Fearing a sudden validation of the acquisition of Activision Blizzard by Microsoft, the FTC decided to seek an injunction to block the procedure in the United States. Microsoft could be happy about that.
After a short rumor that ignited the American legal sphere, the news fell in the evening: the Federal Trade Commission filed an appeal in California federal court to block Microsoft’s takeover of Activision Blizzard.
A radical solution
Little throwback. In December 2022, the American FTC took the other competition authorities by surprise by announcing that it was filing a complaint against Activision Blizzard and Microsoft to request that the takeover be blocked. This first procedure is before the FTC administrative tribunal and is not blocking for Microsoft. In other words, at this stage, nothing prevented Microsoft from initiating the merger with Activision Blizzard. If it made this choice, the Redmond firm would still take quite a risk since the outcome of the trial could force it to go back and separate from Activision Blizzard, at great expense.
Since then, the CMA in the United Kingdom has used its right to block to prohibit the takeover of Activision Blizzard by Microsoft. The latter launched the appeal procedure to overturn this decision. A British procedure which has already given rise to several hearings and from which we should obtain a first decision during the summer.
Visibly confident in its case, Microsoft has since weighed in on the idea of an outright departure from the United Kingdom. It had been whispered since Microsoft lawyers were seriously considering initiating the merger.
The decisive time trial
Indeed, the acquisition contract between Activision Blizzard and Microsoft expires on July 18, 2023. The firm would therefore like to consummate the marriage before this date to avoid renegotiation and additional costs vis-à-vis Activision.
Faced with this growing risk, the FTC therefore decided to react and seek an injunction in federal court. This time things are getting serious for Microsoft on the American front. If the FTC obtains its injunction, Microsoft and Activision will be prohibited from validating the takeover before the outcome of the lawsuit opposing them to the police force of the United States.
For Microsoft, the FTC’s action is an opportunity to speed up the process, as its president Brad Smith pointed out on Twitter.
Today’s action by the FTC to file suit in our Activision case in federal court should accelerate the decision-making process. This benefits everyone. We always prefer constructive and amicable paths with governments but have confidence in our case and look forward to presenting…
—Brad Smith (@BradSmi) June 12, 2023
Indeed, to land at the federal level with the usual procedure, it would first have been necessary to wait for the results of the first trial in the administrative court, i.e. not before 2024. From now on, Microsoft will be able to defend its case before a rigorous court and potentially accelerate the validation of his file, if his army of lawyers manages to convince the Californian judge. The firm has also obtained from the CAT, the appeal court of the United Kingdom, an accelerated procedure for the course of the summer.
The Activision takeover project is therefore taking a legal boost and we could discover the outcome in the weeks to come.