The first pre-trial hearing in the Microsoft vs. FTC case is set to take place early next week, on January 3rd, according to Reuters.
As you already know from our previous reports, the US Federal Trade Commission decided to legally challenge Microsoft’s deal to acquire Activision Blizzard because it would ‘enable Microsoft to suppress competitors to its Xbox gaming consoles and its rapidly growing subscription content and cloud-gaming business. With control over Activision’s blockbuster franchises, Microsoft would have both the means and motive to harm competition by manipulating Activision’s pricing, degrading Activision’s game quality or player experience on rival consoles and gaming services, changing the terms and timing of access to Activision’s content, or withholding content from competitors entirely, resulting in harm to consumers.’
Microsoft responded just before Christmas with a 37-page document that includes claims of constitutional violations and more specific counter-claims to the FTC’s thesis. Microsoft’s lawyers also gave a direct stab to Sony (which has been vocal about the allegedly dire effects of the acquisition).
Sony may prefer to protect the revenues it gets from more expensive individual game sales, but the antitrust laws do not serve to insulate the dominant market player and its favored business model from competition.
According to the Reuters report, the FTC may find it challenging to prove its thesis in court. Andre Barlow, an antitrust lawyer at Doyle, Barlow & Mazard PLLC, said:
The legal precedent is not on the side of the FTC. We’ve had at least three judges that have accepted remedies by the merging parties.
Roger Alford, a law teacher at the University of Notre Dame, added:
Vertical merger challenges are really difficult to win, so it will be an uphill battle for the FTC.
On the other hand, the FTC’s attempt to block the transaction has likely emboldened other regulators in the United Kingdom and the European Union, both of which would be harder to challenge for Microsoft if they decided against the merger.
Meanwhile, the deal has been approved in Chile, following earlier approvals in Brazil, Saudi Arabia, and Serbia.
