Weil’s client Microsoft Corporation has defeated a request by the U.S. Federal Trade Commission to preliminarily enjoin Microsoft’s acquisition of Activision Blizzard, Inc., developer of the Call of Duty franchise, Candy Crush and other video games. The decision was issued following a five-day bench trial before Judge Jacqueline Scott Corley in the Northern District of California. Weil has been acting as global antitrust counsel in the merger review and worked closely with Wilkinson Stekloff, lead trial counsel, in the federal court proceeding. 

The FTC brought an administrative action against the transaction in December 2022, and fact discovery had closed before the FTC initiated its injunction action on June 12, 2023. Leveraging the work in the administrative proceeding, Microsoft sought and obtained a hearing that commenced before Judge Corley 10 days after the FTC filed suit. The administrative challenge to the transaction before an FTC Administrative Law Judge and the Commission is still pending at this time.

The FTC’s unsuccessful effort to enjoin the Microsoft/Activision merger is the first litigated federal court challenge of a vertical transaction by the agency in decades. The focus of the FTC’s claim was that Microsoft would withhold access to Activision games from rivals, including in particular Sony consoles now, and subscription services and cloud gaming post-acquisition. Over the course of the trial, Microsoft presented evidence that the strategic value of the deal lies in its potential to expand Microsoft’s mobile presence, and that it has no incentive to withhold content from Sony or any other providers. Moreover, Microsoft has entered into agreements with Nintendo, NVIDIA and several other cloud services providers to ensure that they are able to distribute Activision games for the next decade, and has made a similar offer to Sony. Judge Corley considered that evidence dispositive in rejecting the FTC’s claim that there was a risk that withholding Activision content could injure competition. 

The victory marks an important milestone in Microsoft’s effort to secure global regulatory clearance for the merger. Weil’s global antitrust team has been leading the regulatory effort before the FTC and foreign antitrust authorities, and working with local counsel has already gained the approval from the European Commission and nine other regulators worldwide. In addition, the Weil team is leading the appeal of the adverse decision by the UK Competition and Markets Authority. The FTC injunction effort was led by Wilkinson Stekloff, a D.C. litigation firm, with assistance from Weil D.C. antitrust partners Megan Granger and Michael Moiseyev, and associates Marie-Marie de Fays, Rachel Crosswell and Meg McKinley in Weil’s New York office, Chris Lee in Silicon Valley, and Tyler Phelps, Charlotte McFaddin, Nicole Payne, Hannah Berry and Nya Gavin in Washington, D.C. A Weil team led by London antitrust partner Jenine Hulsmann and Brussels antitrust partner Niklas Maydell continue to advise Microsoft on the CMA aspects of the deal.