After a slightly longer than expected wait, the Californian federal court has released the verdict of Judge Jacqueline Scott Corley regarding the FTC’s injunction proceedings to block Microsoft’s takeover of Activision Blizzard.
After the federal court hearings that uncovered many secrets about Xbox’s strategy and the video game industry, it’s time for the verdict. Judge Jacqueline Scott Corley had allowed herself a few days of reflection to mature her opinion in the procedure launched by the FTC (Federal Trade Commission), the American competition authority, to request an injunction preventing Microsoft from absorbing Activision Blizzard.
Microsoft has won its biggest challenge in the United States
In a document published on July 10, 2023 by the Californian federal court, we can read that the court denies the request of the FTC. This last “did not demonstrate that it had a chance of winning by claiming that the merged company would likely remove Call of Duty from Sony’s PlayStation, or that its ownership of Activision content would significantly reduce the competition in the video game subscription and cloud gaming markets“.
This means that Microsoft can now freely absorb Activision Blizzard in the United States. Another procedure launched by the FTC is still in progress, and should lead to a verdict in 2024 if it is not abandoned. This other trial is scheduled to open on August 2, 2023. This new verdict could then force Microsoft to unravel its merger, but Judge Corley was not convinced that we are heading towards this hypothesis and therefore refused to block the takeover pending this final verdict.
What can the FTC do?
The FTC can appeal Judge Corley’s ruling or await the outcome of the verdict in its other administrative court proceeding. However, it is more likely that the commission will drop this case.
Indeed, the competition authority must be accountable to the American Congress and justify the files on which it decides to incur legal fees. It’s hard to imagine Congress looking favorably on the investment in a case judged to be a loser by a federal court.
And now ?
Microsoft through the voice of its president Brad Smith reacted to this decision. He obviously congratulates the judge for having ruled in favor of the American giant.
Now, Microsoft only faces a rejection in the UK from the CMA. The appeal process should officially begin the week of July 24, 2023 with a conclusion expected before the end of the summer.
One theory was that Microsoft decided to absorb Activision Blizzard without waiting for the conclusion of the appeal process, ignoring the jurisdiction of the United Kingdom, but Brad Smith’s statement seems to rule out this hypothesis. Indeed, the president of Microsoft indicates that the firm continues to work to find a way out in other jurisdictions.
The takeover contract between Activision and Microsoft expires on July 18, 2023. The two actors must extend and perhaps renegotiate the contract if they wish to continue the adventure.
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