Microsoft’s Tweaks to $69 Billion Activision Deal Avoid EU Probe

Microsoft Corp.’s rehashed $69 billion acquisition of Activision Blizzard Inc.is set to avoid another European Union probe, paving the way for closing of the gaming industry’s biggest ever deal as soon as Britain’s antitrust regulator gives its expected approval in the coming days.

The European Commission has concluded that changes aimed at winning over the UK Competition and Markets Authority don’t need to go through yet another approvals process in Brussels, according to people familiar with the matter who spoke on condition of anonymity. Such a step would have added even more delays to an on-off acquisition that once looked doomed to fail amid opposition from UK and US watchdogs.

After the CMA blocked the deal in April, Microsoft was given an unprecedented second chance to allay the agency’s concerns. The company offered to allow Ubisoft Entertainment SA rights to distribute Activision games in the cloud gaming market. While the remedy would apply everywhere except the European Economic Area, the commission, which approved the deal in May, doesn’t see any new competition concerns, according to the people.

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In blocking the deal earlier this year, the CMA had previously cited concerns with fair competition in the cloud gaming market, saying that the transaction could result in higher prices, fewer choices and less innovation for UK gamers.

The revised proposal, which CMA Chief Executive Officer Sarah Cardell called “structurally different” to Microsoft’s original pitch, was given a positive response by the agency. The CMA has sought feedback from the industry on the changes and, barring last-minute glitches, is expected to formally wave the deal through as soon as next week.

A spokesperson for the commission on Wednesday declined to comment beyond repeating an earlier statement that it’s “closely following the developments in the UK and assessing their potential impact” in the EU case. Microsoft declined to comment on the latest regulatory moves.

With hurdles in Europe set to be overcome, Microsoft still faces legal issues in the US. The Federal Trade Commission will move forward with its in-house trial against the acquisition after pausing that process over the summer, according to an order the agency issued in September.

The move means the FTC can technically continue to challenge the deal even after it closes but won’t likely derail it from going through by Oct. 18 — Microsoft’s current deadline.

--With assistance from Katharine Gemmell.

To contact the reporter on this story:
Samuel Stolton in Brussels at sstolton@bloomberg.net

To contact the editors responsible for this story:
Jeremy Hodges at jhodges17@bloomberg.net

Peter Chapman

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