FTC to appeal judge's decision to let Microsoft buy Activision
Send a link to a friend
[July 13, 2023] By
Diane Bartz
WASHINGTON (Reuters) -The U.S. Federal Trade Commission (FTC) said on
Wednesday it was appealing a federal judge's ruling that Microsoft could
go forward with its $69 billion purchase of "Call of Duty" maker
Activision Blizzard.
Microsoft's victory in court on Tuesday, and a subsequent climbdown by
Britain's competition authority, brought the tech giant two steps closer
to finalizing its tie-up with Activision, Microsoft's biggest deal ever.
Still, any outstanding regulatory hurdle makes it more likely that the
agreement between Microsoft and Activision will expire on July 18
without the deal having been completed. After July 18, either company
will be free to walk away from the deal unless they negotiate an
extension.
The FTC's court filing about the appeal gave no details, which will go
before the Ninth Circuit Court of Appeals on the West Coast.
Microsoft said it would fight the appeal.
"We’re disappointed that the FTC is continuing to pursue what has become
a demonstrably weak case, and we will oppose further efforts to delay
the ability to move forward,” Microsoft President Brad Smith said in an
emailed statement.
The FTC declined to comment further on the notice of appeal.
While the companies succeeded on Tuesday in shooting down an injunction
in court against completing their deal, the judge left in place a stay
preventing them from doing so until Friday, to give time to the FTC to
appeal.
The FTC may request a stay from the appeals court stopping the deal from
closing.
In her opinion, U.S. District Judge Jacqueline Scott Corley in San
Francisco rejected the Biden administration's argument the deal would
hurt consumers by giving Xbox game console-maker Microsoft exclusive
access to games including the best-selling "Call of Duty."
[to top of second column] |
Microsoft logo is seen on a smartphone
placed on displayed Activision Blizzard's games characters in this
illustration taken January 18, 2022. REUTERS/Dado Ruvic/Illustration/File
Photo
Britain's Competition and Markets Authority (CMA), which had opposed
the transaction, said on Wednesday a restructured deal between
Microsoft and Activision Blizzard could satisfy its concerns,
subject to a new investigation.
'MAY' OR 'WILL'?
U.S. legal experts disagreed over whether the FTC had good grounds
for an appeal, with some saying that appeals courts tend to defer to
judges on matters of fact, while others said Judge Corley may have
erred in stating the standard for stopping a deal.
In her 53-page order, Corley said it was not enough for the FTC to
argue "a merger might lessen competition - the FTC must show the
merger will probably substantially lessen competition."
Legal scholars questioned that standard, saying the U.S. antitrust
law required the FTC to prove the proposed deal "may" harm
competition, not that it "will."
To address the FTC's concerns, Microsoft agreed to license "Call of
Duty" to rivals, including a 10-year contract with Japan's Nintendo
Co, contingent on the merger closing.
When U.S. antitrust agencies lose merger challenges in court,
appeals are rare.
That said, the FTC appealed a ruling more than 10 years ago when it
lost its fight against Whole Foods' purchase of Wild Oats. The
agency settled with the companies before the appeals court made a
decision.
(Reporting by Diane Bartz; Editing by Diane Craft, Lincoln Feast and
Muralikumar Anantharaman)
[© 2023 Thomson Reuters. All rights
reserved.]
This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.
|