While a few regulatory decisions are still outstanding, the Microsoft-ActivisionBlizzard merger review process now comes down to the United Kingdom and the United States. There were important events in both jurisdictions, and I commented in real time on Twitter. That's why I'll keep this post relatively short and mostly just show some documents.
I attended the first part, and watched via livestream the remainder, of yesterday's 2nd case management conference in Microsoft v. Competition & Markets Authority. The UK Competition Appeal Tribunal (CATribunal, or just CAT) is moving amazingly fast. The hearing will start in late July. Microsoft proposed Friday, July 28, as the start date. The parties thought that four days would be sufficient, but it looks like it will more likely be five or six.
Some expert evidence (particularly economic evidence regarding market definition) will be accepted by the court on what appears to be a de bene esse basis, meaning that the court could still declare such evidence inadmissible if it is not really deemed helpful at the time of the hearing. Lord Pannick KC (for Activision Blizzard) made a de bene esse fallback argument.
I had originally intended to watch the livestream of the CAT hearing, but a short-notice invitation to a Concurrences and King's College London event taking place today (which I mentioned in a recent post) resulted in a change of plans. That was fortunate because Mr Justice Marcus Smith, the President of the CAT, suspended the livestream for the first couple of hours. The reason for that decision was that some angry gamers who disagree (as do I) with the CMA decision used material from the livestream (screenshots) to mock CMA lawyers. I never did any of that and, in fact, discouraged it by calling on my many Twitter followers twice (here and here) to consider that it's illegal and that we can't even know where a given CMA person stands (some may personally consider the decision just as absurd as we do). Yesterday I also called on my followers to refrain from insulting FTC chair Lina Khan.
I was the second of about 20 participants to leave the speakers' dinner because of the Federal Trade Commission's federal lawsuit, in which the agency is now seeking a preliminary injunction (PI) and a temporary restraining order (TRO). Back at the hotel, I downloaded the complaint (the TRO motion was filed a little later).
The FTC case places the emphasis on a vertical input foreclosure theory relating to videogame consoles. That one has been rejected by the regulators in charge of 40 countries. Even the UK CMA dropped that one after it made a mathematical mistake that was quite unbelievable and doomed that theory of harm.
The FTC complaint does also mention cloud gaming, so the FTC will try to somehow convince the United States District Court for the Northern District of California that the CMA decision weighs in favor of a TRO and a PI. But cloud gaming as more of an afterthought in the FTC's original December 2022 complaint, and they now had to bring a federal complaint consistent with the one they filed with their in-house court.
What the FTC told the district court yesterday shows that Microsoft and Activision Blizzard indicated they might close the deal as early as Friday (June 16). The FTC now asks for a TRO to issue before 9 PM Pacific Time on Thursday, which is midnight on Friday by Eastern Time (the merger agreement is based on Eastern Time because that's the time zone for New York).
The FTC most often gets a TRO, but has a poor track record winning PIs. Here, even a TRO should be denied in my view, but even if the FTC won a TRO, it would face a higher hurdle for a PI, where the likelihood of success on the merits will become key.
I assume the case will be deemed as related to the private class-action-style lawsuit in San Francisco and assigned to United States District Judge Jacqueline Scott Corley.
The FTC and the CMA tried to deadlock the merger--under the merger agreement, the deal must be closed by July 18--by creating a situation where either one could point to the fact that a second regulator was blocking, or trying to block, the deal. Procedurally there is a key difference: the FTC needs help from a court to prevent the deal from closing, while in the UK it either takes a successful appeal of the CMA ruling or Microsoft has to "close over" the CMA's objections. Given that the CMA ruling is so obviously flawed, that is also an option.
Finally, here are the complaint, the motion for a TRO, and the declaration in support of the TRO along with the public exhibits:
