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Take-Two battles FTC investigation

GTAIV publisher says regulatory body's request for information in relation to EA buyout is too broad and will incur undue expense; court hearing scheduled for June 24.

The Federal Trade Commission has acted as a substantial roadblock for Electronic Arts in advancing with its hostile takeover of rival publisher Take-Two. As part of its second and third deadline extension of the tender offer to Take-Two shareholders, EA cited the FTC's requirement for additional time to conclude its regulatory investigation into the merger.

EA's most recent move on account of the FTC appears to have been the last, however. As part of a deal reached on June 3, EA agreed not to proceed with its $25.74-per-share shareholder buyout proposal until the earlier of either the FTC concluding its investigation or the lapse of 45 days after EA provides "substantial compliance with [the FTC's request for additional information]."

Now, it's Take-Two's turn to enter legal wrangling with the FTC. As revealed in a Securities and Exchange Commission filing today, Take-Two said that the US District Court for the District of Columbia has ordered the publisher to explain why it has not complied with a subpoena and civil investigative demand issued by the FTC in relation to EA's buyout offer. The DC court has scheduled a hearing for June 24 to determine whether Take-Two is required to comply with the FTC's request, and Take-Two intends to defend its position in court if it cannot reach an agreement with the FTC prior to the hearing.

In a statement, Take-Two explained its position, saying the FTC's request places an undue burden on the company because of the breadth of the information requested. Take-Two also said that it is willing to comply with the FTC, provided the regulatory body narrows the scope of its inquiry.

"Prior to the issuance of the FTC's subpoena and [civil investigative demand], the company has been cooperating fully with the FTC with regard to their review of EA's offer to acquire the company," said Take-Two in the SEC filing. "The company has already provided enormous quantities of data and access to key executives, and has offered to provide the FTC staff with additional documents and information. Nevertheless, the company believes the FTC's subpoena and CID are unnecessarily broad and would entail unacceptable additional expense to the company."

"To limit the inordinate expense and labor that the FTC's demand would entail, the company has sought to obtain reasonable limits on the scope of the information sought," Take-Two continued. "The company will continue to cooperate actively and produce documents in response to the FTC's previous requests, and will of course attempt to seek an acceptable resolution to this matter as quickly as possible."

80 Comments

  • monoendo1

    Posted Aug 15, 2008 5:28 pm GMT

    EEEEEEEEEEEEEAAAAAAAAAAAAAAAAAAA F^#k off they are taking over every good game studio Take Two,Epic Games like what the f#^k man like seriously.

  • hannify

    Posted Jun 16, 2008 3:41 pm GMT

    BTW, big corporation haters - all companies had to start somewhere. If there products weren't good enough to stay in the comp they wouldn't be where they are today.

    Just seems people like labelling like when you hear McDonalds you think Fat people but not everybody going in there are fat and live a long and prosperous life.

  • LindBergh2007

    Posted Jun 13, 2008 4:29 pm GMT

    Thank you EA for your continued desperations to aqqiure the GTA franchise, your dirty tatics are making things worse for the industy and running developers into the ground. May the lawsuit in your dirty, abesnt minded, monolozing business move on buying out the NFL license in 2004 from Sega's ESPN,Sony's Gameday and Midway's Blitz be your fatal flaw as you are found guilty of antitrust. Your judgement is coming. I can feel it in my bones.

  • morbid_man_guy

    Posted Jun 12, 2008 4:58 pm GMT

    Regardless of EA's supposed new "hands-off" approach to IP obtained through buyouts etc, the fact is that if the publisher of any game changes, particularly one as sought after as GTA IV, then something else has GOT to change - it's just the way things work. What that something is cannot always be foretold. It could be the game's producers, price, quality or any combination of many factors. The best I hope for is that legal battles and borderline anti-competitive, monopolistic companies (read: EA) won't hurt the publisher/developer to the point where the games we love to play are butchered. EA may not be as I described here that's just my opinion - but if they really cared about the games they publish from bought-out publishers and IP, then they would have offered T2 shareholders a price during the bulk of the DEVELOPMENT of GTA IV, not just toward the RELEASE where they obviously are just wanting to cash in on a game that is undoubtedly one of, if not the most popular in the gaming world today.

  • MysteryGoat

    Posted Jun 12, 2008 4:05 pm GMT

    metalisticpain

    Thanks for explaining, makes me even more irritated at them now. I mean I knew they were sheisty but this is low even for them. I really hope Activision's merger does some good for them and they end up beating down EA.

  • Tandem_Toad

    Posted Jun 12, 2008 4:01 pm GMT

    It wouldn't suprise me if Take-Two's claim was legitimate. It seems typical that a government agency would require too much too soon, putting unneeded stress on the company. I say it is time we investigate the FTC and require them to account for all their dealings by no later than next week.

  • blackace

    Posted Jun 12, 2008 2:11 pm GMT

    2K and Rockstar probably have clauses in their contracts with Take-Two. They may go to another company like Ubisoft, Activision or M$ before EA can touch them. Who know how this will unfold. If they destroy the 2K Sport franchise, I will never buy another EA game, EVER. I think a lot of people will ban EA games from their library if that happens. I haven't bought a Madden, NHL, March Madnessor NCAA Football from EA in the last 4 years. I did get NBA Live last year and that game sucked.

  • ObiKKa

    Posted Jun 12, 2008 1:03 pm GMT

    Well, this is it: Take-Two's pedigree, and brands of games are going to be crushed to the ground so badly, and that nothing will ever rescue this incoming cesspool of utter-sh1tnesses as long as EA owns them (which would seem to be forever!). Even the games of 2K Games, a part of Take-Two, are potentially going to be gone forever, or be ruined by EA's method of 'rinse-&-repeat' processes that so afflicts their games, unless some other games are so good that it just propels EA up to make better revisions every year unless said competing games makes so little money that they ain't worried anymore (Konami's notoriously lackluster attitude with their Pro Evo games just by relying on people's hatred of EA, and the not-so-glowing pedigree of the older instalments; Take-Two's hockey & football games, Activision's Tony Hawk [though that competiton's still in progress, but Acti is big & powerful, and is assessing the future direction of their skating franchise, so...], etc.)

    Guys, remember, it's not just EA that you should be hating on, you should also question the behaviours of the executive board of Take-Two, which is apparently a kind of 'external' management firm called Zelnick Media something, that just took over the (disappointing) former board of the company. But, really, they're just in it for the money - purely greedy. They're going to earn a gobsmackng wad of money from selling out their stocks & bonus salary payments, & whatever, but I don't exactly know how all these things would all work out in these cases, but I'm sure that you can find out more about it on the net, or maybe www.gamesutra.com, or www.next-gen.biz, or a bit like that. They apparently don't care about the games, and that's so sad.

    It is very telling how the FTC really is wanting to do a 'very board' investigation of both companies, and the possible buyout offer, and that this atrocity is still ongoing with so many deadlines that have been passed without much happening at all. I am not gonna, and you all shouldn't likewise, be deceived by how the greedy T2's execs only wants to reveal so 'little' of the information about their company (hint, the FTC may also have wanted to have a look at their salary payments & conditions - hint, hint) to the FTC.

  • mrkame16

    Posted Jun 12, 2008 11:51 am GMT

    EA are a bunch of monopolizing thugs!!

  • NA3D

    Posted Jun 12, 2008 11:23 am GMT

    Ubi-Two would be an amazing match. Ubisoft is ran extremely well, and their employees love working there. So that would be great for everyone.

  • prdroog

    Posted Jun 12, 2008 10:47 am GMT

    Suck it EA!!!

  • Dshenlong

    Posted Jun 12, 2008 10:04 am GMT

    XXMADMAN: Wasn't that Family Guy? When Peter and William Shatner are at the fair? Still, that was funny.

    I''d rather they merge with Ubisoft....at least their games are of better quality than EA's are. And since they have no "sports" division setup already, they would actually use Take Two's resources well.

  • stakex007

    Posted Jun 12, 2008 9:57 am GMT

    As far as I know, Take-Two does not have any blockbuster games coming out for a while... so while its stock is currently high from GTA4 sales (and from EA's offer), its not sustainable, and when the stock begins to fall EA will move in for the kill. One way or another, if the FTC approves, EA is going to buy Take-Two and theres not really much they can do about it... thats why they are tieing things up for a while with this.

    Funny thing tho, before GTA4 came out I really thought it would be a bad thing for EA to buy Take-Two, but GTA4 was really an EA quality game anyway... so now I really could care less. Take-Two followed EA's example of better graphics with minimal gameplay improvements... in fact even a gameplay reduction over GTA:SA.

  • Wallenstein_155

    Posted Jun 12, 2008 9:38 am GMT

    Bethesda is the creator of the Elder Scrolls Universe, Take-Two just helped out in making Oblivion, its fourth installment; it will be up to bethesda to decide whether they want to work with take-two in the fifth game or not

  • memnoch2099

    Posted Jun 12, 2008 8:51 am GMT

    Uhmmm Take Two not only releases GTA games.. how bout the NBA 2K series which is much better IMHO than the crappy one that EA releases (NBA Live) and there's also this little game that is called The Elder Scrolls Oblivion

  • Senor_Kami

    Posted Jun 12, 2008 8:43 am GMT

    "The stock wouldnt drop if EA walked away. You see, EA offered 25 and 3/4's. If the stock was stuck around 25-26 like it was for a while, then yes you could relate the price to the offer. However, after GTA IV's sales figures came out, and the earnings were factored, the company reached 27.50 and is hovering today after taking a hit around 26.85. This is because the earnings from GTA drove the price of the stock up. The company is now fairly priced around 27, after dividing earnings by outstanding shares etc... An EA buyout is the worst thing that could happen to this company as a gaming company. The money for the shares for one, would be less then the company is worth, just keep the current price and the dividends should be pleasantly surprising. Anyway, this company should join with Ubisoft, and become one of the most loved companies."
    =====

    Actually the price shot up when EA made their initial offer. Take Two has had financial performance for a while. They were operating at a loss for like two years straight, despite releasing multiple titles that sold well and were reviewed well. For all their games, they are a very poorly run operation that basically lives and dies by GTA releases.

    Their two years of loss wouldn't be so bad if they released nothing but crappy games so it at least made sense that they wouldn't be performing well.
    ===
    For others, why the assumption that GTA will die or BECOME a rehash. LOL, GTA has been a rehash. I guess everyone forgets about Vice City and San Andreas. Hell, minor upgrades to the basic engine sold for full price is a model that both Rockstar and EA follow. At least you'd have synergy now.

    As far as sports do you guys honestly think EA will fire everyone... and leave a bunch of unsigned developers with experience in making hq sports titles in the wild for any company to come and buy up. No, EA isn't a fool when it comes to business decisions. That will not happen. Nor will they keep them on payroll but not have them make games. All that will happen is the next NBA Live will all of the sudden perfectly integrate everything that NBA 2K games better. Thats what a logical company would do. Merge the human assets. Not sit on talent and let it atrophy or let the competition scoop up some of the best talent in sports games.

  • Mystoksor

    Posted Jun 12, 2008 8:35 am GMT

    @madman: I remember that scene. that was so funny

  • XXMadManVII

    Posted Jun 12, 2008 7:50 am GMT

    This whole thing reminds me of a "Simpsons" episode. Remember the one where the German sausage guy wacks the Polish sausage guy in the head and takes over his sausage booth, then the German sausage guy looks at the nervous Czech sausage guy, still holding his assault sausage? Yeah... Take Two is the Czech sausage guy. ahahahaha I just used the word "sausage" 7 no make that 8 times.... lol i just made myself laugh

  • skyline7284

    Posted Jun 12, 2008 7:02 am GMT

    @sickMoron

    If your going to have the government be nice to you, you have to be nice to them... The last thing take two would need is to be investigated. Atleast EA is Cooperating, better then they used to be....

  • King_Jeremy_77

    Posted Jun 12, 2008 7:00 am GMT

    EA sucks.

  • GundamBlue

    Posted Jun 12, 2008 6:58 am GMT

    I think all this is stupid..ea needs to just crawl under a rock and die...

  • NA3D

    Posted Jun 12, 2008 6:53 am GMT

    ctg867 - you forgot that they own the NASCAR exclusive contract too. Then they also have rights for all Superman video games, haha. (Thank you EA Tib. for Epic Fail of Superman Returns when most of your staff was saying that the game was horrid.)

    Sick - They FTC could pull strings and make things hard on them for not playing nice. They should let them have all of the information they need though. At the same time, they need to keep their business going. So they shouldnt have to waste a boat load of man power just to get the info to them.

    cyw - The problem is that the FTC, just like many other government groups, waste a ton of time on purpose. If they look like they do a lot, then the government wont streamline them down and cut down how much money the people who run the group get. (We need to restructure our hold government from top to bottom, it would actually cut taxes like crazy. [not paying old farts that are half alive just because they made a deal with someone so they both get rich])

    Anyways, I wonder when the next news blast about this whole mess is going to be released.

  • Nineball2112

    Posted Jun 12, 2008 6:28 am GMT

    SickM0R0N said "Explain to me in entirety why a company that does not wish to sell or be bought out should pony up information about themselves in detail of a potential buyout by EA."

    Ummm.... because it's the law.

  • cyw1988

    Posted Jun 12, 2008 4:34 am GMT

    EA just wants to dominate the sports games industry. And it is rather interesing that even after FTC has checked on EA, this takeover would be allowed to continue. We on the outside can easily see what EA is trying to do but FTC on the other hand are making so much unnecessary investigations, leading to higher costs. Just block the sales of Take2 shares to EA and that will end everything... sheesh... =/

    This article basically just says that FTC demands information on the merger from Take2's side. Take2 feels that FTC wants too broad a range of info and that would incur unnecessary additional expenses for Take2. Hence they are reluctant to provide it. At the moment Take2 is negotiating with FTC to provide only specific data that is useful. It remains to be seen whether the FTC would agree to this offer. If nothing can be agreed before the June 24 deadline then the two parties will meet in court.

  • combatsoldier

    Posted Jun 12, 2008 3:08 am GMT

    If it were not for fight night i would have nothing to do with ea. they are absolute bullies that do nothing but cry until they get there way. its so frustrating. they are trying to run a monopoly and thats against the law. why doesnt the court see that. they shouldnt be able to expand any more atleast for now.

  • raverrozza

    Posted Jun 12, 2008 2:26 am GMT

    pyro cause they would have to produce expensive reports and findings on all the details of the possible takeover. the fact its a general request means it will require more findings and more time to compile information therefore costing take two money. i also suspect take two are trying to waste time themselves by posting this complaint.

  • javierkatana

    Posted Jun 11, 2008 11:58 pm GMT

    pourya_ahmadian remeber how good was internet explorer 5 after netscape went dead, monopolies are about getting more with the least effort, thats why googles adsense is nothing compared to other services, but since they are a monopoly, why make it better?.

  • Pyro77

    Posted Jun 11, 2008 11:55 pm GMT

    I'm not quite sure I understand. How can a general or broadened request of data from Take 2 cause undue expenses? I'm not being sarcastic, I just don't get it. Can someone please explain?

  • pourya_ahmadian

    Posted Jun 11, 2008 11:15 pm GMT

    they will be so powerful;why they refuse it?i think they can work together so friendly;

  • Nforspeed

    Posted Jun 11, 2008 10:42 pm GMT

    ctg867 you could not be more right!

  • VirtuaCast

    Posted Jun 11, 2008 10:30 pm GMT

    Remember when it was about making great games? Now it's buying them and milk them dry.

  • ColdGen

    Posted Jun 11, 2008 9:27 pm GMT

    Onya T2 - you have my full support. Maybe you should get together with the soon to be Activision Blizzard - that would screw EA's plans. And UbiSoft are pretty hot too!

  • ctg867

    Posted Jun 11, 2008 8:51 pm GMT

    Let's run down the impact on sports games if EA bought Take-Two, using last year's sports sales as a basis:

    For baseball, 2K owned The BIGS and MLB 2K7 combined for about 66% of baseball sales last year, while Sony owned MLB 07: The Show totaled for about 35%. EA has no major selling baseball franchise, so buying Take Two would give them that 66%. Chances are it would be lower without 2K releasing a sequel to The BIGS, though they do have a sequel to MLB Power Pros this year.

    For basketball, EA owned NCAA March Maddness and NBA Live combined for about 49% of basketball sales last year, while 2K owned College Hoops and NBA 2K8 combined for about 48% of basketball sales last year, and Sony owned NBA 08 accounted for about 3% of basketball sales last year. Buying Take-Two would give them a near monopoly with 97% of all basketball sales. To be noted, 2K canned College Hoops, NBA Street didn't chart last year, and NBA Ballers is taking it's place this year. That could affect numbers somewhat.

    For football, EA owned Madden NLF and NCAA Football combined for nearly 100% of all football sales last year. All-Pro Football failed to chart last year, so this deal wouldn't affect football. Aside from EA's own NFL Tour and NFL Head Coach, Blitz: The League, Backbreaker, and Temco Bowl are releasing this year. That may change their near complete dominance somewhat.

    For hockey, 2K owned NHL 2K8 accounted for about 30% of hockey sales last year, while EA owned NHL 08 accounted for about 70% of all hockey sales last year. There is no other competition besides these two franchises, so this would give EA 100% dominance in hockey, and there is no competition in any form this year, or in the foreseeable future.

    In the end, this would give EA dominance over hockey, basketball, and football. The only real genres that have any piece of the sales are Sony's MLB: The Show series for baseball, and a number of other companies who have had soccer titles. EA will also gain large dominace in tennis, while they already have large dominance in golf. Although both genres have other official titles and titles that are partial offshoots. They would also gain a huge edge in boxing, with Prizefighter being eliminated from things. In the end, EA has a lot to gain, and gamers have much to loose.

  • nicowill

    Posted Jun 11, 2008 8:41 pm GMT

    Just stop buying Ea games thats all u got to do

  • OfficialBed

    Posted Jun 11, 2008 8:35 pm GMT

    go away EA...err....stop taking over everyone!

  • metalisticpain

    Posted Jun 11, 2008 8:31 pm GMT

    MysteryGoat

    EA is doing a hostile takeover, that means Take2 has no real say in it, other then asking its shareholders not to sell their shares to EA.

    From my understanding, EA is going directly to take2 shareholders (ie the people who own part of the company) and saying sell me your shares for x amount of money. If they get enough people to sell i.e 50.1% or more, then they have control over all decisions made in the company.

    Offcourse this article is explaining how the FTC is enforcing trade or business laws or some such.

    That is my understanding of the matter.

  • deepen03

    Posted Jun 11, 2008 8:28 pm GMT

    alright before i say anything, i just want to let you know that i hate EA and i think what they have done with the NFL license was unfair. I just want to know one thing, if EA does acquire Take-Two, will they fire all the employees of Take-Two, or will they keep the developers, listen to their ideas and combine forces? Because if they combine, i would have no problem, we would get the gameplay and presentation of 2K sports with the graphics engine of EA, which would probably create some crazy video games. I still just wish Take-Two and all of its shareholders deny this buyout.
    And i know that Take-Two has some sense after seeing the profit GTA IV has brought them. Take-Two knows that they are capable of creating amazing games without the help of EA's ****

  • MysteryGoat

    Posted Jun 11, 2008 7:39 pm GMT

    I'll admit I don't understand business at all, but I don't understand why Take-2 can't just deny the buyout and get on with their lives.

  • Ton77

    Posted Jun 11, 2008 7:20 pm GMT

    This is monopoly.... Wow EA... aint you happy with what you have runied...

  • osiris

    Posted Jun 11, 2008 7:17 pm GMT

    So many people think this is only about gta. And while, yes, I'm sure gta 4 is a huge part of it, what about in 2010 when the nfl exclusivity license is up and Take Two can start making real nfl games again... People still play 2k5 over madden 08 because of the better gameplay...
    EA is just trying to head off a problem that won't be around for 2 more years.

  • Ace20

    Posted Jun 11, 2008 7:17 pm GMT

    damn EA. Can't the be happy with what they have and leave Take-Two alone. They'll ruin the GTA series.

  • LindBergh2007

    Posted Jun 11, 2008 6:33 pm GMT

    Thank you EA for your continued desperations to aqqiure the GTA franchise, your dirty tatics are making things worse for the industy and running developers into the ground. May the lawsuit in your dirty, abesnt minded, monolozing business move on buying out the NFL license in 2004 from Sega's ESPN,Sony's Gameday and Midway's Blitz be your fatal flaw as you are found guilty of antitrust. Your judgement is coming. I can feel it in my bones.

  • lil_luz_10

    Posted Jun 11, 2008 6:08 pm GMT

    LOL!!! THQ releasing crap? ummm Company of Heroes, Supreme Commander, Warhammer??? CoH if not the best RTS of all time. Supreme Commander and Warhammer offer some awesome large scale battle RTS play.

    please dont make your opinions based off the boring Smackdown vs. Raw series please

    OMG oh no Ratatouille made by THQ got a 6.5 I WAS TOTALLING LOOKING FORWARD TO IT GETTING A 10/10!!!

    THQ & Relic are making awesome RTS games

    I hope Company of Heroes2 is modern warfare.

  • ps3thabest

    Posted Jun 11, 2008 5:55 pm GMT

    gamers we need 2 come together and take a stand after i buy mgs4 2morrow

  • SWATMAN4

    Posted Jun 11, 2008 5:45 pm GMT

    I for 1 love the Battlefield, GTA, and Command and Conquer series. But ever since EA took over Westwood, there really hasnt been any good C&C games except for the most recent, C&C 3. Im pullin for Take-Two. EA just doesnt want any competition. If they fail here, it might be Bungie that they might target. Master Cheif would be pissed if he saw a HALO game with a EA tag on it.

  • GeigerdolylWodd

    Posted Jun 11, 2008 5:31 pm GMT

    "Vividnightmare It's sad when these publicly traded companies get strong armed by over sized super giant corps. One day ALL game companies will be EA, then shortly after video game sales will plummet and gaming as we know it will be over. "

    I'm pretty sure EA would just as soon sell them off than lose money remember EA is all about the bottomline why should they hold on to companies that turn no profit? The second their games suck and we stop buying them altogether they'll lose money.

    EA wants to make money its in their best interest to make quality games or else they won't be able to get out from under the ensuing mess they create for theirselves by the lack of quality.

    At anyrate I've never been for this buy out. Personally though I must say I told you so. For those curious as to what I'm referring to? You need look no further than what happened to Acclaim to see what the future may have in store for Take Two. I really don't want to see this happen to them but such is the way of greed.

  • liesandpies

    Posted Jun 11, 2008 5:28 pm GMT

    EA is hardly an "evil" publisher. If you're really worried about any publisher ruining gaming then worry about Eidos or THQ, they're the ones releasing crap.

  • samuraiguns

    Posted Jun 11, 2008 4:52 pm GMT

    This pisses me off. EA's monopoly is crazy it's like an octopus with 500 arms just grabbing up all of the good gaming industries. Pretty soon it will be Tecmo, Kojima Productions, Square Enix, and Ubisoft. The fabric of gaming will unravel and we shall revolt. buy not buying crappy games!!!

  • PandaBear86

    Posted Jun 11, 2008 4:40 pm GMT

    EA buying Take-Two = GTA 2009, GTA 2010, GTA 2011, GTA beach volleyball, The Sims 2: Life in Liberty City.

  • gamer082009

    Posted Jun 11, 2008 4:34 pm GMT

    It's too bad us gamers don't create a petition of some sort that could help show are discust with what EA's been doing lately with this hostile take over thing. God willing, Take2 shall not fall!

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