Microsoft buys Activision Blizzard

Can MS still close the deal if it passes everwhere except the UK? I’ve been hearing different opinions on that. I know at least one M&A lawyer familiar with UK law said MS would have to break the law and pay a 5% fine (of their total earnings) and he doesn’t think they will do that. But I don’t know if they have any real options because as I understand it the deal was predicated on it passing China, CMA, EU, and FTC, no where else matters. Also, it seems they would have to own ABK to bypass the UK, but if it doesn’t pass the CMA then they don’t own it?

The agreement to acquire Activision is conditional on it passing it the CMA. They could reopen the agreement, but that might need a new shareholder vote (and they’d probably want to renegotiate the price, which definitely would).

Yes, it’s illegal for them in the UK to acquire Activision.

I don’t know what you’re asking. They can just pull out of the UK regardless of whether they acquire ABK, but that seems unlikely, and doesn’t give them any benefit other than spite unless they do eventually acquire it.

The 2002 legislation doesn’t really envisage international takeovers (because those weren’t a CMA competence back then). If MS get it past the FTC and its just the CMA it will be interesting to see what happens - I’m sure MS would want to find some kind of deal but I’m not sure there’s a mechanism to reopen the decision.

Or MS might win the appeal tribunal on the “wrong question” test, which would force a repeat of the process.

Is it legal though? The Chancellor leaning on a statutorily independent CMA. He is not saying “this is more information you need to look at”. He is questioning the weighing CMA should put on its decision, that economic growth should be given more weight. If CMA listened, it could be charged with fettering of its discretion, which is a kind of error of law.

I’m not a lawyer, much less a British barrister, but my guess is even if it’s technically a violation to apply political pressure, such things do happen and can absolutely be effective. We may yet see the UK reverse that decision. If they don’t, though, I see no path forward.

Sony would have reason to take CMA and the Chancellor to court though, so it is not a nothing-burger. Yeah in some jurisdiction it is entirely a political decision, but in case of a statutorily independent CMA approving the merger, the law-makers designed the process to be politically independent.

I’m kind of surprised EC approved the merger. As consumer I want to see more cross-platform titles, I want more choices. And I can’t ever see twitchy CoD popular on the cloud, ever. It is just physics that there will be extra latency played on the cloud, on top of the usual latency of the internet.

The lawmakers never designed the process to apply to takeovers like this (large multinational takeovers which perhaps have more of a political dimension) - they expected a different process to apply.

The leaning happened after the decision, so hard to see how it would be a basis for an appeal (not to mention the chutzpah of arguing that political pressure in favour of a deal should be a cause for overturning the rejection). The only way the pressure could even in principle affect the outcome is if the CAT sends it back for some other reason and the CMA has to reach a new decision. The CMA is not going to unilaterally withdraw the decision. I’m not sure it even can.

On the subject of “bypassing” the CMA, Meta just sold Giphy.

Yeah, but that was “only” $300M and Facebook probably feels differently about non-LLM acquisitions in 2023 than 2020. MS still wants Activision, and there’s a penalty if the purchase doesn’t go through too.

Your point is made, though. FB was forced to comply.

Florian Mueller aka Fosspatents just dropped a bombshell! Apparently, MS can waive the CMA requirement to pass the deal any time they want! So if push comes to shove, they can pass the deal without CMA approval. Obviously, they want UK to be a part of the market so they are appealing the decision, but they will probably close the deal in the next month or two regardless. See link below:

Florian Mueller on Twitter: “Too many people still believe that the #Microsoft-#ActivisionBlizzard merger agreement is the reason why CMA approval is required. I’ve said countless times that Microsoft could WAIVE that requirement anytime. Still, there are people who don’t believe it, so here’s definitive… https://t.co/MNkvYHdRdM” / Twitter

None of that is at all relevant as to whether MS can afford to ignore the CMA ruling (spoiler: It can’t).

I haven’t heard Florian Mueller‘s name in a long time. Can’t believe that troll is still at it

I’m not so sure ol’ Florian has a good point. You can claim anything in a document. The question is whether or not the CMA would agree and then the courts.

Microsoft could waive the requirement that the CMA approve the deal… but they couldn’t “waive” the penalties that would be leveled against them.

Yeah, I don’t know who that guy is, but Microsoft is not going to close a deal that doesn’t allow them to sell product in the UK.

He’s a guy who has/had a history of discussing legal matters of companies like Oracle and MS while being cagey about working for them as a pad consultant.

Some old links, because it’s been a while

https://m.slashdot.org/story/167803

Another hurdle passed. This time the easy one.

I think if it passes in the US, MS can and will pull out of the UK if necessary.