Two Tencent-appointed directors have quit Epic Games’ board following U.S. Department of Justice antitrust concerns over potential competitive conflicts.
Recently, two directors from Tencent Holdings appointed to the Epic Games board have resigned amid antitrust concerns by the United States Department of Justice. The DOJ cited a potential violation of Section 8 of the Clayton Act, which prohibits interlocking directorates between competing firms, as they hold both positions on the boards of Epic Games and Tencent.
Tencent, a Chinese multinational conglomerate, is an investor with a minority stake in Epic Games and the parent company of Riot Games, a direct competitor in the gaming industry. This overlap led to scrutiny by the DOJ, forcing the resignations. As a response, Tencent agreed to amend its shareholder agreement with Epic, relinquishing the unilateral right to appoint directors or observers to Epic’s board in the future.
Epic Games confirmed these, saying that the directors Tencent had nominated to the board, who comprised a minority of its board votes, voluntarily resigned earlier this year in light of the concerns DOJ expressed. The firm is going to nominate through committees of shareholders two new independent board members.
This action aligns with the DOJ’s broader efforts to enforce antitrust laws and prevent potential conflicts of interest that could hinder competition. By addressing such interlocking directorates, the DOJ aims to maintain fair competition within the industry.
It is interesting that no firm or individual has accepted liability in relation to this investigation. The intervention of the DOJ points out the need for compliance with antitrust laws, particularly in industries where large corporations have overlapping interests.
This is against the backdrop of growing antitrust scrutiny in the tech industry as regulators seek to prevent anti-competitive practices and ensure a level playing field for all market participants.
