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 was appealing a federal judge’s ruling that allowed Microsoft to proceed with its $69 billion purchase of gaming company Activision Blizzard.
Microsoft’s victory in court on Tuesday and a subsequent change in stance by Britain’s competition authority brought the tech giant closer to finalizing its largest deal ever with Activision. However, the appeal by the FTC suggests that regulatory hurdles may still pose a threat to the completion of the deal, which is set to expire on July 18.
The FTC’s court filing did not provide any details about the grounds for the appeal, but it is expected to be presented before the Ninth Circuit Court of Appeals on the West Coast.
Microsoft responded to the appeal by stating that it will fight against any further attempts to delay the deal. Microsoft President Brad Smith expressed disappointment with the FTC’s decision, calling the case weak and arguing for the ability to move forward with the merger.
The FTC declined to comment further on the notice of appeal.
While the companies succeeded in defeating an injunction against completing the deal on Tuesday, the judge maintained a stay preventing them from doing so until Friday, to allow time for the FTC to appeal.
The FTC may request a stay from the appeals court to halt the deal from closing.
U.S. District Judge Jacqueline Scott Corley in San Francisco, in her opinion, rejected the argument made by the Biden administration that the deal 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, subject to a new investigation, could address its concerns.
Legal experts in the United States had differing opinions on the FTC’s grounds for appeal. Some argued that appeals courts typically defer to judges on matters of fact, while others suggested that Judge Corley may have made an error in her standard for halting a deal.
In her 53-page order, Corley stated that the FTC must demonstrate that the merger “will probably substantially lessen competition,” rather than simply arguing that it “might” harm competition. This standard raised questions among legal scholars, who argued that U.S. antitrust law only requires the FTC to show that the proposed deal “may” harm competition.
To address the FTC’s concerns, Microsoft agreed to license “Call of Duty” to competitors, including a 10-year contract with Japan’s Nintendo Co, contingent upon the merger’s completion.
Appeals by antitrust agencies over lost merger challenges are rare, but not unheard of. More than 10 years ago, the FTC appealed a ruling when it lost its fight against Whole Foods’ acquisition of Wild Oats. However, the agency settled with the companies before a decision was made by the appeals court.
Reporting by Diane Bartz; Editing by Diane Craft, Lincoln Feast, and Muralikumar Anantharaman