The Federal Trade Commission’s (FTC) last-minute attempt to halt Microsoft’s $68.7 billion acquisition of Activision Blizzard has been unsuccessful, as the Ninth Circuit Court of Appeals declined to grant the agency an emergency stay. The court’s decision allows the deal to proceed in the United States, with the major remaining obstacle being a UK regulator.
Previously, a temporary restraining order had been imposed to prevent the closure of the acquisition by Microsoft and Activision. This order was in place until Judge Jacqueline Scott Corley ruled on the FTC’s request for a preliminary injunction. Corley’s rejection of the injunction request set a deadline for the FTC to secure an emergency stay from the appeals court by 11:59 PM PT on July 14th. As the stay was not obtained, Microsoft and Activision are now free to finalize the deal, potentially as early as Saturday.
Expressing appreciation for the Ninth Circuit’s response, Microsoft president and vice-chair, Brad Smith, mentioned on Twitter that this brings them closer to the completion of the regulatory reviews associated with the acquisition.
We appreciate the Ninth Circuit's swift response denying the FTC's motion to further delay the Activision deal. This brings us another step closer to the finish line in this marathon of global regulatory reviews.
— Brad Smith (@BradSmi) July 15, 2023
Judge Corley, in her ruling, concluded that the FTC had not substantiated its claims of harm to consumers resulting from the merger. The FTC has stated its intention to appeal Corley’s decision and subsequently requested the district court to block the merger while the appeal is pending. However, Corley denied that motion shortly afterward.
The FTC initially filed a lawsuit in December to block the merger, citing concerns about potential harm to competition. An administrative hearing is scheduled for early August. The FTC sought a preliminary injunction to prevent the companies from finalizing the merger until the antitrust trial takes place. However, the merger deadline is set for July 18th.
Both Microsoft and Activision Blizzard appear confident in closing the deal by the deadline. Activision’s stock will be delisted from the Nasdaq-100 index before Monday’s stock market opens, suggesting that the deal may be completed around that time.
In addition to the US hurdles, Microsoft and Activision still need to address concerns raised by a UK regulator regarding cloud gaming. The deal was initially blocked by the regulator, and Microsoft has appealed the decision. The legal battle between the companies and the Competition and Markets Authority (CMA) has been put on hold, pending a decision by the Competition Appeal Tribunal (CAT) on July 17th regarding the implementation of the pause.
The CMA indicated that Microsoft and Activision could restructure the deal but cautioned that such a move might trigger a fresh merger investigation. The regulator has extended its decision-making deadline until the end of August to thoroughly review Microsoft’s detailed submission. However, the CMA aims to reach a conclusion as soon as possible. Reports suggest that Microsoft might consider selling some cloud gaming rights in the UK to facilitate the completion of the deal.
