The UK’s Competition & Markets Authority (CMA) has recently confirmed that they will be blocking Microsoft’s proposed takeover of video game-maker Activision. The US-based company had put forward plans in 2020 to acquire the publisher and developer, which is best known for its Call of Duty franchise, for an estimated $10billion.
However, the CMA has recently weighed in on Microsoft’s proposal and have made the decision to prevent the landmark merger. According to the CMA, the deal would result in decreased competition, as both companies operate in the same area of the market. The merge would have resulted in the two firms in comprising ‘a substantial portion’ of the industry, potentially damaging the competitive landscape and making it difficult for other firms and consumers to find alternatives.
The findings by the CMA have been welcomed by many in the industry, as Microsoft and Activision are both set to develop their own version of the popular Call of Duty franchise; something which the CMA reports could limit choices and drive upprices.
In response to the CMA’s decision to block the merger, Microsoft have announced plans to renegotiate the deal in order to offer a solution that is compliant with UK competition law. In response, the CMA has opened an additional investigation into the restructured deal proposal proposed by Microsoft.
Although it is unclear what outcome this will provide, many in the industry speculate that Microsoft will need to make significant alterations to their proposal in order to be approved by the CMA. The result could have ramifications for the gaming market, as the merger could put two of the biggest companies in the industry into one portfolio, potentially causing a seismic shift in the balance of power.
For now, the CMA’s decision to block Microsoft’s proposed takeover of Activision signifies a major victory for competition law and consumer choice in the UK, and we remain hopeful that the additional probe into the restructured proposal will also result in a result in favour of the consumer.
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