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Take-Two Fights FTC Investigation Into Takeover

| 11 Jun 2008 15:23
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Electronic Arts has been joined under the harsh light of a Federal Trade Commission investigation by unexpected company - Take-Two Interactive.

Take-Two had earlier been served with a subpoena and "civil investigative demand" requesting documents on behalf of FTC regulators looking into EA's attempted hostile takeover of the company. The publisher has thus far declined to file the requested documents, saying the FTC's demands are "too broad" and would add unacceptable additional expenses to the process, claiming it has already spent more than $1 million in providing "enormous quantities of data and access to key executives" to the investigation.

According to a GamePolitics report, the FTC is "particularly interested" in the files of Take-Two CEO Ben Feder and Greg Thomas, president of Visual Concepts, the studio behind most 2K Sports releases. The focus on Take-Two's sports games brand indicates the investigation is centering on a possible EA Sports monopoly of the genre should the takeover succeed, but despite that, attorneys for Take-Two said the publisher shouldn't be hit with the expense of providing the information because they weren't the ones who launched the takeover process in the first place. FTC attorney Reid Horowitz also claimed that when asked why Take-Two would not provide files from Feder or Thomas, he was told, "These individuals were 'creative types' who would leave the company rather than allow their files to be searched."

"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 said in an SEC filing released earlier today. "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." If Take-Two is unable to reach a settlement with the FTC prior to a June 24 hearing in U.S. District Court, it says it will oppose the commission's request.

Disclosure(s): Strauss Zelnick, Chief Executive Officer and Chairman of the Board of Directors of Take-Two Interactive Software, Inc., is the head of ZelnickMedia, an investor in both Take-Two and Defy Media, LLC, our parent company. This article was published without approval or consent of ZelnickMedia or Take-Two.
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