Quiver Quantitative - The U.S. Federal Trade Commission (FTC) is continuing its efforts to challenge Microsoft's (NASDAQ:MSFT) acquisition of Activision Blizzard (NASDAQ:ATVI), even after the deal's closure and approval by British regulators. The FTC, in an appeals court, argued against the lower-court judge's ruling, which deemed the $69 billion acquisition legal under competition law. The FTC's lawyer, Imad Abyad, contended that the lower court demanded excessively stringent proof of the deal's anti-competitive nature, whereas the FTC only needed to demonstrate Microsoft's potential to restrict Activision's games from rival platforms.
Abyad referred to Microsoft's historical precedent of making some Zenimax games exclusive after acquiring the company, suggesting a similar fate for Activision's games. The FTC's challenge is an uphill battle, particularly after losing the initial court case and with the European Union and Britain already approving the deal. This legal fight is part of the Biden administration's broader strategy to curb mergers and acquisitions that could negatively impact consumer prices in various sectors.
Market Overview: -The US Federal Trade Commission (FTC) challenged a federal judge's ruling approving Microsoft's $69 billion acquisition of Activision Blizzard. -The agency argued the judge held them to an excessively high standard, requiring proof of anticompetitiveness rather than mere ability and incentive to harm rivals.
Key Points: -FTC lawyer Imad Abyad argued that Microsoft's past behavior, including making Zenimax games exclusive, demonstrates potential for similar actions with Activision's titles. -Despite losing the lower-court case and facing EU and UK approval, the FTC continues its legal fight aligned with the Biden administration's push against mergers deemed harmful to consumers. -Microsoft lawyer Rakesh Kilaru argued the FTC case is "weak" and lacks sufficient evidence to prove Microsoft's incentive to withhold "Call of Duty" from competitors.
Looking Ahead: -Judges actively questioned both attorneys, with concerns about the FTC's reliance on concessions made to UK regulators and Microsoft's recent agreements with rivals like Sony. -Antitrust experts predict a tough uphill battle for the FTC, likely requiring a finding of "clear error" on the part of the lower court judge.
The FTC initially filed a lawsuit in December 2022 to prevent the acquisition, fearing Microsoft would use Activision's games to dominate the gaming market and suppress competition for its Xbox consoles. However, a California federal judge ruled in July that the FTC failed to substantiate its claims, allowing the deal to proceed.
This article was originally published on Quiver Quantitative