Court of Appeals Denies FTC’s Request to Block Microsoft’s Acquisition of Activision
The Federal Trade Commission’s final attempt to halt Microsoft’s $68.7 billion acquisition of Activision Blizzard has been unsuccessful. The Ninth Circuit Court of Appeals has rejected the agency’s request for an emergency stay on a ruling that permits the deal to move forward in the United States.
The temporary injunction was put in place last month to prevent Microsoft and Activision from closing the deal until Judge Jacqueline Scott Corley rules on the FTC’s request for a preliminary injunction. When Corley rejected the FTC’s request for an injunction this week, he ruled that the agency had until July 14 at 11:59 p.m. PT to get an emergency stay from the appeals court. After the Ninth Circuit Court of Appeals dismissed the FTC’s appeal, Microsoft and Activision are now free to terminate the deal in the US as early as Saturday.
In his injunction, Corley ruled that the FTC failed to substantiate its claims that the merger would harm consumers. The FTC announced Wednesday that it will appeal Corley’s decision. On Thursday, it asked the district court, which initially ruled on the preliminary injunction, to block the merger until the appeals court makes a decision. Hours later, Corley denied that motion.
The FTC sued in December to block the deal on the grounds that it would harm competition. Administrative processing is scheduled for the beginning of August. The agency sought a preliminary injunction to prevent the companies from closing the merger before the antitrust proceedings are completed. However, the deadline for the merger is July 18.
Microsoft and Activision Blizzard are apparently confident of completing the deal by Tuesday’s deadline. Activision’s shares will be delisted from the Nasdaq-100 before the stock market opens on Monday, so the companies can finally seal the deal at that time.
Microsoft and Activision have yet to resolve issues with the UK regulator, which blocked the deal over concerns about cloud gaming. Microsoft has appealed the decision, but the companies and the Competition and Markets Authority agreed to end their legal battle. The Competition Appeal Tribunal (CAT), which hears appeals against the CMA’s decisions, will decide on July 17 whether this pause will take effect.
The CMA said Microsoft and Activision were welcome to reorganize the deal, but warned that the move could trigger a new merger investigation. The regulator has extended the deadline for a decision on the case to the end of August to give it more time to review Microsoft’s “detailed and complex submission”. However, the CMA said it would aim to conclude matters as soon as possible.
The deadline for the merger between Microsoft and Activision is Tuesday, July 18, and they are eager to close the deal by then. Otherwise, Activision could walk away and Microsoft would be on the hook for a $3 billion severance payment. The companies also have the option to renegotiate the terms, but that could be a moot point as it looks increasingly likely that this deal will soon be done.
