We know that, as we speak, the FTC is thoroughly investigating the possible takeover of Take-Two by Electronic Arts, to be sure that there are no antitrust issues. The FTC first made one request for information, and then a second one, indicating they're analyzing the deal very closely.
EA cut a deal with the FTC by which it consented to a 15-day extension on the investigation period, making it 45 days, and in return the publisher agreed it wouldn't move to acquire Take-Two until the investigation was closed or until the 45 days expired.
Newsweek's Level Up legal affairs columnist, former FTC lawyer Justin Blankenship, wrote a new piece trying to pin down exactly what issues the FTC might be looking at. Though the specifics are not public record and not likely to be sussed out easily, Blankenship learned a few details - like where the FTC's greatest area of concern likely is, and whether Take-Two is risking a legal injunction to stonewall EA:
For one thing, a second request from the FTC is a fairly rare occurrence and often demands a mountain of information from the companies involved - in fact, Take-Two has resisted answering the request on the grounds that it's just too much unnecessary stuff and would cost them too much time and money.
But Blankenship's details suggest there might be more to that story:
The gist of it appears to be that Take-Two had an agreement with the FTC to search for responsive documents in the files of certain individuals. But after hiring a new law firm, Take-Two has apparently reneged on that initial agreement, and has on several occasions narrowed the scope of the search that it is willing to perform even further.
Although the target of an FTC investigation has some grounds to object to a second request on the basis that it's unduly burdensome, the Horwitz affidavit tells the story of a corporation that's gone beyond making good faith objections based on scope. Take-Two appears to be simply stonewalling.
It's certainly a viable speculation that Take-Two is simply buying time in order to hold off EA after negotiations have fallen apart. The Federal Court has already demanded to know why Take-Two hasn't ponied up the info - and if they continue to withhold, the FTC could seek a preliminary injunction in Federal Court, which could delay the acquisition until the FTC gets what it wants - but not permanently.
It actually doesn't make a lot of sense for Take-Two to do that, as Blankenship's article explains:
You would think that as the unwilling target of EA, it would be in Take Two's best interests to hand everything over to the FTC as soon as possible with every incriminating quote already highlighted, complete with its own commissioned economic study about how EA would destroy competition in sports videogames, all wrapped up with a pretty red bow.
As all of the commenters here at Kotaku who've been following this story have speculated:
Not surprisingly, the FTC's investigation appears to be focused on "competing titles for simulated sports games, including basketball, football, hockey, and baseball."
Specifically, said Blankenship, with Take-Two holding the Major League Baseball exclusive while EA's got Madden, consolidating the basketball and hockey overlap just might choke the competition out of the sports game genre.
The Law and the Short of It: Level Up Legal Affairs Columnist Justin Blankenship Returns to the Scene of Electronic Arts' Bid For Take-Two [Level Up]