Microsoft's eagerly anticipated acquisition of Activision Blizzard Inc. is currently under review by the Competition and Markets Authority (CMA) in the United Kingdom. In its final and consolidated proposal to the CMA July 25, Microsoft asserted there have been significant changes in circumstances since the CMA's previous report, or there are compelling reasons to reach a different decision regarding the remedies question.
"Microsoft considers that it is clear that there are material changes in circumstance and special reasons under section 41(3) of the Act which mean that the CMA should not adopt the draft order prohibiting the merger," Microsoft said in its submission to the CMA.
The CMA previously published its final report titled Anticipated Acquisition by Microsoft of Activision Blizzard Inc. Final Report April 26, according to a CMA document. In the report, the CMA found the acquisition of Activision by Microsoft would lead to the creation of a relevant merger situation.
Further, the CMA predicted the merger would likely result in a substantial lessening of competition in the UK's cloud gaming services market due to vertical effects caused by input foreclosure, the document said. As a result, the CMA decided to take action to remedy, mitigate or prevent the substantial lessening of competition and any adverse effects resulting from it, saying prohibiting the merger would be the most effective and proportionate solution.
Under UK law, the CMA's remedial action must remain consistent with its previous report unless there has been a material change of circumstances or special reasons for a different decision, the document said. The CMA issued a notice of the proposed order to address the substantial lessening of competition and its potential adverse effects May 19. The notice and proposed order were made available to the public on the CMA website.
While the acquisition is still under scrutiny in the UK, other regulatory bodies have already given the deal their approval. The European Commission, for instance, greenlit the proposed acquisition under the EU Merger Regulation in May. The investigation concluded Microsoft would not have an incentive to withhold Activision's games from rival consoles such as Sony's PlayStation, as Sony remains the leading distributor of console games worldwide.
Therefore, the acquisition would not significantly harm competition in the consoles market, even if Microsoft decided to withdraw Activision's games from the PlayStation platform, according to the European Commission.
In the U.S., the Federal Trade Commission attempted to halt the deal, but a federal judge blocked the FTC's request, prompting the FTC to appeal the decision July 12.
