrogatory is to require the responding party to identify the evidentiary support for its contentions. See Fed. R. Civ. P. 33(a)(2); In re Convergent Techs. Sec. Litig., 108 F.R.D. 328, 337 (N.D. Cal. 1985). Second, the FTC cannot defer its response entirely to a forthcoming expert report. Dr. Keenan's expert report is not due until August 18, 2025 — two weeks after the close of fact discovery — and Defendants are entitled to know the factual basis for the FTC's market definition now, independent of what Dr. Keenan may or may not opine. The FTC undoubtedly gathered substantial evidence from marketplace participants, conducted internal analyses within the Bureau of Economics, and prepared staff memoranda during its investigation. That evidence exists independently of the retained expert's work, and Defendants are entitled to its identification.
Third, the FTC's market definition is far from uncontested. Defendants intend to argue that the FTC has gerrymandered its relevant market to exclude competing channels — including direct-to-consumer e-commerce, social commerce platforms, and brick-and-mortar retail — thereby artificially inflating concentration levels. Defendants cannot effectively challenge the FTC's market definition without understanding the evidence the Commission actually gathered and relied upon.
We therefore request that the FTC provide a substantive supplemental response to Interrogatory No. 3, identifying the specific facts, documents, and analyses supporting its relevant product market definition, including but not limited to evidence gathered from marketplace participants, internal Bureau of Economics analyses, and staff memoranda concerning market definition.
ii. Interrogatory No. 7 — Identification of Complaining Third Parties. Interrogatory No. 7 asked the FTC to identify all third parties — including sellers, competitors, trade associations, and other entities or individuals — who communicated complaints, concerns, or opposition regarding the proposed Cascade-Pinnacle merger to the FTC during its investigation.
The FTC objected to this interrogatory on the ground that the identities of "confidential informants" are protected from disclosure and that the information sought is shielded by the law-enforcement investigative privilege. The FTC did not provide any substantive response.
We acknowledge that the FTC has a legitimate interest in protecting the confidentiality of certain communications with third parties during the course of a merger investigation. However, the FTC's blanket assertion of the law-enforcement investigative privilege is overbroad and unjustified in the circumstances of this case, for several reasons.
First, the law-enforcement investigative privilege is a qualified privilege that must yield when the need for the information outweighs the government's interest in non-disclosure. See In re Sealed Case, 856 F.2d 268, 272 (D.C. Cir. 1988). Here, the identities of third parties who communicated with the FTC about the merger are directly relevant to Defendants' ability to prepare their defense. These are potential witnesses at the September 8, 2025 evidentiary hearing, and Defendants must have adequate time to identify, investigate, and, where necessary, depose such witnesses before the close of fact discovery.
Second, many of the third parties who communicated with the FTC have not done so confidentially. Indeed, several entities have taken public positions regarding the merger or have taken affirmative steps to participate in this litigation. The Independent Online Sellers Alliance ("IOSA"), through its counsel Martina Galloway of Galloway & Peck LLP, has filed a motion to intervene in this action, publicly stating its opposition to the merger. IOSA's communications with the FTC are thus not entitled to any confidential treatment. Similarly, Vertex Commerce Inc. — which holds 35.7% of the FTC's alleged relevant market by gross merchandise volume ("GMV") and is the combined entity's closest competitor post-merger — has a significant competitive interest in opposing this transaction. Any communications between Vertex Commerce and the FTC are highly relevant to evaluating the Commission's allegations and the reliability of its market share evidence. We further note that Nomad Shops LLC, another significant marketplace participant, has publicly commented on competitive conditions in the online marketplace platform industry.
Third, the FTC's blanket assertion of the privilege, without any differentiation among categories of communicants, fails to satisfy the Commission's burden of establishing the applicability of the privilege on a document-by-document or communication-by-communication basis.
We request that the FTC supplement its response to Interrogatory No. 7 at a minimum with respect to third-party entities whose communications with the FTC cannot reasonably be deemed confidential by virtue of those entities' own public statements, litigation positions, or other conduct manifesting a waiver of any expectation of confidentiality. At a minimum, the FTC should identify IOSA, Vertex Commerce Inc., Nomad Shops LLC, and any other entity that has publicly commented on or participated in proceedings relating to the merger.
iii. Interrogatory No. 12 — FTC's Analysis of Entry Conditions. Interrogatory No. 12 asked the FTC to describe its analysis of barriers to entry and expansion in the alleged relevant market, including its assessment of the competitive significance of new entrants such as Brevity Social Commerce Inc. (launched in 2023) and Trove Marketplace Inc. (launched in 2024).
The FTC's response stated only that the Commission "considered entry conditions as part of its pre-complaint investigation" and referred generally to the Complaint's allegations regarding barriers to entry. The FTC did not provide any substantive analysis, identify any specific evidence, or describe its evaluation of actual or potential new entrants.
This response is plainly insufficient. The issue of entry is a critical element of the FTC's prima facie case under Section 7 of the Clayton Act. If entry is timely, likely, and sufficient to counteract the competitive effects of the merger, the FTC cannot sustain its burden. See 2023 Merger Guidelines § 7; United States v. Tarvick Hughes Inc., 908 F.2d 981, 987 (D.C. Cir. 1990). Defendants intend to present substantial evidence at the evidentiary hearing that the online marketplace platform market has experienced significant and successful entry in recent years, with platforms such as Brevity Social Commerce and Trove Marketplace gaining meaningful market share and attracting billions of dollars in investment capital. The FTC's refusal to disclose what evidence it gathered and what analysis it conducted regarding these new entrants during its investigation impedes Defendants' ability to develop their entry defense.
We request that the FTC provide a substantive supplemental response identifying all facts and analyses it considered regarding conditions of entry and expansion, including any staff memoranda, recommendations, or Bureau of Economics analyses concerning the competitive significance of Brevity Social Commerce Inc., Trove Marketplace Inc., and other emerging or potential marketplace platforms.
iv. Interrogatory No. 18 — FTC's Consideration of Efficiencies. Interrogatory No. 18 asked the FTC to identify all facts, analyses, and evidence it considered regarding the procompetitive efficiencies of the proposed Cascade-Pinnacle merger, including Cascade's projected merger-specific efficiencies of approximately $340 million annually by Year 3 of the combined entity's operations. These projected efficiencies consist of approximately $195 million in logistics and fulfillment cost savings and approximately $145 million in technology and platform synergies, as set forth in the parties' submissions to the FTC during the Second Request process.
The FTC's response was a blanket objection that the interrogatory was "premature" and sought information protected by the attorney work-product doctrine. The FTC provided no substantive response.
This objection is without merit. First, there is nothing "premature" about asking the FTC to identify the facts and analyses it considered regarding efficiencies during its pre-complaint investigation. The investigation is complete; the complaint has been filed; and the Commission has voted 3-to-2 to authorize this action. The FTC necessarily evaluated the parties' efficiency claims as part of its pre-complaint analysis, and the results of that evaluation are a factual matter, not work product.
Second, the FTC's treatment of efficiencies evidence during the investigation is directly relevant to the preliminary injunction hearing. Under FTC v. H.J. Heinz Co., 246 F.3d 708 (D.C. Cir. 2001), and the Section 13(b) preliminary injunction standard, the court is required to weigh the equities, including the potential procompetitive benefits of the merger. If the FTC's own staff analysis concluded that the parties' efficiency projections were cognizable, verifiable, and merger-specific — or if the FTC's staff disagreed about the magnitude or likelihood of claimed efficiencies — that evidence is highly probative and must be disclosed.
Third, to the extent the FTC contends that its internal analysis of efficiencies constitutes work product, that protection does not extend to the underlying facts. See Fed. R. Civ. P. 26(b)(3); Upjohn Co. v. United States, 449 U.S. 383, 395–96 (1981). The FTC must, at a minimum, identify the facts it considered — i.e., which efficiency claims it evaluated, what data it reviewed, and what evidence it gathered from the parties and third parties regarding efficiencies — even if it may withhold the mental impressions of its attorneys.
We request that the FTC withdraw its objection and provide a substantive supplemental response to Interrogatory No. 18.
B. Requests for Production Disputes
i. Request No. 4 — Communications with Third-Party Complainants. Request No. 4 sought all documents and communications between the FTC — including staff of the Bureau of Competition and the Bureau of Economics — and third parties concerning the proposed Cascade-Pinnacle merger, the competitive conditions in the online marketplace platform market, or the merger's potential effects on sellers or consumers. This request encompasses communications with marketplace sellers, competing platforms, trade associations, industry analysts, and any other third parties who provided information to the FTC during the course of its investigation.
The FTC produced a small number of documents in response to this request, consisting primarily of heavily redacted excerpts from public comments and form letters. The FTC withheld the vast majority of responsive communications on the basis of the law-enforcement investigative privilege and the deliberative process privilege.
These privilege assertions are overbroad. Communications between the FTC and third parties during a merger investigation are generally not privileged, particularly where the third parties themselves have no expectation of confidentiality or have waived any such expectation through their own conduct. Moreover, the deliberative process privilege does not protect factual communications between the government and outside parties; it protects only the internal deliberative process of the agency. See NLRB v. Sears, Roebuck & Co., 421 U.S. 132, 150 (1975).
Defendants request that the FTC produce, at a minimum, the following categories of communications:
(a) All non-privileged communications with the Independent Online Sellers Alliance ("IOSA"), located at 1025 Vermont Avenue NW, Suite 600, Washington, D.C. 20005, and its counsel Galloway & Peck LLP. IOSA has publicly opposed the merger and has filed a motion to intervene in this action; it cannot claim any expectation of confidentiality in its communications with the FTC;
(b) All non-privileged communications with Vertex Commerce Inc., located at 2100 North First Street, San Jose, California 95131. Vertex Commerce is the largest marketplace platform in the FTC's alleged relevant market, holding 35.7% market share by GMV. Vertex Commerce has a direct competitive interest in blocking this transaction, and its communications with the FTC are highly relevant to evaluating the reliability of the FTC's allegations and market share evidence;
(c) All non-privileged communications with Nomad Shops LLC, located at 45 Main Street, Suite 700, Brooklyn, New York 11201. Nomad Shops is another significant marketplace platform, and its communications with the FTC are relevant to the competitive effects analysis in this case.
We note that Defendants have separately served third-party subpoenas duces tecum on Vertex Commerce Inc. and Nomad Shops LLC, and are entitled to receive the FTC's side of those communications as well. The production of the FTC's own records of these communications is necessary to ensure completeness and to enable Defendants to evaluate any discrepancies between the FTC's records and the third parties' records.
To the extent the FTC maintains privilege objections over any communications with third parties, Defendants request that the FTC produce a detailed privilege log that identifies each withheld document or communication by: (1) date; (2) author or sender; (3) recipient(s); (4) a description of the subject matter sufficient to evaluate the privilege claim; and (5) the specific privilege or protection asserted. The FTC's current privilege log, to the extent one has been provided, is insufficiently detailed to permit Defendants to assess the validity of the FTC's privilege assertions or to seek judicial resolution of any dispute.
ii. Request No. 8 — Bureau of Economics Internal Analyses. Request No. 8 sought all economic analyses, memoranda, models, data compilations, and reports prepared by or on behalf of the Bureau of Economics, including materials prepared or supervised by Dr. Nathaniel Hargrove (a staff economist in the Bureau of Economics), relating to market definition, market shares, Herfindahl-Hirschman Index ("HHI") calculations, competitive effects, entry analysis, or efficiencies in connection with the FTC's investigation of the proposed Cascade-Pinnacle merger (FTC File No. 251-0089).
The FTC's Complaint contains specific HHI calculations and market share figures that necessarily were derived from internal Bureau of Economics analyses. Specifically, the Complaint alleges a pre-merger HHI of 2,361, a post-merger HHI of 2,856, and an HHI increase (delta) of 495 in the alleged relevant market. The Complaint further alleges the following market shares by GMV: Cascade at 8.2%, Pinnacle at 30.1%, the combined entity at 38.3%, Vertex Commerce at 35.7%, Nomad Shops at 14.6%, and all other competitors at 11.4%. These calculations did not materialize from thin air. They were necessarily based on internal Bureau of Economics analyses — including data compilations, market share calculations, and econometric models — that are distinct from the work of the FTC's retained outside expert, Dr. Wallace Keenan of Thornfield Research Group.
The FTC withheld all responsive documents on the basis of the deliberative process privilege. This assertion is improper for two reasons.
First, factual analyses and data compilations prepared by Bureau economists are not protected by the deliberative process privilege. The privilege shields only the agency's deliberative process — that is, the exchange of opinions and recommendations that are part of the decision-making process. It does not protect the factual inputs to that process. See Mapother v. DOJ, 3 F.3d 1533, 1539 (D.C. Cir. 1993); Petroleum Info. Corp. v. DOI, 976 F.2d 1429, 1434 (D.C. Cir. 1992). Bureau of Economics analyses calculating market shares, HHIs, and competitive effects based on data gathered from the parties and third parties are factual materials, not deliberative communications. They must be produced.
Second, the FTC has waived the deliberative process privilege to the extent it has placed the Bureau of Economics' analyses at issue in this litigation. The FTC has cited specific market share figures and HHI calculations in its Complaint. It relies on those figures in seeking a preliminary injunction. Having affirmatively placed the results of its internal economic analysis before the Court, the FTC cannot now shield the underlying analyses from discovery. See In re Sealed Case, 121 F.3d 729, 741 (D.C. Cir. 1997) (deliberative process privilege may be waived by the agency's conduct); Cobell v. Claveth, 213 F.R.D. 1, 5 (D.D.C. 2003).
We request that the FTC produce all factual economic analyses, data compilations, market share calculations, HHI computations, and empirical models prepared by the Bureau of Economics in connection with this investigation. To the extent any responsive documents contain intertwined deliberative and factual material, the FTC should produce the documents with appropriate redactions limited to purely deliberative content, consistent with its obligations under the Federal Rules of Civil Procedure.
iii. Request No. 14 — Commission Deliberations and Vote. Request No. 14 sought documents reflecting or relating to the Commission's deliberations and the vote to authorize the filing of the Complaint in this action. The Complaint was authorized by a 3-to-2 vote of the Commission.
The FTC objected on deliberative process privilege grounds and did not produce any responsive documents.
Defendants acknowledge the sensitivity of Commissioner deliberations and do not seek to intrude upon the core decisional process of the Commission. However, the close 3-to-2 vote to authorize this action is itself a relevant factual matter. A closely divided Commission vote bears on the weight of the FTC's likelihood-of-success showing under Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), because it reflects a divided assessment within the Commission itself regarding the merits of the challenge. Courts have considered the closeness of the Commission's vote in evaluating preliminary injunction motions. See FTC v. Sysco Corp., 113 F. Supp. 3d 1, 22 (D.D.C. 2015) (noting the Commission's vote in assessing the weight of the FTC's case).
Moreover, the dissenting Commissioners may have articulated analyses favorable to Defendants' position regarding market definition, competitive effects, entry, or efficiencies. In many FTC merger challenges, dissenting Commissioners have issued public statements explaining their votes, and those statements are part of the public record. Defendants are entitled to know whether dissenting statements were issued in this case and, if so, to receive copies of those statements.
We request, at a minimum, that the FTC: (1) identify the Commissioners who voted in favor of and against the filing of the Complaint; and (2) produce any publicly available dissenting statements or separate statements issued by any Commissioner in connection with the vote to authorize this action.
iv. Request No. 22 — Documents Concerning the Second Request Investigation. Request No. 22 sought all documents generated, received, or reviewed by the FTC during the Second Request investigation, including analyses of the parties' document productions, summaries of depositions and third-party interviews conducted during the investigation, and data analyses performed on the parties' transactional data. The Second Request was issued by the FTC on May 7, 2025, and Cascade and Pinnacle certified substantial compliance with the Second Request on June 10, 2025.
The FTC produced a limited set of documents in response to this request, consisting primarily of administrative correspondence regarding the scheduling of depositions and custodian negotiations. The FTC withheld substantial portions of responsive documents on work-product grounds, asserting that the documents were prepared in anticipation of litigation.
While we acknowledge that certain materials prepared by the FTC's litigation team after the commencement of this action may be protected by the work-product doctrine, the Second Request investigation is, by its nature, a pre-litigation investigative process. Much of the material generated during the Second Request process — including summaries of third-party interviews, analyses of document productions, and data compilations — constitutes factual material that is not protected by the work-product doctrine. The FTC cannot shield all materials gathered during the investigative phase of a merger review simply by characterizing them as litigation work product.
We request that the FTC supplement its production to include all non-privileged factual materials gathered or generated during the Second Request process, including but not limited to summaries or memoranda of third-party interviews, data analyses performed on the parties' transactional data (including any analyses performed by the Bureau of Economics), and factual summaries or indices of the parties' document productions. To the extent the FTC asserts work-product protection over specific documents, it must provide a privilege log entry for each such document, identifying the document with sufficient specificity to permit Defendants to assess the validity of the assertion.
4. Supplemental Production Regarding IOSA and Vertex Commerce Communications
Separate and apart from the specific requests discussed above, Defendants specifically request that the FTC supplement its production to include all communications between the FTC (including all staff in the Bureau of Competition and the Bureau of Economics) and the Independent Online Sellers Alliance ("IOSA") and its counsel, Galloway & Peck LLP. As noted above, IOSA has filed a motion to intervene in this action, which Defendants have opposed on the grounds that IOSA's interests are adequately represented by the FTC and that intervention would unduly complicate the proceedings and delay the preliminary injunction hearing. The extent and nature of IOSA's coordination with the FTC during the investigation and this litigation is directly relevant both to the merits of the FTC's case and to the pending intervention motion. If IOSA and the FTC have coordinated their litigation strategy or shared evidence, that coordination bears on whether IOSA's interests are truly "inadequately represented" by the FTC — a prerequisite for intervention as of right under Federal Rule of Civil Procedure 24(a)(2).
Similarly, Defendants request all communications between the FTC and Vertex Commerce Inc. Vertex Commerce holds 35.7% of the FTC's alleged relevant market and is the combined Cascade-Pinnacle entity's closest competitor post-merger. Vertex Commerce has a direct and substantial competitive interest in blocking this transaction: the merger would create a combined entity with 38.3% market share, narrowing Vertex Commerce's competitive advantage and intensifying competitive pressure in the marketplace platform sector. Any ex parte communications between Vertex Commerce and the FTC — including any provision of data, analyses, or competitive intelligence by Vertex Commerce to the Commission — are highly relevant to evaluating the credibility and reliability of the FTC's complaint, the foundation for its market share calculations, and the motivations of the third-party sources upon which the Commission has relied.
We note that the FTC has an affirmative obligation under its own rules and the Federal Rules of Civil Procedure to disclose materials provided by third parties that form part of the evidentiary basis for its claims. See Fed. R. Civ. P. 26(a)(1)(A)(ii) (requiring disclosure of documents that the disclosing party may use to support its claims). To the extent any communications from IOSA or Vertex Commerce informed the FTC's complaint allegations, market share calculations, or competitive effects analysis, those communications must be produced.
5. Proposal for Meet-and-Confer Conference
Pursuant to Federal Rule of Civil Procedure 37(a)(1) and Local Civil Rule 37(a)(2) of the Western District of Washington, Defendants propose an in-person or telephonic meet-and-confer conference during the week of July 28, 2025, to attempt to resolve the disputes identified in this letter without the need for motion practice. We suggest the following dates and times, at your convenience:
• Monday, July 28, 2025
• Tuesday, July 29, 2025
• Wednesday, July 30, 2025
We are available at any mutually convenient time on any of these dates. The conference may be held in person at Calderwood & Harkness's Washington, D.C. office at 1401 K Street NW, Suite 1200, Washington, D.C. 20005, or by videoconference, at the FTC's preference.
We note that Diana Whitfield and Kenneth Oshiro of Whitfield, Greer & Tanaka LLP, counsel for Pinnacle, wish to participate in the meet-and-confer conference and have authorized us to extend this invitation on their behalf.
We hope to resolve these disputes amicably and cooperatively. However, we must be candid: if the parties are unable to reach agreement at the meet-and-confer conference, Defendants intend to file a motion to compel promptly thereafter, given that fact discovery closes on August 4, 2025. Any delay beyond that date will directly and irreparably prejudice Defendants' ability to prepare their opposition to the FTC's motion for preliminary injunction (due August 11, 2025), develop their expert reports (due August 18, 2025), and present their defense at the evidentiary hearing (September 8, 2025).
Defendants reserve the right to seek expedited relief from Judge Johannsen, including an emergency motion to compel or an order shortening time, if the FTC does not agree to a timely meet-and-confer conference or otherwise fails to engage in the good-faith discussions required by the Federal Rules of Civil Procedure and the Local Rules.
6. Reservation of Rights
Defendants expressly reserve all rights and remedies available under the Federal Rules of Civil Procedure, the Local Rules of the Western District of Washington, and applicable law, including but not limited to:
(a) The right to file a motion to compel under Federal Rule of Civil Procedure 37(a);
(b) The right to seek an award of reasonable expenses, including attorneys' fees, under Federal Rule of Civil Procedure 37(a)(5), if a motion to compel is granted;
(c) The right to seek sanctions for discovery abuses, including under Federal Rule of Civil Procedure 37(b) and the Court's inherent authority;
(d) The right to raise the FTC's discovery deficiencies at the September 8, 2025 evidentiary hearing, including by arguing that adverse inferences should be drawn from the FTC's failure to produce relevant evidence; and
(e) The right to seek additional discovery, including through motions to extend the discovery period, if the FTC's belated production of documents or supplementation of interrogatory responses necessitates additional time.
Nothing in this letter, or in any meet-and-confer discussions that may follow, shall constitute a waiver of any objection, privilege, defense, or right available to Defendants in this action or in any other proceeding.
7. Conclusion
We respectfully request that the FTC respond to this letter no later than Friday, July 25, 2025, confirming the Commission's availability for a meet-and-confer conference during the week of July 28, 2025, and indicating whether the Commission will agree to supplement its interrogatory responses and document production voluntarily in advance of or concurrent with the meet-and-confer conference.
We are genuinely committed to working cooperatively with your office to resolve these discovery disputes without the need for court intervention. We recognize that both sides are operating under significant time pressure, and we believe that prompt and productive discussions can narrow the areas of disagreement and, ideally, eliminate the need for motion practice. At the same time, we must emphasize in the strongest terms that the current state of the FTC's discovery responses is inadequate, and that the compressed schedule in this matter does not permit further delay.
We appreciate your attention to this letter and look forward to hearing from you promptly.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Howard Bellamy Partner, Antitrust & Competition Practice Group
1401 K Street NW, Suite 1200 Washington, D.C. 20005 Telephone: (202) 551-8427
Email: hbellamy@calderwoodharkness.com
cc (via email):
Jerome Weston, Esq. General Counsel & Corporate Secretary Cascade Retail Holdings Inc. 2200 Westlake Avenue North, Suite 3400 Seattle, WA 98109
Diana Whitfield, Esq. Whitfield, Greer & Tanaka LLP 100 Congress Avenue, Suite 2200 Austin, TX 78701
Kenneth Oshiro, Esq. Whitfield, Greer & Tanaka LLP 100 Congress Avenue, Suite 2200 Austin, TX 78701
Rebecca Yun, Esq. Staff Attorney, Bureau of Competition Federal Trade Commission 600 Pennsylvania Avenue NW Washington, D.C. 20580
Elaine Forsythe, Esq. Calderwood & Harkness LLP
Elliot Nguyen, Esq. Calderwood & Harkness LLP
Aaron Liu, Esq. Calderwood & Harkness LLP

CALDERWOOD & HARKNESS LLP Attorneys at Law

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