pats3912
June 5th, 2008, 11:33 AM
dont want to get anyone excited, but read the article below. this guy used to be a lawyer for the FTC and he shares with us his views of how he would handle the EA/T2 buyout investigation. heres the link and a few paragraphs that i thought was interesting. Wouldnt it be great if this whole buyout backfired on EA and the FTC forced EA to give up its licensing agreements!!!!!
http://blog.newsweek.com/blogs/levelup/archive/2008/03/31/could-the-ftc-block-electronic-arts-bid-to-acquire-take-two.aspx
"Do I think this is a deal that the government would sue to block? Not really. But I wouldn't be at all surprised if they required EA to divest its license agreements with certain sports leagues, and maybe spin off some of the talent behind those games to a competitor. And if that happens, does this deal still have the appeal to EA? Not if what Mr. Pachter said was true and EA's offer is based on the realization of monopoly profits from its sports division. Furthermore, if you see the government give this deal a hard look--beyond the normal 30 days normally allocated--you could possibly see the deal delayed long enough by the review process to adversely affect financing arrangements, potentially derailing the whole affair."
"If a government agency has problems with a merger, it's likely because it believes the economic data supports a narrowly defined market (e.g., licensed professional hockey videogames or hockey videogames). The parties to the merger will argue to define the market more broadly (e.g., videogames as a whole, or sports videogames as a whole). Under a broad market definition of all videogames, the merger poses no problems, because the loss of one product in a market of thousands of competitors is a ripple in the sea. However, under a narrow market definition, no other third party can make a licensed professional hockey game (with real player names, team names, stats, etc.) other than EA/Take-Two, granting it an effective monopoly."
"The concept of market definition turns on economic evidence, which I'm not privy to, but if Mr. Pachter's comments are accurate, EA and Take-Two's sports games are price constrained by one another. In other words, vigorous competition between their respective basketball and hockey games is what causes the prices of those games to decrease more rapidly--much more so than competition from other videogames in the market. In that case, it's entirely probable that government regulators could define a narrow submarket of "NHL-licensed hockey games," "NCAA-licensed basketball games," and "NBA-licensed basketball games." If so, what you're effectively seeing here is almost a complete elimination of competition in those narrow submarkets"
http://blog.newsweek.com/blogs/levelup/archive/2008/03/31/could-the-ftc-block-electronic-arts-bid-to-acquire-take-two.aspx
"Do I think this is a deal that the government would sue to block? Not really. But I wouldn't be at all surprised if they required EA to divest its license agreements with certain sports leagues, and maybe spin off some of the talent behind those games to a competitor. And if that happens, does this deal still have the appeal to EA? Not if what Mr. Pachter said was true and EA's offer is based on the realization of monopoly profits from its sports division. Furthermore, if you see the government give this deal a hard look--beyond the normal 30 days normally allocated--you could possibly see the deal delayed long enough by the review process to adversely affect financing arrangements, potentially derailing the whole affair."
"If a government agency has problems with a merger, it's likely because it believes the economic data supports a narrowly defined market (e.g., licensed professional hockey videogames or hockey videogames). The parties to the merger will argue to define the market more broadly (e.g., videogames as a whole, or sports videogames as a whole). Under a broad market definition of all videogames, the merger poses no problems, because the loss of one product in a market of thousands of competitors is a ripple in the sea. However, under a narrow market definition, no other third party can make a licensed professional hockey game (with real player names, team names, stats, etc.) other than EA/Take-Two, granting it an effective monopoly."
"The concept of market definition turns on economic evidence, which I'm not privy to, but if Mr. Pachter's comments are accurate, EA and Take-Two's sports games are price constrained by one another. In other words, vigorous competition between their respective basketball and hockey games is what causes the prices of those games to decrease more rapidly--much more so than competition from other videogames in the market. In that case, it's entirely probable that government regulators could define a narrow submarket of "NHL-licensed hockey games," "NCAA-licensed basketball games," and "NBA-licensed basketball games." If so, what you're effectively seeing here is almost a complete elimination of competition in those narrow submarkets"