A look into the CMA's decision on the Microsoft-Activision merger​

By Jake Rickman
Image credit - Sergei Elagin / Shutterstock.com​

What do you need to know this week?

On 26 April, the UK’s Competition and Market Authority (CMA) published its final report on the proposed acquisition of video games publisher Activision by computing giant Microsoft and its effect on market competition. The report concludes that the merger stands to substantially reduce the competition in the cloud gaming services.

As a result, the CMA intends to use its powers to block the merger.

The acquisition, announced in January last year , was valued at nearly $70bn and would have been the largest transaction of its kind in the video game and e-sports market.

Both Microsoft and Activision have announced their plans to independently challenge the market regulator’s decision, with Activision having instructed one of the most well-regarded public law barristers in the country, Lord David Pannick KC.

On Monday (15 May), the EU’s competition authority, the European Commission, announced it had reached a different decision than its UK peers. The results of the United States’ Federal trade Commission investigation into the merger have not yet been released. Why is this important for your interviews?

The report, which is over 400 pages long and available here , provides detailed reasoning for the CMA’s decision. It evaluates and dismisses several remedies proposed by Microsoft to counteract any impact on market competition.

If you are interested in competition law, reviewing aspects of the report is an excellent way to familiarise yourself with one of the most high-profile CMA decisions in history. Studying the report would also give you considerable ammo for interview talking points.

One particular line of inquiry that indirectly arises from this development is the notion that this is further evidence that UK’s regulators are hostile to big businesses — a line of reasoning that both Activision and Microsoft advanced in their public statements following the CMA’s decision.

Given that the EU reached a different conclusion than the CMA, this charge might prove particularly persuasive considering the context of other criticisms levied by business leaders against the UK’s public company listing regime and ongoing concerns about the consequences of Brexit.

How is this topic relevant to law firms?

Four out of five of the UK’s so-called Magic Circle firms are ranked as Band 1 firms for competition law: Clifford Chance, Freshfields, Linklaters, and Slaughter and May.

Hogan Lovells, Allen & Overy, Ashurst, and Herbert Smith Freehills are ranked Band 2.