Notification regarding Legal Action against DeNA

1. Background and grounds of the lawsuit

(1) On June 9, 2011, the Japan Fair Trade Commission issued a cease and desist order against DeNA pursuant to Article 7 Clause 2 under Act on Prohibition of Private Monopolization and Maintenance of Fair Trade ("Antitrust Law"), finding that the actions of DeNA are applicable to the unfair business practices stipulated in the Fair Trade Commission Public Notice No. 15 of June 18, 1982 Clause 14, "Interference with a competitor’s transactions", and violate Article 19 of Antitrust Law.

(2) According to the above cease and desist order, DeNA decided not to list specified links on "Mobage Town", a social networking service operated by DeNA, for social games provided by specific social game providers through Mobage Town, when the game providers also provide social games through GREE's operating social networking service, "GREE". Therefore, it was found that DeNA violated the Antitrust Law by interfering with the provision of social games through "GREE". ("Mobage Town" has been renamed "Mobage".)

(3) The above cease and desist order required that the board of directors at DeNA make a resolution that it was not conducting the aforementioned illegal acts at the time of issuance of the order and will not commit said acts, will abide by the decision, and will thereby establish an Antitrust Law Abidance Policy as required and provide necessary internal training and take other appropriate measures.

(4) After the above cease and desist order was issued, DeNA did not file any appeals to the order. Therefore, the cease and desist order became final and binding in August 2011.

(5) GREE has extensively deliberated on how it should react to the illegal acts carried out by DeNA since the above cease and desist order became final and binding. Under consideration of the following facts, GREE has decided to bring a lawsuit against DeNA ("the lawsuit"). Supporting GREE's grounds to achieve sound development of the entire social game industry through sound competition described below, KDDI, co-operating company of "au one GREE" with GREE, made the decision to become a co-plaintiff in the lawsuit.

• If GREE did not take any legal action against the acts that were found as illegal by an official governmental body, the Fair Trade Commission, it would be problematic in terms of the fulfillment of fiduciary duty to the shareholders by GREE's management.
• These illegal acts have not only hampered our business but have had a negative impact on other elements of the internet industry such as social game developers and telephone carriers. Considering that this is still impacting many companies, we feel that this is a major barrier to ensuring a fair, competitive business environment.
• These actions are very problematic from the perspective that they threaten to obstruct the free development of the internet industry as well as disempower consumers from the freedom to choose.
• Despite DeNA's claims to the contrary in December of last year, they still continued to disturb social game developers who provided games for GREE in addition to Mobage.

2. Outline of the lawsuit

(1) Related parties
Plaintiffs:
GREE, Inc.
KDDI CORPORATION
Defendant:
DeNA Co., Ltd.

(2) Major claim is as follows:
Claim for damages due to the illegal acts
Minimum of 1.05 billion Japanese yen (Approximately US$14 million) as damages

• GREE: 900 million Japanese yen (Approximately US$12 million)
• KDDI: 105 million Japanese yen (Approximately US$2 million)

• *USD amounts calculated with $1=77 yen rate (today's approximate rate)

3. Outlook

Along with the progress of the lawsuit, GREE will immediately make an announcement when any item requiring disclosure arises. Currently, GREE expects that the lawsuit will have an insignificant impact on its business performance.
GREE will make the best effort possible to restore fair and proper competitive business practices and strive to make contributions to the sound growth of the industry.
Fair Trade Commission documentation (cease and desist order related)

• *Japanese only

• http://www.jftc.go.jp/pressrelease/11.june/110609honbun.pdf [PDF : 139KB]
• http://www.jftc.go.jp/pressrelease/11.june/110609gaiyo.pdf [PDF : 225KB]
• http://www.jftc.go.jp/pressrelease/11.june/110609betten.pdf [PDF : 205KB]