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U.S. FTC tried to prevent EU from approving Microsoft’s Activision Blizzard acquisition deal

The U.S. Federal Trade Commission (FTC) filed a lawsuit last December against Microsoft for its acquisition of Activision Blizzard, partly to get ahead of the European Commission and dissuade them from accepting Microsoft’s compromise to approve the deal, several people familiar with the matter reportedly said today.

One of the people familiar with the matter said that officials from the U.S. and EU held a phone call last December to discuss their respective investigations into Microsoft’s $69 billion (currently about 467.82 billion yuan) acquisition of Activision Blizzard. The FTC filed a lawsuit against the deal on Dec. 8, just hours after that call.

During the call, EU officials said they planned to open negotiations with Microsoft about potential remedies, the person familiar with the matter said. But that EU decision prompted the FTC to file suit against Microsoft the same day as the call, sending a strong signal to EU Competition Commissioner Margrethe Vestager and her staff (not to approve the deal lightly). Although technically speaking, the FTC will not consider the investigated company’s remedial proposals until late in the process.

EU and UK officials are not expected to make a decision on whether to approve the deal until April. And U.S. officials typically delay announcements until close to the deadline to try to work out a global solution. As a result, the FTC is not expected to make a decision until the spring, people familiar with the matter said.

By acting quickly, the FTC will be able to get ahead of the Europeans and try to shape the story (set the tone for the deal), said Barry Nigro, a former top official at the U.S. Department of Justice and head of the antitrust practice at law firm Fry Frank Harris Shriver & Jacobson LLP.

Microsoft’s acquisition of Activision Blizzard requires approval from 16 jurisdictions, with the FTC, the U.K.’s Competition and Markets Authority (CMA) and the European Commission being the biggest hurdles. These three international bodies have been in close contact since the deal was announced in January 2022.

The European Commission is conducting an in-depth investigation into the transaction and is scheduled to make a decision by April 11. The European Commission is expected to issue a so-called “Statement of Objections” in the near future, setting out the reasons that could block the deal if no remedy is available. Of course, “dissenting statements” are commonplace in large transactions and do not necessarily indicate an imminent rejection of the deal.

U.K. regulators are also reviewing the deal and plan to issue a preliminary decision later this month or early February, with a final decision to be announced April 26.

And Microsoft plans to propose a global remedy to the EU to ensure that Sony’s PlayStation will continue to use the popular Call of Duty game for the next 10 years. But so far, Sony has not accepted this guarantee from Microsoft.

In addition, Microsoft has struck a deal to make the game available to Nintendo and allow Valve’s PC gaming platform STeam to sell the game. If EU officials accept these remedies, which apply globally, it could weaken U.S. or U.K. investigations into the deal.

Previously, the EU has had a history of going against the grain of U.S. and U.K. regulators. In February, the European Commission accepted a settlement agreement approving the merger of two Finnish shipping equipment giants. But a month later, both the U.K. and the U.S. said they would block the deal, leading the companies to eventually abandon the merger.

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