US Regulator to Contest Microsoft-Activision Merger Following Court Decision
On Wednesday, the U.S. Federal Trade Commission announced its intention to challenge a federal judge’s decision allowing Microsoft to proceed with its acquisition of Activision Blizzard, the creator of “Call of Duty.” The appeal will be presented to the Ninth Circuit Court of Appeals on the West Coast, although no specific information regarding the appeal was provided in the filing.
Microsoft did not immediately respond to a request for comment. U.S. District Judge Jacqueline Scott Corley in San Francisco on Tuesday rejected the Biden administration’s argument that the deal would harm consumers by giving Xbox game console maker Microsoft exclusive rights to games, including the best-selling Call of Duty.
Experts disagreed Tuesday on whether the agency had good grounds to appeal, with some saying appellate courts tend to defer to judges on issues of fact, but others saying Judge Corley may have erred in stating the standard for estoppel.
In his 53-page order, Corley said it was not enough for the FTC to allege that “the merger is likely to lessen competition — the FTC must show that the merger is likely to substantially lessen competition.”
Legal scholars questioned that standard, saying that US antitrust law required the FTC to show that the proposed agreement “may” harm competition, not that it “will.”
The deal is Microsoft’s largest ever and the largest in the history of the video game industry. Microsoft shares rose 1.4 percent to $337.20 on Wednesday. To address the agency’s concerns, Microsoft agreed to license “Call of Duty” to competitors, including a 10-year deal with Nintendo that requires a merger.
