A judge has rejected the Federal Trade Commission’s request for a preliminary injunction to prevent Microsoft from buying Activision Blizzard for $68.7 billion. Both Microsoft and Activision said they’d abandon the blockbuster merger if Judge Jacqueline Scott Corley granted the injunction.

“This Court’s responsibility in this case is narrow. It is to decide if, notwithstanding these current circumstances, the merger should be halted — perhaps even terminated — pending resolution of the FTC administrative action,” Corley wrote in the ruling. “For the reasons explained, the Court finds the FTC has not shown a likelihood it will prevail on its claim this particular vertical merger in this specific industry may substantially lessen competition. To the contrary, the record evidence points to more consumer access to Call of Duty and other Activision content. The motion for a preliminary injunction is therefore denied.”

Corley wrote that, as the acquisition “has been described as the largest in tech history,” it deserves to be scrutinized. She noted Microsoft’s commitment to keep Call of Duty on PlayStation and deals the company has to bring its games and Activision Blizzard titles to Nintendo Switch and cloud gaming services.

“We’re grateful to the court in San Francisco for this quick and thorough decision and hope other jurisdictions will continue working towards a timely resolution.” Microsoft president and vice chair Brad Smith said. “As we’ve demonstrated consistently throughout this process, we are committed to working creatively and collaboratively to address regulatory concerns.”

“We’re grateful to the court for the way this process was handled and the thoughtfulness of the decision. The US joins the 38 countries where our deal can proceed — these decisions are based on facts and data that show our merger is good for players and for competition in the industry,” Activision Blizzard CEO Bobby Kotick wrote in an email to employees.

The FTC sued to block the merger last December and a hearing in its administrative proceeding is set for August 2nd. However, the merger agreement has a deadline of July 18th, so Microsoft and Activision Blizzard are eager to close the deal by then. Otherwise, Microsoft will be on the hook for a $3 billion breakup fee to Activision unless the two sides are able to renegotiate terms. As such, they wanted the court to review the FTC’s injunction request swiftly.

The companies claimed that, if the preliminary injunction were granted, it would “effectively block the transaction because the FTC’s process is ‘glacial’ and one no substantial business transaction could ever survive.”

The UK’s Competition and Markets Authority is the only other national antitrust regulator that has formally challenged the Activision takeover. Microsoft and Activision are appealing the CMA’s decision to block the merger over cloud gaming concerns. The appeal process that can take several months, but there have been suggestions that the companies may lock in the deal regardless.

That prompted the FTC to request an injunction in the hopes of being able to “assess the legality of the proposed acquisition” in the August hearing before the deal closes. “Press reports began circulating suggesting that defendants were seriously contemplating closing the proposed acquisition despite the pending administrative litigation and the CMA orders,” the FTC’s request read. 

Corley issued her ruling following a five-day trial in June that saw all manner of juicy gaming industry secrets and emails between industry leaders laid bare for all to see. For one thing, we learned that MachineGames’ Indiana Jones project was originally going to be a multiplatform game, but after Microsoft bought ZeniMax, it made the title an Xbox console exclusive.

Microsoft and Activision Blizzard aren’t fully in the clear. Regulators in dozens of countries have cleared the deal, including in the European Union. However, the UK antitrust authority presents a significant road block (an appeal process will start with a hearing later this month) and the FTC’s administrative trial is still pending. However, the companies have cleared a major hurdle by winning this particular battle. 

Corley ruled that the FTC has until 11:59PM PT on July 14th to obtain a stay pending appeal from the Ninth Circuit Court of Appeals to further delay the deal from closing. Otherwise, Microsoft and Activision will be able to close the deal, giving them just enough time to do so before their deadline. The companies may still choose to extend their acquisition agreement while the CMA appeal takes place in the hope of closing without having to resort to workarounds.

“We’re optimistic that today’s ruling signals a path to full regulatory approval elsewhere around the globe, and we stand ready to work with UK regulators to address any remaining concerns so our merger can quickly close,” Kotick 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,” Smith said. “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.”

This article originally appeared on Engadget at https://www.engadget.com/microsofts-activision-acquisition-moves-ahead-as-judge-rejects-ftc-injunction-request-152845890.html?src=rss

Source: Engadget – Microsoft’s Activision acquisition moves ahead as judge rejects FTC injunction request