Microsoft and the UK CMA Open a Nasty Can of Worms
Microsoft Corp.'s victory over US trustbusters seeking to end its $69 billion purchase of Activision Blizzard Inc. was a big moment on Tuesday — but London was where the software giant landed the bigger win.
The UK's Competition & Markets Authority, which initially blocked the deal in April, has said it's open to considering “proposals … to restructure the transaction” that would address its concerns. That's not how the British antitrust process usually goes — and the ramifications are far reaching. There's a standard recourse for merging parties facing a CMA veto: appeal. Microsoft had initiated the process and that's now been put on hold.
How might things move forward? We're in unprecedented territory for big M&A in the UK.
To re-cap, the CMA found that Microsoft's ownership of Activision's games catalogue could harm competition in the cloud-gaming market. It also rejected Microsoft's proposed remedy — a decade-long commitment to make Activision titles like Call of Duty available to rival streaming platforms, subject to certain conditions.
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While the CMA has yet to issue its formal order thwarting the transaction, it confirmed on Wednesday that merging parties can't suggest new remedies once a final report is published, as is the case here. However, the regulator says they can propose a restructured deal, thereby triggering a new investigation.
It's crucial that the CMA sticks to its existing processes. Failing to do so would be an invitation to Microsoft rival Sony Group Corp. — which opposes the Activision acquisition — to sue.
The implication from the CMA's comment about listening to proposals is that Microsoft would get a reasonable sense of whether any revised deal would sail
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