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The US Federal Trade Commission has formally stayed an administrative trial over Microsoft’s pending acquisition of Activision Blizzard. The move was first reported by bloombergwill allow government agencies and businesses to negotiate a merger settlement of a staggering $68.7 billion.
The FTC’s decision to stay the lawsuit is another big win for Microsoft and Activision as they try to cross the line in a deal. The agency filed a lawsuit in December to block the deal, and an evidence hearing in the lawsuit was scheduled for August 2. The company last week lost a legal bid to block a merger between the two companies ahead of an administrative trial scheduled for early August. The FTC appealed the loss.
“The FTC has not shown that the combined company will likely pull Call of Duty off Sony PlayStation, or that its claim that ownership of Activision’s content will substantially reduce competition in the video game library subscription and cloud gaming markets is likely to succeed,” Jacqueline Scott Corey said in last week’s judgment. Microsoft then struck a deal with Sony to keep Call of Duty on the PlayStation for 10 years if the merger went through.
of Petition Filed Tuesday, Microsoft and Activision asked the FTC to drop the lawsuit. FTC rules stipulate that the agency must withdraw the lawsuit after the companies file their requests because the interlocutory injunction blocking the merger between the two companies has been denied.Around bloombergMicrosoft and Activision will now be able to convince the FTC to accept a remedy that addresses the FTC’s concerns about the impact of the deal on competition in the gaming industry. Alternatively, it could persuade the FTC to abandon its opposition to the merger altogether.
The FTC still has the option of holding an administrative trial after the merger is complete. But it is unusual for the agency to pursue an internal lawsuit after losing a battle in federal court.
The original deadline for completing the acquisition was Tuesday, but Microsoft and Activision have extended the merger agreement until October 18 to give them “additional time to resolve remaining regulatory concerns.” The two companies agreed that Microsoft would pay up to $4.5 billion in damages if the deal fell through, but both sides are determined to work things out.
For Microsoft and Activision to continue operating in the country, UK regulatory approval must be obtained to complete the deal without resorting to workarounds. The Competition and Markets Authority initially blocked the merger in April, but in the past week or so has indicated it is willing to amicably resolve concerns about the deal’s potential impact on the cloud gaming market.
Microsoft will submit its latest merger proposal to the CMA. Regulators are expected to make a decision by August 29, but aim to do so as soon as possible. At a hearing this week, CMA lawyers said they were confident both the regulator and Microsoft could resolve the company’s concerns. It’s another sign that the biggest merger in gaming history is very likely to be completed within the next few weeks.