New twist in the soap opera of the takeover of Activision Blizzard by Microsoft. After the defeat of the FTC in the United States, the American competition authority would consider appealing. In the United Kingdom, a new investigation could open.
The proposed takeover of Activision Blizzard by Microsoft seemed on track to be finalized before the deadline of July 18, 2023. Indeed, the injunction procedure requested by the FTC was refused by the Californian court, leaving Microsoft free to merge with Activision in the United States. The two firms also have the green light from the European Union and China, as well as several other countries. Only the United Kingdom remains a sticking point, but the British competition authority has agreed to put the legal procedure on hold to reopen discussions with Microsoft and Activision.
Unfortunately for Microsoft and Activision, it won’t be that easy.
FTC considering appeal
The US competition authority, the FTC (Federal Trade Commission) would consider appealing the decision of the Californian judge. This is what can be read in the columns of Bloomberg who interviewed a person familiar with the matter.
Microsoft’s proposed takeover of Activision Blizzard is temporarily on hold until Saturday, July 15. It would be necessary for the FTC to launch an appeal procedure which allows it to extend this blockage. The dispute would relate to the interpretation made of the law by the federal judge. However, the authority faces a substantial difficulty. It will be difficult to convince a court to extend the blockage beyond the deadline for the takeover contract to July 18 on the basis of a procedure that it has already lost for the first time.
Be that as it may, Microsoft would therefore perhaps not have quite finished with the legal proceedings across the Atlantic.
UK may launch new investigation
Things are also getting more complicated on the UK side. After opening the door to further discussions, the UK competition authority, the CMA (Competition and Markets Authority) eventually told Reuters that the time was over for negotiations. As we explained in April 2023 when the CMA announced the blocking, the authority’s decision is final. It is not possible to go back on the file, except through the appeal procedure before the competent court, the CAT. A procedure launched by Microsoft and Activision and whose hearings were to begin the week of July 24.
However, the CMA says it is open to further investigation if Microsoft and Activision Blizzard come up with a new takeover plan. Such an investigation could last several months again before the two actors get the green light, or a new blockage. Activision and Microsoft told Reuters they were considering the possibility.
If the merging parties do not have the opportunity to propose new compromises once a final report has been published, they may choose to restructure the transaction, which may lead to a new investigation into the merger. Microsoft and Activision have indicated that they are considering modifying the operation, and the CMA is ready to engage in discussions with them on this basis. These discussions are at an early stage and the nature and timing of next steps will be determined in due course. Although both parties requested a pause in Microsoft’s appeal to allow these discussions to take place, the CMA’s decision set out in its final report stands.
A new takeover project between Microsoft and Activision Blizzard could take several forms in the UK. The two companies could, for example, leave the management and distribution of call of duty in the hands of an independent company across the Channel.
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