Britain’s competition regulator has given new life to Microsoft’s proposed Activision Blizzard merger after throwing a lifeline to both companies on Wednesday.
The UK’s Competition and Markets Authority (CMA) has said that a restructured deal could satisfy its concerns, although it warned that negotiations were still ‘at an early stage’.
The CMA blocked the Microsoft-Activision deal earlier this year over cloud gaming competition concerns, but both companies are now looking to negotiate a new proposal that addresses the CMA’s concerns.
The CMA said that whilst merging parties don’t have the opportunity to put forward new remedies once a final report has been issued, they could ‘choose to restructure a deal which can lead to a new merger investigation.’
Microsoft and Activision have indicated that they are considering modifying the transaction, and the CMA has said it is prepared to engage with them over it.
CNBC reported yesterday that Microsoft and the CMA had agreed on a ‘small divestiture’ in order to address the cloud gaming concerns.
The European Union had also raised cloud-gaming competition concerns but approved the deal in June, thanks to 10-year licensing deals that Microsoft offered to cloud-gaming competitors, per AP.
Although the UK regulator’s decision to throw a lifeline to the deal’s embattled parties has surprised many advisers and competition lawyers, the CMA has remained adamant that discussions are still in the early stages and a new merger investigation may still be triggered.
Alex Haffner, competition partner at UK law firm Fladgate, said: ‘It is really an unprecedented and dramatic turn of events.’
According to an unnamed source close to the deal, the UK regulator was unwilling to stand out of touch with the two major jurisdictions of the European Union and the United States.
Jonathan Compton, partner at law firm DMH Stallard and a specialist in competition law, warned that Microsoft could face fresh inquiry from the FTC and/or the Commission should it restructure the deal.
The CMA has not given any further clarification on its u-turn or the new investigation, leaving many questions surrounding the agreement yet unanswered.