FTC Appeals Court Ruling, Challenges Microsoft’s Acquisition of Activision Blizzard

FTC Appeals Federal Judge’s Ruling Allowing Microsoft’s Acquisition of Activision Blizzard

WASHINGTON, July 12 (Reuters) – The U.S. Federal Trade Commission (FTC) announced on Wednesday that it is appealing a federal judge’s ruling that Microsoft could proceed with its $69 billion purchase of video game company Activision Blizzard.

Microsoft’s victory in court on Tuesday, along with the withdrawal of opposition from Britain’s competition authority, brought the tech giant closer to finalizing its largest deal ever. However, the appeal by the FTC introduces the possibility of further delays and potential expiration of the agreement between Microsoft and Activision on July 18.

The FTC’s court filing did not provide specific details but stated that the appeal would be presented before the Ninth Circuit Court of Appeals on the West Coast. Microsoft has expressed its intention to fight the appeal, with Microsoft President Brad Smith stating, “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.”

While the companies successfully defeated an injunction against completing the deal in court, the judge maintained a stay until Friday to allow the FTC time to appeal. The FTC may request a stay from the appeals court to prevent the deal from closing.

U.S. District Judge Jacqueline Scott Corley in San Francisco rejected the Biden administration’s argument that the acquisition would harm consumers by granting Microsoft exclusive access to popular games like “Call of Duty.” The Competition and Markets Authority (CMA) in Britain, which initially opposed the transaction, stated that a restructured deal between Microsoft and Activision Blizzard could address its concerns, subject to a new investigation.

Legal experts have differing opinions on the grounds for the FTC’s appeal. Some argue that appeals courts typically defer to judges on matters of fact, while others suggest that Judge Corley may have made an error in setting the standard for halting the deal. In her ruling, Corley stated that the FTC must demonstrate that the merger will probably substantially lessen competition, rather than simply arguing that it might do so. Some legal scholars argue that the U.S. antitrust law only requires the FTC to prove that the proposed deal “may” harm competition, not that it “will.”

To address the FTC’s concerns, Microsoft has agreed to license “Call of Duty” to competitors, including a 10-year contract with Japan’s Nintendo Co, contingent on the merger’s completion.

While appeals are rare when antitrust agencies lose merger challenges in court, the FTC previously appealed a ruling over a decade ago when it lost its case against Whole Foods’ acquisition of Wild Oats. However, the agency settled with the companies before the appeals court reached a decision.

Reporting by Diane Bartz; Editing by Diane Craft, Lincoln Feast, and Muralikumar Anantharaman

How might the FTC’s appeal potentially impact the agreement between Microsoft and Activision Blizzard, and what are Microsoft’s plans to address this appeal

The U.S. Federal Trade Commission (FTC) has filed an appeal against a federal judge’s ruling that allowed Microsoft to proceed with its $69 billion acquisition of video game company Activision Blizzard. The FTC’s appeal introduces the possibility of further delays and potential expiry of the agreement between the two companies on July 18.

The FTC did not provide specific details in its court filing, but stated that the appeal would be presented before the Ninth Circuit Court of Appeals on the West Coast. Microsoft has expressed its intention to fight the appeal, with Microsoft President Brad Smith calling it a “demonstrably weak case” and stating that the company will oppose any further efforts to delay the deal.