Friday, November 18, 2022

European Commission extends deadline for Microsoft-ActivisionBlizzard merger review by 10 days, presumably at parties' request: potential harbinger of positive outcome

Today the European Commission announced the extension of its deadline for the merger review of Microsoft's $69 billion acquisition of Activision Blizzard King by 10 working days to April 11, 2023. According to the website of the EC's Directorate General for Competition (DG COMP), this decision was made under Article 10(3)2 of the EU's Merger Regulation.

In my interpretation of the statute, the basis must have been a request by the notifying parties:

  • If formal commitments are offered, the deadline is extended by 15 (not 10 as here) working days, and only if such commitments are offered at least 55 working days after the initiation of proceedings. Here, it's clearly too early for that: the transaction was notified on September 30, and Phase 2 began last week.

  • The second subparagraph of Article 10(3) allows for an extension of up to 20 working days at the request of the notifying parties, provided that such request is made "not later than 15 working days after the initiation of [Phase 2] proceedings." Also, the commission can always agree on such extension with the parties.

Extensions under the second subparagraph (which are requested by the parties or agreed upon by the Commission and the parties) do not require any formal offer of commitments, nor does anything prevent parties from offering commitments and (previously or subsequently) requesting (or agreeing with the Commission on) an extension.

A few days ago, Microsoft Gaming CEO Phil Spencer restated in the clearest and most specific terms to date that Microsoft is prepared to provide reasonable assurances to Sony regarding the continued availability of Activision's Call of Duty on the PlayStation. While Microsoft did not offer commitments during Phase 1, the combination of today's procedural announcement by the Commission and Microsoft's apparent willingness to find a solution makes me--an app developer who has complained over Apple's and Google's app distribution terms--hopeful that we will indeed see a mobile app store by Microsoft that could pose a formidable challenge to Google's and Apple's app store monopolies. According to a court filing by Epic Games, Google was afraid of Activision Blizzard King working on an Android app store of its own.

It is my personal opinion that Microsoft-ActivisionBlizzard is a case for unconditional clearance: the issues are numerical (mind-boggling numbers), not legal. Also, the Commission has sometimes cleared mergers not on the basis of formal commitments but public statements that satisfactorily addressed the Commission's concerns. That is a compromise between unconditional and formally conditional clearance. There are various possible outcomes here. It's too early to tell what the result will be in this case, but at least for now I just can't see why the extension of the deadline by 10 working days would be bad news (unless you're Google and want to renew your $360 million three-year deal with Activision Blizzard King).