FTC Pauses Investigation into Microsoft-Activision Merger
The administrative trial between Microsoft and Activision Blizzard, regarding their pending acquisition, has been officially postponed by the Federal Trade Commission. According to Bloomberg‘s initial report, this decision enables the agency and the companies involved to engage in discussions regarding a potential settlement for the massive $68.7 billion merger.
The FTC’s decision to stay the case is another big win for Microsoft and Activision as they try to get the deal over the line. The agency sued to block the deal in December, and an evidentiary hearing in the case was set for August 2. Last week, it lost a legal bid to block the merger between the companies before an administrative trial was scheduled to begin in early August. The FTC has appealed its loss in court.
“The FTC has not demonstrated success in its argument that the combined company is likely to pull Call of Duty from Sony PlayStation or that its ownership of Activision content will significantly reduce competition in the video game library subscription and cloud gaming markets.” Jacqueline Scott Corley wrote in her sentencing last week. Microsoft has since signed a deal with Sony to keep Call of Duty on PlayStation for 10 years if the merger goes through.
In a motion filed Tuesday, Microsoft and Activision urged the FTC to drop its lawsuit. Under FTC rules, the agency must withdraw its case after the companies filed a request because it was denied a preliminary injunction against the merger. Per Bloomberg, Microsoft and Activision may now try to convince the FTC to approve remedies that address the agency’s concerns about the deal’s impact on competition in the gaming industry. Alternatively, they could get the FTC to drop its opposition to the merger.
The FTC will still have the option to hold its administrative hearing after the merger closes. However, it is rare for the agency to handle an in-house case after losing a federal court battle.
The original deadline for the deal to close was Tuesday, although Microsoft and Activision extended their merger agreement to April 18. until October to give them “additional time to resolve remaining regulatory issues”. They agreed that Microsoft would have to pay a severance fee of up to $4.5 billion if the deal falls apart, even though both sides have decided to end things.
Microsoft and Activision still need to get approval from the UK regulator to close the deal without resorting to a workaround to continue doing business in the country. The Competition and Markets Authority initially blocked the merger in April, but over the past week it has expressed its willingness to amicably resolve concerns about the deal’s potential impact on the cloud gaming market.
Microsoft is ready to submit an updated merger proposal to the CMA. The regulator will make a decision by August 29, although it will aim to do so as soon as possible. At a hearing this week, a lawyer for the CMA said both the regulator and Microsoft were confident the company could resolve its concerns. It’s yet another sign that the biggest merger in gaming history is likely to happen in the coming weeks.
