Following a recent ruling by a US federal judge denying the Federal Trade Commission’s request to halt Microsoft’s acquisition of Activision Blizzard for $68.7 billion, Microsoft and the United Kingdom’s Competition and Markets Authority (CMA) have announced their decision to temporarily halt their legal dispute. This pause aims to facilitate negotiations and potentially reach a compromise that satisfies both parties and enables the deal to proceed.
In response to the US court decision, Microsoft President Brad Smith took to Twitter, stating, “With today’s ruling in the US, our attention now turns to the UK. While we disagree with the CMA’s concerns, we are exploring modifications to the transaction to address those concerns in a manner acceptable to the CMA.” Smith further explained that Microsoft and Activision have jointly submitted a request to the Competition Appeal Tribunal, in agreement with the CMA, to suspend litigation in the UK, believing it to be in the public interest to prioritize work on proposals for addressing the CMA’s apprehensions.
The CMA initially announced its intention to block Microsoft’s bid to acquire Activision Blizzard back in April, arguing that the merger would negatively impact the emerging cloud-gaming market by establishing a dominant player. The regulator asserted that Microsoft, if allowed to proceed, would likely limit access to Activision Blizzard games for competitors, significantly undermining competition in this vital and expanding sector. Microsoft had planned to challenge the decision through a preliminary hearing before the Competition Appeal Tribunal, scheduled for July 28th. In response, the CMA expressed its openness to consider Microsoft’s proposals for restructuring the transaction to address the concerns outlined in their Final Report. The CMA, Microsoft, and Activision have collectively submitted a request to the Competition Appeal Tribunal, acknowledging that a temporary suspension of litigation in the UK would serve the public interest. It is anticipated that the tribunal will grant approval for the negotiation process.
Update 1:40 PM ET: The CMA has provided additional comments regarding the matter.
Frequently Asked Questions (FAQs) about Activision acquisition
What is the legal battle between Microsoft and UK regulators regarding Activision acquisition?
Microsoft and UK regulators are engaged in a legal battle over Microsoft’s proposed acquisition of Activision Blizzard for $68.7 billion. The regulators have expressed concerns about potential harm to the cloud-gaming market and competition.
What was the recent ruling by the US federal judge?
A US federal judge recently denied the Federal Trade Commission’s request for a preliminary injunction to halt Microsoft’s purchase of Activision Blizzard.
What is the current status of the legal dispute between Microsoft and UK regulators?
Microsoft and the United Kingdom’s Competition and Markets Authority (CMA) have agreed to pause their legal battle. They are now focused on negotiations to find a compromise that would address the CMA’s concerns and allow the acquisition to proceed.
Why is Microsoft considering modifying the transaction?
Microsoft disagrees with the CMA’s concerns but is willing to explore modifications to the deal to address those concerns in a manner acceptable to the CMA. They hope to find a solution that satisfies both parties and enables the acquisition to move forward.
What were the CMA’s concerns about the acquisition?
The CMA argued that the acquisition would harm the nascent cloud-gaming market by creating a monopoly player in Microsoft. They were concerned that Microsoft might withhold Activision Blizzard games from competitors and weaken competition in this growing market.
What actions have Microsoft and the CMA taken to facilitate negotiations?
Microsoft and Activision have jointly submitted a request to the Competition Appeal Tribunal, with the CMA’s agreement, to suspend litigation in the UK. They believe that prioritizing work on proposals to address the CMA’s concerns is in the public interest.
When was the CMA’s decision to block Microsoft’s bid announced?
The CMA announced its intention to block Microsoft’s bid to acquire Activision Blizzard at the end of April, citing concerns about competition in the cloud-gaming market.
What is the role of the Competition Appeal Tribunal in this matter?
The Competition Appeal Tribunal is the body that hears appeals on CMA decisions. It is expected to review and likely approve the joint request from Microsoft, Activision, and the CMA to temporarily suspend litigation and allow negotiations to take place.
What is the anticipated outcome of the negotiation process?
The goal of the negotiation process is to reach a compromise that addresses the CMA’s concerns and allows the acquisition to proceed. The ultimate outcome will depend on the proposed modifications and whether they are deemed acceptable by the CMA.