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A judge in California is allowing Microsoft to proceed in closing its deal to acquire Activision Blizzard. After nearly a week of testimony from both sides, Judge Jacqueline Scott Corley denied the FTC's request for a preliminary injunction.
Judge Corley issued the following statement as part of their ruling.
Microsoft’s acquisition of Activision has been described as the largest in tech history. It deserves scrutiny. That scrutiny has paid off: Microsoft has committed in writing, in public, and in court to keep Call of Duty on PlayStation for 10 years on parity with Xbox. It made an agreement with Nintendo to bring Call of Duty to Switch. And it entered several agreements to for the first time bring Activision’s content to several cloud gaming services.
This Court’s responsibility in this case is narrow. It is to decide if, notwithstanding these current circumstances, the merger should be halted—perhaps even terminated—pending resolution of the FTC administrative action. For the reasons explained, the Court finds the FTC has not shown a likelihood it will prevail on its claim this particular vertical merger in this specific industry may substantially lessen competition. To the contrary, the record evidence points to more consumer access to Call of Duty and other Activision content. The motion for a preliminary injunction is therefore DENIED.
This Court’s responsibility in this case is narrow. It is to decide if, notwithstanding these current circumstances, the merger should be halted—perhaps even terminated—pending resolution of the FTC administrative action. For the reasons explained, the Court finds the FTC has not shown a likelihood it will prevail on its claim this particular vertical merger in this specific industry may substantially lessen competition. To the contrary, the record evidence points to more consumer access to Call of Duty and other Activision content. The motion for a preliminary injunction is therefore DENIED.
It was said that Microsoft was considering closing the deal despite the block in thee UK. Around the same time, the FTC filed the injunction against Microsoft. While Microsoft was battling the FTC in court over their injunction, the CMA to tried to delay Microsoft's appeal of the Activision Blizzard acquisition decision in the UK. The Competition Appeal Tribunal (CAT) denied that request by the CMA as it would have pushed the appeal process back several months to October. The CAT said that this move by the CMA would have been "contrary to justice and fairness."
Outside of the UK, the European Commission approved Microsoft's acquisition of Activision Blizzard. This happened in May, or about a month after the UK's CMA handed out their denial.
If Microsoft so wanted, they could close the deal right now if they wanted to. This would be done without the UK and without the being hindered by an injunction in the FTC. Closing without the UK's approval would be a bit messy though. More likely is that Microsoft and Activision Blizzard will extend the merger agreement in order to cover the extra time needed to tackle the appeals process with the CMA.
The FTC also has a chance to appeal today's decision by Judge Corley. The FTC has until midnight on July 14th to get their appeal in. Based on what The Verge says, the FTC did not appeal a court's decision when Meta acquired Within. This does is not necessarily saying that they will do the same in this case, but there is a basis showing that the FTC has not appealed similar cases.
In short: Today's ruling by California's Judge Corley is a big win for Microsoft, but the process of acquiring Activision Blizzard is still far from over.
