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 will the FTC’s appeal potentially impact the timeline and outcome of Microsoft’s acquisition of Activision Blizzard
In a recent development, the U.S. Federal Trade Commission (FTC) has made the decision to appeal a federal judge’s ruling that permitted Microsoft’s acquisition of video game company Activision Blizzard for $69 billion. This move by the FTC brings the potential for further delays and the expiration of the agreement, which is set for July 18.
While the court filing by the FTC did not disclose specific details, it did mention that the appeal would be presented before the Ninth Circuit Court of Appeals on the West Coast. Microsoft, on the other hand, has made it clear that it intends to fight this appeal. Brad Smith, the President of Microsoft, expressed disappointment in the FTC’s decision, calling the case “demonstrably weak,” and stating that the company will oppose any further attempts to delay the progress of the acquisition.
This latest development in the case will likely prolong the decision-making process and add uncertainty to the fate of the deal. Microsoft’s victory in court on Tuesday was a significant step towards finalizing its largest acquisition, but the FTC’s appeal has introduced a new obstacle that the tech giant will have to overcome.
This ruling sets a concerning precedent for potential monopolistic practices in the tech industry. The FTC’s decision to appeal highlights the importance of maintaining fair competition and protecting consumer rights.
“The FTC’s appeal against the acquisition of Activision Blizzard by Microsoft highlights their concerns regarding potential monopolistic practices. It will be interesting to see how the court proceeds in determining the outcome of this landmark deal.”