Judge Jacqueline Scott Corley, a U.S. District Judge for the Northern District of California, refused to block Microsoft’s $69 billion purchase of the entertainment company Activision Blizzard. In a ruling on July 11, Corley denied the request for a preliminary injunction sought by the Federal Trade Commission (FTC) and allowed Microsoft to move forward with the deal, which was set to expire on July 18, an ABC News story said.
Activision Blizzard is the maker of the Call of Duty video game series. The FTC had tried to block the deal, citing concerns about a potential negative impact on competition and asking for a temporary injunction until the FTC's in-house judge could review the case in August. However, both Microsoft and Activision argued that this delay would essentially result in them having to terminate the acquisition agreement they entered into almost a year and a half ago.
“After considering the parties’ voluminous pre- and post-hearing writing submissions, and having held a five-day evidentiary hearing, the Court DENIES the motion for preliminary injunction," Judge Corley said. "The FTC has not shown it is likely to succeed on its assertion the combined firm will probably pull Call of Duty from Sony PlayStation or that its ownership of Activision content will substantially lessen competition in the video game library subscription and cloud gaming markets.”
Microsoft had committed to paying Activision a breakup fee of $3 billion by July 18 if the deal were to fail to close.
“Our merger will benefit consumers and workers. It will enable competition rather than allow entrenched market leaders to continue to dominate our rapidly growing industry," Bobby Kotik, the CEO of Activision Blizzard, said.
“We're grateful to the court for swiftly deciding in our favor," said Phil Spencer, who heads Microsoft's Xbox and gaming. "The evidence showed the Activision Blizzard deal is good for the industry, and the FTC’s claims about console switching, multi-game subscription services, and cloud don’t reflect the realities of the gaming market.”
Judge Corley said that Microsoft promised to keep Call of Duty on the Sony PlayStation and expand it to Nintendo.
“Microsoft’s acquisition of Activision has been described as the largest in tech history. It deserves scrutiny," Corley wrote in her decision. "The Court finds the FTC has not shown a likelihood it will prevail on its claim this particular vertical merger in this specific industry may substantially lessen competition. To the contrary, the record evidence points to more consumer access to Call of Duty and other Activision content."
Unless the FTC obtains a stay pending an appeal, the deal is now subject to a temporary restraining order only until July 14, Axios reported. The article said Microsoft would like to finalize the deal before the expiration date of July 18, but may have to decide whether to defy the U.K.'s competition regulator block, which was put in place in April. In order to proceed, Microsoft said that it has reached an agreement with U.K. regulators to temporarily pause its appeal of the ruling, with the intention of modifying the deal to meet the regulator's requirements and gain their approval.
