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CMA approves Microsoft’s record £56bn Activision merger

CMA microsoft Image credit: vfhnb12 / Shutterstock

The Competition and Markets Authority (CMA) has approved Microsoft’s £56bn bid to acquire video game publisher Activision Blizzard, after six months after the deal was first blocked.

The UK competition regulator gave its seal of approval to the largest-ever acquisition in the video game industry after Microsoft offered a restructured deal to ease the regulator’s concerns.

The merger was first blocked by the CMA in April due to concerns it could reduce innovation and consumer choice in the UK gaming market. The competition watchdog was particularly concerned over Microsoft’s potential to dominate the cloud gaming market.

After months of negotiations and interventions from regulators in Europe and the US, the CMA offered hope to the tech giant in September, after positive talks regarding the terms and structure of the deal.

Ubisoft, the gaming titan behind Assassin’s Creed and Far Cry, agreed to acquire Activision’s cloud gaming rights, in an effort to curb Microsoft’s ability to control the market.

Though an agreement has now been reached, the CMA boss expressed frustration with Microsoft’s handling of the situation.

“Tactics employed by Microsoft are no way to engage with the CMA,” said CMA chief executive Sarah Cardell.

“Microsoft had the chance to restructure during our initial investigation but instead continued to insist on a package of measures that we told them simply wouldn’t work. Dragging out proceedings in this way only wastes time and money.”

Alex Haffner, competition partner at UK law firm Fladgate, said: “In many ways, the end result is no different to other transactions which have raised significant competition concerns amongst competition regulators with the parties agreeing concessions to mitigate those concerns in an effective and clean cut manner.

“But, what is different here is the circuitous route taken to get to that endpoint and the fact that Microsoft and Activision had to go to the brink of court proceedings before an accommodation was found.”

Haffner added: “The question that is left hanging therefore is whether this case shows a merger oversight system in the UK that is too dogmatic in dealing with what is a forward-looking competitive assessment… or one which can be sufficiently flexible when required, provided always that consumer protection is to the fore.”