Activision’s stock was up 1.1% before noon in New York, while Microsoft’s was up 0.7%. Ubisoft shares closed 8.8% higher in Paris, the largest gainer on the pan-European STOXX 600 (.STOXX) index.
In early 2022, Microsoft announced the largest gaming purchase in history, but the acquisition was banned by Britain’s competition regulator, who was concerned that the US computing giant would gain too much control of the burgeoning cloud gaming business.
After months of back-and-forth, the Competition and Markets Authority (CMA) said on Tuesday that it had maintained its original decision to refuse the agreement, compelling Microsoft to submit fresh terms.
This will be true globally, but not in Europe, where Brussels had already agreed to the original arrangement. Ubisoft will receive a non-exclusive license for Activision’s rights in Europe, allowing it to offer those games in that region as well.
According to a spokeswoman, EU antitrust officials are investigating whether Microsoft’s intention to obtain UK clearance will have an impact on its concessions to the European Commission.
Tom Smith, a partner at law firm Geradin Partners and former legal director at the CMA, said the sale appeared to be on track. “The process has been torturous, and there’s still possibly scope for the wheels to come off,” he told Reuters, “But we shouldn’t expect Big Tech deals to sail through nowadays.”
Microsoft said on Tuesday that it believed its latest plan was “substantially different” and that it anticipated the CMA to assess it by Oct 18.
The CMA stated that it would investigate the new arrangement using its standard procedure, with a Phase 1 process completed on October 18. If the CMA remains concerned about the impact on competition, it may launch a much more extensive Phase 2 investigation.
After the regulatory procedure went longer than planned, the two American corporations have already pushed back the transaction deadline by three months to Oct.18.
Alex Haffner, a competition partner at UK law firm Fladgate, believes Microsoft would not have taken this extra step if it did not believe it could have the new arrangement approved by the British regulator by Oct. 18.
COMPETITION THAT IS EFFECTIVE
CMA Chief Executive Sarah Cardell stated that the UK regulator would now extensively examine the new agreement, including soliciting feedback from third parties.
“Our goal has not changed – any future decision on this new deal will ensure that the growing cloud gaming market continues to benefit from open and effective competition driving innovation and choice,” she stated in a statement.
The CMA will claim that Microsoft’s substantial concession demonstrates the success of its strong approach to technology agreements since becoming a standalone regulator following Britain’s exit from the European Union.
However, competition attorneys have claimed that the disagreement with Brussels and the back-and-forth over the contract have created significant ambiguity in the regulatory landscape.
The US Federal Trade Commission also opposed the merger, but its attempts to stop it were unsuccessful. The European Union, on the other hand, approved it after Microsoft agreed to license Activision’s games to other platforms.
The CMA announced its intention to block the acquisition in April and was preparing to go to court to defend its position.
It did, however, resume its probe in July after Microsoft stated that obligations agreed by the European Union and a new agreement with Sony represented a significant change.
The CMA said on Tuesday that after reviewing the adjustments, it still did not approve them and would block the original agreement, requiring the American conglomerate to come back with fresh terms.
Microsoft stated that Ubisoft would acquire the rights through a one-time payment and a market-based wholesale pricing system, including a usage-based pricing option.
At 1430 GMT, Ubisoft’s Paris-listed shares were up over 10%.