THE Federal Trade Commission failed in his last ditch effort to pump the brakes on Microsoft Buying Activision Blizzard for $68.7 billion. The Ninth Circuit Court of Appeals decreases to grant the agency an emergency stay of a ruling that allows the deal to continue in the United States, leaving a UK regulator as the main stumbling block.
A temporary restraining order was set up last month to prevent Microsoft and Activision from closing the acquisition until Judge Jacqueline Scott Corley rules on the FTC’s request for a preliminary injunction. When Corley denied the FTC’s injunction request this week, she ruled the agency had until 11:59 p.m. PT on July 14 to seek an emergency stay from the appeals court. Since that didn’t happen, Microsoft and Activision are now free to close the deal on Saturday.
“We appreciate the Ninth Circuit’s prompt response denying the FTC’s motion to further delay the Activision settlement,” Microsoft Chairman and Vice Chairman Brad Smith said. wrote on Twitter. “This brings us one step closer to the finish line of this marathon of global regulatory reviews.”
We appreciate the Ninth Circuit’s prompt response denying the FTC’s motion to further delay the Activision settlement. This brings us one step closer to the finish line of this marathon of global regulatory reviews.
—Brad Smith (@BradSmi) July 15, 2023
In its injunction decision, Corley determined that the FTC had failed to prove its claims that the merger would harm consumers. The FTC said Wednesday that it would appeal Corley’s decision. Thursday he asked the high court who ruled on the preliminary injunction in the first place of block merge while waiting for the call. A few hours later, Corley denied this request.
In December, the FTC sued to block deal on the grounds that it would harm competition. An administrative hearing is scheduled for early August. The agency sought a preliminary injunction to prevent the companies from closing the merger until the antitrust lawsuit takes place. However, the merge deadline is July 18.
Microsoft and Activision Blizzard are obviously confident of closing the deal before Tuesday’s deadline. Activision’s stock will be delisted from Nasdaq-100 before the stock market opens on Monday, so the companies could finally close the deal around that time.
If they cannot do so by the deadline, they will have to renegotiate the terms or agree to extend the deadline. Otherwise, Activision may choose to walk away with Microsoft’s $3 billion severance fee in its pocket. That seems unlikely at this point, as the two companies are eager to join forces.
Microsoft and Activision have yet to resolve issues with a UK regulator, which blocked the case about cloud gaming issues. Microsoft appealed this decision, but the companies and the Competition and Markets Authority agreed to suspend their legal battle. The Competition Appeals Tribunal (CAT), which hears appeals of CMA decisions, decide on July 17 whether this break will take effect.
The CMA said Microsoft and Activision were welcome to restructure the deal, but warned the move could trigger a new merger investigation. The regulator has extended its deadline to make a decision until the end of August so that it has more time to consider a “detailed and complex submission” from Microsoft. However, the CMA said it aims to wrap things up as soon as possible. Reports have suggested Microsoft could sell some UK cloud gaming rights to complete the deal.
Update 7/14 at 10:47 p.m. ET: Added comments from Brad Smith.