WASHINGTON (Reuters) –
By Mike Scarcella
The U.S. Federal Trade Commission’s (FTC) attempt to temporarily block Microsoft’s $69 billion acquisition of Activision Blizzard, the maker of “Call of Duty,” is facing significant challenges, according to legal experts. The largest-ever deal in the gaming industry was approved by U.S. District Judge Jacqueline Scott Corley, who rejected the Biden administration’s argument that it would harm consumers. However, the FTC has appealed this decision.
The appeal will be heard by the San Francisco-based 9th U.S. Circuit Court of Appeals, which has various options to consider. Legal professionals have noted the rushed timing and the requirement to prove any alleged errors by Judge Corley, which could potentially hinder the FTC’s efforts to enforce antitrust laws.
The FTC has requested a preliminary injunction from the appeals court to halt the deal while the agency prepares to challenge it in court in August. The FTC argues that Judge Corley’s decision allowing Microsoft to proceed with the acquisition misapplied the legal standard.
While some legal experts find the FTC’s argument compelling, they also acknowledge the lack of certainty for success. Merger cases of this nature are relatively rare in federal courts.
The temporary order issued by Judge Corley expires on Friday at 11:59 p.m. Pacific Time (0659 GMT on Saturday), and therefore, it is expected that the appeals court will issue an order on Friday. Microsoft and Activision intend to close the deal on July 18.
Several legal experts suggest that the appeals court may “administratively” halt the deal for a few days to allow the panel of judges sufficient time to study the dispute and make a ruling. Alternatively, the court could grant the FTC’s request for an injunction, which would result in a more extended pause, or outright deny it.
Brad Smith, President of Microsoft, has referred to the FTC’s lawsuit as a “demonstrably weak case” and expressed the company’s opposition to any further delays in proceeding with the acquisition.
Kathleen Bradish, who oversees legal advocacy at the American Antitrust Institute, believes that the FTC has valid grounds to question Judge Corley’s order. Bradish also stresses the potential implications of any mistakes made by Judge Corley, which could affect future challenges in vertical merger cases, involving companies from different parts of the same supply chain.
According to antitrust scholar Sean Sullivan, an appeals court can overturn a lower court’s opinion based on perceived errors of law. Sullivan, however, cautions that not every alleged error is an actual error, and not every actual error warrants intervention.
The appeals court is expected to act swiftly, although the time constraints are a result of the FTC’s own actions. Douglas Ross, an antitrust law professor at the University of Washington, suggests that the appeals court may be unsympathetic to the FTC’s argument for urgency when the blame lies solely with the FTC for filing the case at the agency’s in-house forum instead of federal court back in December.
In a similar case in 2007, the FTC attempted to block Whole Foods’ merger with Wild Oats. The D.C. Circuit issued a temporary stay before allowing the merger to proceed.
“Although the FTC has raised concerns about the district court’s decision, it has not provided sufficient evidence to show that it is likely to succeed with its appeal,” stated the panel from the District of Columbia Circuit. Ultimately, Whole Foods settled with the FTC.
(Reporting by Mike Scarcella; Editing by Mark Potter)
Credit: The Star : Tech Feed
