Microsoft to modify Activision Blizzard acquisition to address CMA concerns

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Update, July 12, 2023: The CMA has issued a fresh statement emphasising that – while it is open to potential changes in the Microsoft-Activision deal – its decision to block the merger currently still stands.

News that the UK regulator will consider proposals from Microsoft as to how it may modify its proposed acquisition of Activision Blizzard have sparked speculation that the deal is more likely to go through. But the CMA has suggested this may require further investigation before the transaction can be approved.

“Whilst merging parties don’t have the opportunity to put forward new remedies once a final report has been issued, they can choose to restructure a deal, which can lead to a new merger investigation," a spokesperson said.

"Microsoft and Activision have indicated that they are considering how the transaction might be modified, and the CMA is prepared to engage with them on this basis. These discussions remain at an early stage and the nature and timing of next steps will be determined in due course.

"While both parties have requested a pause in Microsoft's appeal to allow these discussions to take place, the CMA decision set out in its final report still stands.”

Original story, July 11, 2023: Microsoft is looking into changes it can make to the proposed acquisition of Activision Blizzard in order to win over the Competition and Markets Authority, the UK regulator that blocked the deal earlier this year.

The platform holder was due to face the CMA again in court as it argued against the latter's decision to the Competition Appeal Tribunal on July 24. However, both parties have now agreed to pause this process while Microsoft modifies its deal.

In a statement to GamesIndustry.biz, Microsoft's vice chair and president Brad Smith said: "After today's court decision in the US, 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 CMA also issued a statement to GamesIndustry.biz, in which a spokesperson said: "We stand ready to consider any proposals from Microsoft to restructure the transaction in a way that would address the concerns set out in our Final Report."

The court decision Smith refers to is the San Francisco judge ruling in Microsoft's favour after its recent legal clash with the Federal Trade Commission.

The FTC was attempting to temporarily block Microsoft from closing the Activision deal ahead of its own legal challenge, which is scheduled for August.

However, following the Judge's decision, Microsoft could complete the transaction ahead of its July 18 deadline, after which it needs to pay an extension fee to Activision Blizzard and renegotiate the deal.

The $68.7 billion deal needs approval in three key markets before it can go through: the US, the UK and the EU.

The EU approved the deal earlier this year, the US' FTC issued its legal challenge in December (but does not technically have the power to block the deal), and the UK's CMA blocked the deal but is now awaiting Microsoft's new proposals.

You can read more about the regulatory hurdles Microsoft and Activision Blizzard face in our extensive primer.

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