US Court allows Microsoft/Activision transaction to proceed while UK appeal is on hold

 

US Court allows Microsoft/Activision transaction to proceed while UK appeal is on hold

A US Court has refused a request by the Federal Trade Commission (FTC) to temporarily restrain Microsoft’s acquisition of Activision.

Meanwhile, the merging parties are understood to be renewing discussions with the UK Competition and Markets Authority (CMA) regarding a possible solution.

The US District Court for the Northern District of California rejected the FTC’s claim that the acquisition by Microsoft of Activision would provide it with the incentive to denigrate the quality of games such as Call of Duty.  In refusing to grant the preliminary injunction, the judge concluded that there would be “no foreclosure of Call of Duty” if the deal is not immediately blocked. The judge found “the merger will enhance, not lessen, competition in the cloud-streaming market.”

The judge has made some modifications to the temporary restraining order to expire on 14 July unless the FTC obtains a stay pending an appeal to the US Court of Appeals for the Ninth Circuit. The deadline to close the transaction is currently 18 July. 

In April 2023 the CMA had prohibited the transaction outright finding that no remedies could be found to avert the substantial lessening of competition that it found.  The UK’s Competition Appeal Tribunal was due to start hearing an appeal against that decision on 28 July.  In a turn of events following the US Court judgment, the CMA has agreed to a stay of the appeal of its prohibition decision. This is intended to allow for discussions to be renewed regarding possible structural fixes.

Case No. 23-cv-02880-JSC:  https://storage.courtlistener.com/recap/gov.uscourts.cand.413969/gov.uscourts.cand.413969.305.0_4.pdf