WASHINGTON, Jul. 12 (Reuters) – The US Federal Trade Commission (FTC) said on Wednesday it was appealing a federal judge’s ruling that Microsoft (MSFT.O) could proceed with the purchase of “Call of Duty” maker Activision Blizzard for $69 billion. (ATVI.O).
Microsoft’s court victory on Tuesday, and a subsequent ouster by the U.K. competition authority, brought the tech giant two steps closer to finalizing its partnership with Activision, Microsoft’s biggest deal ever.
Still, any outstanding regulatory hurdle makes it more likely that the agreement between Microsoft and Activision will expire on July 18 without the deal being finalized. After July 18, any company is free to walk away from the deal unless they negotiate an extension.
The court that filed the FTC on the appeal did not provide details, which will be submitted to the Ninth Circuit Court of Appeals on the West Coast.
Microsoft said it would contest the appeal.
“We are disappointed that the FTC is continuing to pursue what has become an arguably weak case, and we will resist any further efforts to delay the ability to move forward,” Microsoft president Brad Smith said in a statement by e-mail. -mail.
The FTC declined to comment further on the appeal.
While the companies managed to strike down a court order against finalizing their deal on Tuesday, the judge allowed a postponement until Friday to give the FTC time to appeal.
The FTC can request a stay from the appeals court to prevent the deal from closing.
According to her, U.S. District Judge Jacqueline Scott Corley in San Francisco rejected the Biden administration’s argument that the deal would harm consumers by giving Xbox game console maker Microsoft exclusive access to games, including the best-selling “Call of Duty.”
Britain’s Competition and Markets Authority (CMA), which had opposed the transaction, said on Wednesday that a restructured deal between Microsoft and Activision Blizzard could allay its concerns, subject to a new investigation.
‘CAN’ OR ‘WILL’?
US legal experts disagreed over whether the FTC had good grounds to appeal, with some saying appeals courts tend to delay judges on factual cases, while others said Judge Corley may have been mistaken in specifying the standard for stopping a deal.
In her 53-page order, Corley said it wasn’t enough for the FTC to argue that “a merger could reduce competition — the FTC must demonstrate that the merger is likely to significantly reduce competition.”
Legal scholars questioned that standard, saying U.S. antitrust law required the FTC to prove that the proposed deal “may” harm competition, not that it “will.”
To allay concerns from the FTC, Microsoft agreed to license “Call of Duty” to rivals, including a 10-year contract with Japan’s Nintendo Co (7974.T), contingent on completion of the fusion.
When U.S. antitrust agencies lose merger challenges in court, appeals are rare.
That said, the FTC appealed a ruling more than 10 years ago when it lost its battle against Whole Foods’ purchase of Wild Oats. The agency settled with the companies before the appeals court made a decision.
Reporting by Diane Bartz; Edited by Diane Craft, Lincoln Feast and Muralikumar Anantharaman
Our standards: The Thomson Reuters Principles of Trust.