UK reopens investigation into Microsoft's proposed acquisition of Activision

The UK launched a new investigation into Microsoft Corp.'s $69 billion acquisition of Activision Blizzard Inc. after the tech giant presented a significantly revised proposal to the country's antitrust agency, effectively reviving a transaction that had previously been believed to be dormant.

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In an unusual move, the Competition and Markets Authority stated that it was evaluating Microsoft's offer after it stated that it would transfer the rights to all existing and future Activision games published over the next 15 years to Ubisoft Entertainment SA. The European Economic Area is not included in the divestiture, according to the CMA.

A CMA merger decision being reconsidered at this level isexceptional, and it comes after a series of dramatic twists and turns in the deal's global regulatory fights. The agreement acquired surprising traction after the UK agreed to examine new information. In the United States, Microsoft prevailed against the Federal Trade Commission's legal objection to the acquisition. In May, the European Union approved the accord with behavioral treatments.

Bloomberg cited Sarah Cardell, head of the CMA, saying, "This is not a green light. We will carefully and objectively assess the details of the restructured deal and its impact on competition, including in light of third-party comments."

Furthermore, Microsoft missed the July 18 deadline under the initial deal—inked in January 2022—to consummate the acquisition as it overcame regulatory hurdles. Activision agreed to extend the deadline to October 18 to allow Microsoft more time to resolve the outstanding issues.

In July, Microsoft urged the UK regulator to rethink its April veto, claiming that the situation had "materially changed" as a result of the US court judgment and a later agreement to license Activision's blockbuster hit Call of Duty to competitor Sony Group Corp. The proposed divestiture may eliminate the need for the CMA to rule on that request.

Furthermore, the CMA has stated that it favors structural remedies to resolve concerns about anti-competitive transactions. To meet that objective, Microsoft and Activision have been looking for a divestment that will satisfy authorities without jeopardizing what Microsoft deems the acquisition's critical components. For example, the software behemoth has openly rejected outselling the Call of Duty property. The phase one investigation will now resume, and the CMA has set a statutory deadline of October 18.