CMA launches new consultations on Microsoft Takeover Bid

The Competition Watchdog launched a consultation “very rarely” on Microsoft’s attempts to reverse its block on Activision Blizzard’s $68.7 Billion takeover. This could set the stage for an eventual climbdown.

The Competition and Markets Authority has published arguments from the technology group urging it to reconsider its decision to stop the largest video gaming deal ever.

Three weeks ago, the agency declared a truce and agreed to look at how it could modify the acquisition to ease its concerns.

The CMA denied that it changed its position as a result external pressure. The CMA’s decision to initially block Microsoft from acquiring Activision was met with a fierce backlash. Both companies claimed that the UK had “shut down for business”.

The authority acknowledged that it was not “normal” for it to consult on a claim of material change in circumstances after it has already made a decision. However, it did so in this instance based on the guidance of the Competition Appeal Tribunal where it was due to face off with Microsoft.

Microsoft claims that a number of developments have occurred since the CMA initially sought to block the acquisition by Activision. These include Microsoft’s commitments to the European Commission , which gave the greenlight , an agreement with Sony the rival gaming company, which had previously expressed concerns, and concurrent proceedings in the United States where the deal can now proceed.

The watchdog is asking interested parties to provide feedback “on whether there has been or has not been a materially changed circumstances” since its initial announcement. The deadline for their response is Friday.

Microsoft will also submit a restructured deal for Activision, which, if it is completed, would be the largest acquisition in its history, for CMA’s scrutiny.

Microsoft has sent a document outlining why they believe there have been material changes in circumstances and/or reasons special why the CMA shouldn’t impose a definitive order prohibiting the merger.

This type of submission is rare but possible. Microsoft’s submissions, as well as other responses from interested parties will be carefully considered ahead of the August 29, statutory deadline.

The CMA stated in the spring that Microsoft’s acquisition of Activision would likely lead to “substantial reductions” in competition on the cloud gaming market. Activision produces games such as Call of Duty Candy Crush, and World of Warcraft. Santa Monica, California-based Activision was founded in 1979.

Microsoft’s commitments in Brussels prevented it from violating or changing a ten-year obligation to grant royalty free worldwide licenses for Nvidia and Boosteroid without the consent of the European Commission.

Sony, which is the owner of PlayStation, Microsoft’s main competitor, was a major critic of the deal. They claimed that Activision’s Call of Duty blockbuster franchise could become exclusive to Xbox, or of lower quality on PlayStation. Both companies signed a legally binding agreement on July 16 that will see Call of Duty remain on PlayStation for 10 years.

Microsoft and Activision initially agreed to a deadline of 18 July for the completion of their deal. After this deadline passed, Microsoft and Activision announced a 3-month extension.