Microsoft and UK regulators won more time in court on Monday as the US tech company uses a rare second chance to overcome opposition to its $69 billion bid for video game maker Activision Blizzard.
Judge Marcus Smith conditionally approved a joint request by Microsoft and the Competition and Markets Authority to delay the appeal the company launched after the CMA initially rejected the deal. The regulator then pushed back its final decision so it could consider Microsoft’s argument that new developments mean its blockbuster purchase of games maker Call of Duty should go through.
The agreement has already won the approval of the European Union and many countries, but has faces opposition from antitrust regulators in Great Britain and the United States.
The UK has blocked the deal, fearing it will stifle competition in the small but rapidly growing cloud gaming market. It has also faced strong resistance from rival Sony, which is making the PlayStation console a rival to Microsoft’s Xbox gaming system.
But these positions seemed to soften. Microsoft announced on Sunday that it has signed a 10-year deal with Sony to keep the popular Call of Duty video game series on PlayStation if the merger goes through.
Activision’s Call of Duty game series has been a flashpoint in the merger battle fueled by Sony’s fears of losing access to the title.
As it tried to convince regulators around the world, Microsoft signed tentative deals to license Activision titles like Call of Duty to Nintendo and select cloud game providers. Sony had held up so far.
The watchdog said last week it was giving itself an additional six weeks to review Microsoft’s submission outlining the new developments and “special reasons” why the deal should be approved.
Smith said his decision was conditional on the AMC providing written explanations to address certain points he raised. He said it would also help if Microsoft provided a statement “explaining the significance of the Sony transaction.”
The judge acknowledged the need for a quick decision before Tuesday, which marks an important deadline for the agreement. Both Microsoft and Activision had agreed that either party could walk away from the planned merger if it didn’t close by then, forcing Microsoft to potentially pay a $3 billion severance fee. unless both parties decide to renegotiate.
“Obviously this is an urgent matter that requires an urgent, albeit conditional, outcome,” Smith said.
Both parties had requested the delay from the Competition Appeals Tribunal shortly after a US court thwarted the efforts of the Federal Trade Commission stop acquiring.
Smith said he wanted to make sure the FTC’s failure to block the deal played no part in the CMA’s reasoning for asking for a delay to give Microsoft another chance.
CMA attorney David Bailey said it was “coincidence in timing” at least “as far as CMA is concerned” that the FTC lost its fight to block the deal in the United States. He said the CMA was squarely audience-focused. interest and there is a realistic chance that a restructured transaction will resolve its issues.
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Matt O’Brien in Providence, Rhode Island contributed to this report.
