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A judge has denied the Federal Trade Commission’s request for a preliminary injunction to block Microsoft and Activision Blizzard’s pending merger. While the FTC can still appeal this decision, this is a major win in favor of the acquisition.
Had the FTC won, it would have prevented the two companies from closing the deal before hearings on August 2. The original agreement includes a termination date of July 18. During last week’s hearings, Bobby Kotick, CEO of Activision Blizzard, confirmed that the company’s board did not see a path forward to complete the deal if the judge granted the injunction.
“This Court’s responsibility in this case is narrow. It is to decide if, notwithstanding these current circumstances, the merger should be halted — perhaps even terminated — pending resolution of the FTC administrative action,” concluded Judge Jacqueline Scott Corley in her decision. “For the reasons explained, 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. The motion for a preliminary injunction is therefore DENIED.”
Reactions to ruling
Both Activision Blizzard and Microsoft issued statements following the ruling, praising the judge’s ruling.
“We’re grateful to the court for the way this process was handled and the thoughtfulness of the decision. The U.S. joins the 38 countries where our deal can proceed—these decisions are based on facts and data that show our merger is good for players and for competition in the industry,” Kotick wrote in a blog post. “We’re optimistic that today’s ruling signals a path to full regulatory approval elsewhere around the globe, and we stand ready to work with UK regulators to address any remaining concerns so our merger can quickly close.”
Similarly, Phil Spencer weighed in on Twitter.
Meanwhile, the FTC expressed disappointment in the outcome and asserted that the merger was a threat to open competition for 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,” an FTC spokesperson said.
In addition to the FTC, the United Kingdom’s Competition and Markets Authority also issued a preliminary ruling to block the merger. However, that resistance appears to be crumbling.
The CMA moved to block Microsoft’s proposed acquisition of Activision Blizzard in April, with an appeal hearing set for July 28. In response to the U.S. ruling, Microsoft and the CMA have agreed to pause its appeal process to find solutions that address the CMA’s cloud gaming concerns.
While the deal has not closed just yet, today’s ruling gives Microsoft and Activision Blizzard a more clear path to complete its merger.
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