Microsoft buys Activision Blizzard

[Ginger_Yellow]

At this stage, the CMA has identified the following possible structural remedies: (a) Requiring a partial divestiture of Activision Blizzard, Inc. This may be: (i) Divestiture of the business associated with Call of Duty;

(ii) Divestiture of the Activision segment of Activision Blizzard, Inc. (the Activision segment), which would include the business associated with Call of Duty;

(iii) Divestiture of the Activision segment and the Blizzard segment (the Blizzard segment) of Activision Blizzard, Inc., which would include the business associated with Call of Duty and World of Warcraft, among other titles.

(b) Prohibition of the merger.

15. Behavioural remedies are designed to address an SLC and/or its adverse effects by regulating the ongoing conduct of parties following a merger. The CMA will generally only use behavioural remedies as the primary source of remedial action where: (a) divestiture and/or prohibition is not feasible, or the relevant costs of any feasible structural remedy far exceed the scale of the adverse effects of the SLC;

(b) the SLC is expected to have a short duration; or

(c) behavioural measures will preserve substantial relevant customer benefits (RCBs) that would be largely removed by structural remedies.8

16. At this stage, the CMA considers that certain divestitures and/or prohibition are, in principle, feasible remedies in this case. The provisional SLCs are not time-limited, and while RCBs have not yet been assessed in detail, evidence on efficiencies received to date does not suggest that RCBs might be substantial.

17. In most CMA merger investigations, the detailed assessment of remedies begins only after the Provisional Findings – where the CMA provisionally concludes that a Merger gives to an SLC (or SLCs). While the CMA’s guidance notes that merging parties have the option to engage in discussions about potential remedies before the Provisional Findings (‘without prejudice’ to the question of whether the Merger gives rise to an SLC),9 there is no requirement for merging parties to do so – and the Parties in this case have not yet proposed any potential remedies to the CMA.

18. Microsoft has, however, informed us of existing and potential contractual arrangements with third-party platforms relating to access to Call of Duty. Accordingly, while none of the circumstances in which the CMA would select a behavioural remedy as the primary source of remedial action in a merger investigation (as summarised in paragraph 15 above) appear to be present, the CMA will also consider a behavioural access remedy as a possible remedy.

Edit: more on behavioural remedies:

As noted above, the circumstances in which the CMA might select a behavioural remedy as the primary source of remedial action are not present in this case. The two markets in which the CMA has provisiona lly found SLCs are multi-faceted and continue to develop. This is particularly the case in cloud gaming, where the customer offerings and business models of market participants are evolving rapidly. We are of the initial view that any behavioural remedy in this case is likely to present material effectivenessrisks. We invite the Parties to provide evidence on how these risks could be appropriately managed to ensure that any behavioural remedy is effective.