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Hurdles Pile Up for FTC in Microsoft-Activision Merger Legal Challenge

The FTC's appeal against the mega Microsoft-Activision merger faces significant legal obstacles, as the industry braces for an unprecedented gaming deal.

FTC building
FTC building

Impediments on the FTC's Path

The US Federal Trade Commission (FTC) is staring down significant legal hurdles as it attempts to temporarily block Microsoft's monumental $69 billion acquisition of Activision Blizzard, the creators of "Call of Duty", according to law experts.

Judge Greenlights Record-Breaking Deal

Despite the Biden administration's claims that the merger could negatively impact consumers, US District Judge Jacqueline Scott Corley has given the green light to the gaming industry's largest deal ever, sparking an appeal from the FTC.

Court Weighs FTC's Rushed Appeal

A federal appeals court now faces a plethora of options in handling the FTC's appeal. However, legal professionals suggest the rushed timing and the necessity to demonstrate a significant error by the district court judge could obstruct the FTC's efforts to block the deal.

FTC Urges for Preliminary Injunction

On Thursday night, the FTC urged the 9th US Circuit Court of Appeals, headquartered in San Francisco, to issue a preliminary injunction. This action would freeze the merger while the agency gears up to challenge it in a trial scheduled for August.

The FTC, in its appeal, argues that the order permitting Microsoft to proceed with the acquisition held the agency to an unreasonably high legal standard, a contention that some legal experts agree with, despite uncertainties regarding the success of this argument.

Temporary Prohibition Order Expires

Judge Corley's temporary order ceases at 11:59 p.m. Pacific Time on Friday, creating an expectation for the appeals court to issue an order that same day. The Microsoft-Activision deal is scheduled to close on July 18.

Possible Outcomes for the Appeals Court

The appeals court could either administratively block the deal for a few days to allow further evaluation, grant the FTC's request for an injunction, leading to a longer pause, or outright deny it.

Microsoft logo
Microsoft logo

Microsoft Opposes FTC Lawsuit

Microsoft President Brad Smith has publicly criticized the FTC's lawsuit as "a demonstrably weak case" and pledged to resist any further attempts to delay the merger's progression.

Potential Impact on Future Mergers

Kathleen Bradish, the head of legal advocacy at the American Antitrust Institute, said any misstep by Judge Corley could not only affect this case but potentially alter the course of future vertical merger challenges.

FTC Blamed Rush

Critics, such as Douglas Ross from the University of Washington's law school, attribute the rush against time to the FTC. Ross points out that the FTC could have filed the case in December but chose to go through their in-house forum, where preliminary injunctions can't be issued.

FTC's History with Injunction Requests

In 2007, the FTC requested the D.C. Circuit to issue a preliminary injunction to halt the merger of Whole Foods with Wild Oats. After a brief administrative stay, the court allowed the merger to proceed, which may set a precedent for the current case.

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