MAGGIE PAGANO: Game on for Britain’s competition watchdog
MAGGIE PAGANO: Game on for the UK competition watchdog as US regulators heed the Call of Duty
The special relationship just got more special. In a surprising twist, the US government has sided with the UK competition watchdog in its controversial bid to block Microsoft’s £55 billion acquisition of video game publisher Activision Blizzard.
US regulators at the Federal Trade Commission (FTC) have asked the courts to temporarily block Microsoft from completing its bid for Activision.
They claim the deal – which would be the largest in the video game industry’s history – would significantly reduce competition in the industry.
If Microsoft’s bid for the Call of Duty maker goes through, the combined group would be the third largest gamer in the world after China’s Tencent and Japan’s Sony.
The FTC order comes after the Competition and Markets Authority (CMA) blocked the deal in the UK on the grounds that it would hurt competition and hinder innovation, leaving gamers with less choice.
Blocked: US regulators at the Federal Trade Commission have asked courts to temporarily block Microsoft from completing its bid for Activision
Both Microsoft and Activision deny this, arguing that the shift to “cloud gaming” opens up the market.
Indeed, Microsoft claims that game groups will become more like streaming services – such as Netflix – with players becoming subscribers to a larger library rather than having to pay for individual games for their PC or console.
The European Commission bought the Microsoft story, aided by the computer giant promising to offer ten-year free licensing deals, giving European customers access to Actvision’s PC and console games.
But the CMA didn’t.
The UK regulator believed that the growth of the emerging cloud gaming markets is changing the industry so dramatically that the two combined companies would effectively become a monopoly.
The decision to block the acquisition in April drew outrage from Activision boss Bobby Kotick, who accused the CMA of being a “tool” of the FTC, while Microsoft president Brad Smith called the UK regulator a maverick and suggested that start-ups are better off in the EU than in the UK.
Technically, the CMA’s opposition to the deal should be enough to stop the takeover. But the FTC went to court Monday over concerns that Microsoft and Activision would try to close the deal this week, rather than wait for the July 18 deadline.
The main concern was that the two gamers were looking for ways to circumvent the veto power by reorganizing their respective UK businesses.
Smith — who is also suing the CMA — says he is now excited about the chance to present his case in federal court in August.
Much of Microsoft’s case will rest on convincing the court that the merger will not affect competition.
He will let his work be done. The FTC and the CMA mean business.
It is correct to say that they worked closely together on this deal. The two sides have met 26 times for talks.
But to describe the UK regulator as a ‘tool’ is grossly unfair hot air from Kotick.
What the FTC’s trip to court does show is that the CMA has won in its original decision, and how much more seriously our regulators are assessing the consumer impact of mergers than even a few years ago.
That’s not a bad thing.
The CBI’s bad show
Less than a third of the CBI’s direct members supported the group during last week’s final vote on whether or not the group would survive. That is even worse than in local elections.
After the vote, Director General Rain Newton-Smith claimed that 93 percent of members were in favour.
The CBI has always been secretive about membership but open about its reach, claiming it speaks on behalf of 190,000 companies and 7 million employees.
But inquiries from MPs on the Commons Business Committee show that the CBI has just 1,200 companies and 120 trade associations as members.
Achieving a turnout of 28 percent is pathetic, and an embarrassing admission for Newton-Smith.
Some humility and more transparency would help if she wants to rebuild credibility after the sexual misconduct scandals.
Outside
JP Morgan has followed Goldman Sachs, Exane and Morgan Stanley in cutting ties with Odey Asset Management.
JP Morgan was a key partner of Odey and a custodian of its assets. It will now have to find a new partner to take over these assets as a depositor.
Not an easy task during the sex drama swirling through the company.