US judge temporarily blocks Microsoft’s acquisition of Activision

Matt Mills McKnight/Reuters

Microsoft signage is seen at the company’s headquarters in Redmond, Washington, US, on January 18, 2023.

A US judge late on Tuesday granted the Federal Trade Commission̵[ads1]7;s (FTC) request to temporarily block Microsoft Corp’s acquisition of video game maker Activision Blizzard and set a hearing next week.

U.S. District Judge Edward Davila scheduled a two-day evidentiary hearing on the FTC’s request for a preliminary injunction for June 22-23. June in San Francisco. Without a court order, Microsoft could have ended the $69 billion deal as early as Friday.

The FTC, which enforces antitrust laws, asked an administrative judge to block the transaction in early December. An evidentiary hearing in the administrative proceeding will begin on August 2.

Based on the hearing at the end of June, the federal court will decide whether a preliminary injunction – which will last during the administrative review of the case – is necessary. The FTC sought the temporary block on Monday.

Davila said the temporary restraining order issued Tuesday “is necessary to maintain the status quo while the complaint is pending (and) preserve this court’s ability to order effective relief in the event it determines that a preliminary injunction is warranted and preserve the FTC’s ability to obtain an effective permanent remedy in the event that it prevails in the ongoing administrative proceeding.”

Microsoft ( MSFT ) and Activision ( ATVI ) must file legal arguments against a preliminary injunction by June 16; The FTC must respond by June 20.

Activision, which said Monday that the FTC’s decision to seek a federal court order was “a welcome update and one that speeds up the legal process,” declined to comment Tuesday.

Microsoft said Tuesday “accelerating the legal process in the United States will ultimately bring more choice and competition to the gaming market. A temporary restraining order makes sense until we can receive a decision from the court, which is moving quickly.”

The FTC declined to comment.

Davila said the bar on closure will remain in place until at least five days after the court rules on the preliminary injunction request.

The FTC has argued that the transaction would give Microsoft’s Xbox video game console exclusive access to Activision games, leaving Nintendo consoles and Sony Group Corp’s PlayStation out in the cold.

Microsoft’s bid to buy the “Call of Duty” video game maker was approved by the European Union in May, but British competition authorities blocked the takeover in April.

Microsoft has said the deal will benefit both players and game companies, and has offered to sign a legally binding consent decree with the FTC to provide “Call of Duty” games to rivals, including Sony, for a decade.

The case reflects the muscular approach to antitrust enforcement taken by the administration of US President Joe Biden.

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