On the Newsweek blog LevelUp, Justin Blankenship discusses why he thinks the government will take a hard look at the EA-Take Two merger, but also provides a wonderful synopsis of the second request process.
"A little background on how the merger review process works is helpful here. Under a law called the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR), any merger or tender offer that exceeds a certain monetary threshold is required to file a Notification and Report Form with both the FTC and the Antitrust Division at the Department of Justice. The Form includes a description of the deal, the parties to the deal, and attaches certain documents relevant to the deal for government review.
Most importantly, the HSR filing starts a 30-day clock running for the government to review the deal during which it is illegal to consummate the merger. The vast majority of deals go through after this 30-day period, or even earlier if the parties have requested an "early termination" of the waiting period.
A much smaller percentage of deals, however, present some competitive concerns that require that the government investigation extend beyond the 30-day waiting period. Those deals receive what's called a "Second Request"--which is what EA got on April 17th.
A Second Request is basically a large discovery request asking for any and all documents, correspondence, and economic data relating to the deal. Depending on the size of the request and the size of the deal, a response to the Second Request can require producing up to hundreds, or even thousands, of boxes of documents. If, for instance, there are any incriminating intra-company emails discussing the possibility of increased profits from a monopoly in the sports division after the merger, that's where they'll be found."
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