The UK’s Competition and Markets Authority (CMA) has announced it is imposing a Final Order which blocks the original Microsoft-Activision merger deal on a worldwide basis. Instead, it is starting a brand new, phase 1 investigation on a new, restructured deal that Microsoft has separately submitted. Under the new deal, Activision’s cloud streaming rights outside of the European Economic Area (EEA) will be sold to rival Ubisoft. Ubisoft will pay to gain the rights to license out all existing and future content, for 15 years, from Activision to any cloud gaming provider, including back to Microsoft. Ubisoft can also pay to require Microsoft to adapt Activision’s titles to other platforms.
This means that CMA’s original extended investigation deadline of August 29, 2023 is no longer valid. And, the phase 1 investigation decision deadline matches the Microsoft’s extended acquisition deadline of October 18, 2023. This makes it less likely the deal will close early, and more likely that Microsoft will respond soon to speed things up. According to Florian Mueller, Microsoft can immediately resume the Competition Appeal Tribunal (CAT) appeal of CMA’s ruling prohibiting the original merger deal, while pursuing the new investigation of the restructured deal, and to ask for an early October hearing.
Recap
To recap on the long and twisty journey leading up to this announcement:
- April 2023: CMA formally ruled against the original Microsoft-Activision merger deal on April 26, 2023.
- July 2023:
- In the US, the Federal Trade Commission (FTC) failed to gain an injunction to stop the merger in a federal court on July 11, 2023, and then failed again to gain an emergency stay from the court of appeals. The FTC formally withdraw its challenge to the acquisition on July 20, 2023. This effectively makes CMA the only roadblock remaining for the Microsoft-Activision merger, since other major governments like China and EU had already approved the merger.
- In the UK, following the decision to deny the injunction for the FTC, Microsoft, ABK and the CMA got the CAT to pause the appeal against the April ruling to negotiate. The CMA also announced on July 14, 2023, that they would be extending their investigation to August 29, 2023, pending review of a new proposal that Microsoft had submitted to the CMA.
- Microsoft and Activision extended the acquisition deadline from July 18 to October 18, 2023, in order to gain enough time to get approval from CMA. Under the terms of the extension, if the deal does not close by August 29, 2023, Microsoft will pay Activision a breakup fee of $3.5 billion. And, if the deal does not close by September 15, 2023, the breakup fee increases to $4.5 billion.
About The Author
Leave a Reply