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CMA to reopen Microsoft talks after US clears Activision deal

Microsoft Activision
Image credit: icemanphotos via Shutterstock

The UK competition regulator will continue talks with Microsoft over the terms of its acquisition of Activision Blizzard, following a green light given to the deal by a US judge.

The Federal Trade Commission (FTC) in the US had previously requested the deal be blocked over competition concerns similarly shared by the UK’s Competition and Markets Authority (CMA).

However, yesterday a California court ruled in favour of Microsoft, saying there was not enough evidence to suggest Microsoft would use the merger to unfairly restrict competition.

The FTC had argued that Microsoft could use the new ownership of massively popular intellectual property, including the video game series Call of Duty, to block competitors such as Sony from using them.

“The FTC has not shown it is likely to succeed on its assertion the combined firm will probably pull Call of Duty from Sony PlayStation, or that its ownership of Activision content will substantially lessen competition in the video game library subscription and cloud gaming markets,” said Judge Jacqueline Scott Corley.

The CMA previously blocked the £56bn deal over concerns that it would damage the competitiveness of the cloud gaming market.

Despite its concerns, the CMA said following the US ruling that it was “ready to consider any proposals from Microsoft to restructure the transaction in a way that would address the concerns set out in our final report”.

The CMA added: “In order to be able to prioritise work on these proposals, Microsoft and Activision have agreed with the CMA that a stay of litigation in the UK would be in the public interest and all parties have made a joint submission to the Competition Appeal Tribunal to this effect.”

Alex Haffner, competition partner at the law firm Fladgate told UKTN: “The CMA is effectively saying to the parties, ‘let’s discuss some sort of compromise here’, which allows us to avoid the upcoming appeal by Microsoft and Activision before the Competition Appeal Tribunal.

“What that compromise will be is clearly up for grabs, but one can speculate that it will likely involve the CMA asking for some form of undertakings/concessions from the parties which permits CMA to say that it can now clear the transaction on the basis that its competition concerns have been answered.”