US judge temporarily blocks Microsoft acquisition of Activision

Photo courtesy of Simon Dawson, Reuters

Article courtesy of David Shepardson, Reuters

WASHINGTON. - A U.S. judge late on Tuesday granted the Federal Trade Commission's (FTC) request to temporarily block Microsoft Corp's (MSFT.O) acquisition of video game maker Activision Blizzard (ATVI.O) 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 in San Francisco. Without a court order, Microsoft could have closed on the $69 billion deal as early as Friday.

The FTC, which enforces antitrust law, asked an administrative judge to block the transaction in early December. An evidential hearing in the administrative proceeding is set to begin Aug. 2.

Based on the late-June hearing, the federal court will decide whether a preliminary injunction - which would 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 on 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 a preliminary injunction is warranted and preserve the FTC’s ability to obtain an effective permanent remedy in the event that it prevails in its pending administrative proceeding."

Microsoft and Activision must submit legal arguments opposing a preliminary injunction by June 16; the FTC must reply on June 20.

Activision, which said Monday the FTC decision to seek a federal court order was "a welcome update and one that accelerates the legal process," declined to comment Tuesday.

Photo courtesy of Dado Ruvic, Reuters

Microsoft said Tuesday "accelerating the legal process in the U.S 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 swiftly."

The FTC declined to comment.

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

The FTC has argued the transaction would give Microsoft's video game console Xbox exclusive access to Activision games, leaving Nintendo (7974.T) consoles and Sony Group Corp's (6758.T) PlayStation out in the cold.

Microsoft's bid to acquire the "Call of Duty" video game maker was approved by the EU in May, but British competition authorities blocked the takeover in April.

Microsoft has said the deal would benefit gamers and gaming companies alike 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 U.S. President Joe Biden.