The Federal Trade Commission has lost its request for a preliminary injunction to block Microsoft’s $69 billion deal to purchase Activision Blizzard, according to a ruling from U.S. District Judge Jacqueline Scott Corley.
Critics of the acquisition have focused on the popularity of Activision’s Call of Duty franchise and the power it would give Microsoft in the console gaming market. But the judge was not convinced.
“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,” Corley wrote in the filing. “To the contrary, the record evidence points to more consumer access to Call of Duty and other Activision content.”
Activision Blizzard
(ticker: ATVI) shares closed up 10% on Tuesday, to $90.99, following the news, while
Microsoft
(MSFT) stock was up 0.2% to $332.47.
Microsoft has said it has offered a 10-year commitment for Call of Duty games to continue to be published on Sony‘s PlayStation consoles. Microsoft has also reached a deal with
Nintendo
to make Call of Duty games for its platform if the merger is completed.
The FTC can appeal, but some experts have said such a move is unlikely based on historical precedent. Last month, the government requested the injunction to block Microsoft from closing its Activision Blizzard deal ahead of its July 18th deadline. A trial in the government agency’s in-house court is scheduled for August.
“We are disappointed in this outcome given the clear threat this merger poses to open competition in cloud gaming, subscription services, and consoles. In the coming days we’ll be announcing our next step to continue our fight to preserve competition and protect consumers,” FTC spokesman Douglas Farrar said in an email.
Microsoft President Brad Smith thanked the judge in a statement for the quick decision, adding “we’ve demonstrated consistently throughout this process, we are committed to working creatively and collaboratively to address regulatory concerns.”
Activision Blizzard CEO Bobby Kotick also said in a statement: “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” after the ruling.
The ruling in the U.S. is still not a guarantee that the merger will be completed. The U.K.’s Competition and Markets Authority is now the main roadblock. It has ruled to block the deal, a move that had been appealed by Microsoft.
But Microsoft is trying again to get U.K. approval or find an alternative by altering the merger deal. Later Tuesday, Microsoft’s Smith said the company is looking into modifying the transaction to appease the U.K. regulatory agency: “After today’s court decision in the U.S., our focus now turns back to the UK. While we ultimately disagree with the CMA’s concerns, we are considering how the transaction might be modified in order to address those concerns in a way that is acceptable to the CMA. In order to prioritize work on these proposals, Microsoft and Activision have agreed with the CMA that a stay of the litigation in the UK would be in the public interest and the parties have made a joint submission to the Competition Appeal Tribunal to this effect.”
The statement about pursuing a new solution with the U.K., seemed to drive Activision Blizzard shares higher in Tuesday trading.
Write to Tae Kim at [email protected]
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