CMA on Microsoft-Activision merger: 'We're not doing bidding of other agencies'

CMA CEO Sarah Cardell says that the agency had 'limited' discussions with the FTC regarding the Microsoft-Activision merger before their decision to block.

6 minutes & 15 seconds read time

Competition and Markets Authority CEO Sarah Cardell refutes claims that the UK agency is somehow colluding with overseas regulators like the FTC in the United States as it relates to the Microsoft-Activision merger.

UK merger control agency CMA chose to block the $68.7 billion merger of Microsoft and Activision Blizzard King on the grounds of anti-competitive effects arising in the cloud gaming segment. The FTC has also chosen to sue to attempt to block the merger from happening on similar grounds, adding in potential harmful effects on the multi-game subscription and console market. While the European Commission also identified these concerns, the EC cleared and approved the merger because Microsoft's expansive cloud remedies satisfied anti-competitive worries.

Following both the FTC's and the CMA's decisions to block the merger on similar grounds, there have been reports that both agencies had affected and influenced their individual decisions. The FTC has refuted these claims on multiple occasions, with FTC Chair Lina Khan refuting claims that the FTC "outsourced policy" to overseas regulators, and FTC spokesperson Douglas Farrar denying claims from Activision-Blizzard CEO Bobby Kotick that the FTC and CMA had met specifically so that the FTC could convince the CMA to block the deal.

The Activision-Blizzard CEO has also said that the CMA had been "co-opted by FTC ideology," and that the British agency was being "used as a tool by the FTC."

For reference, in its final decision report where it determined that the Microsoft-Activision merger would lessen competition, the CMA confirmed that it had consulted with both the FTC in the United States and the European Commission:

"We have also been conscious of the international context, and have consulted with other competition authorities, including in the EU and US," the CMA said in the report.

Now in a Business and Trade Committee hearing with the British government, Competition and Markets Authority CEO Sarah Cardell elaborates on the timing of the CMA's discussions with the FTC and EC, and also describes the process in which these discussions took place.

Below we have a transcription of the pertinent details of the hearing as it relates to the Microsoft-Activision merger.


"On the international aspect of this, to what extent does the CMA discuss and coordinate with authorities considering the same merger in other jurisdictions.

"For example, did you interact with the FTC in the U.S. and the European Commission in the stages of examining this case? And what weight do you put on those discussions?"

CMA's Sarah Cardell answers:

"The starting point, I should emphasize, is that we are very mindful that post-Brexit we are looking at a significantly larger number of global transactions than we would have done previously. That means as a merger control authority, we are likely to be looking at deals alongside other authorities such as the European Commission and the U.S. authorities.

"So when we're looking at those deals, of course we are highly mindful of the fact that we want to ensure continuity and integrity of the analysis to the extent possible. Alongside that, our responsibility at the end of the day is to look at the impact to the UK. So we're balancing those two aspects.

"To answer your question then in terms of specifics and engagement, the extent to which we engage with other authorities on individual cases will depend on whether there are waivers in place from the merging parties that enable us to have specific conversations in relation to the deal.

"In this case, for example, we had a waiver in place that was granted by the parties that enabled us to have conversations with the European Commission at appropriate points."

Read Also: FTC Chair Lina Khan on Microsoft-Activision merger: 'We have to protect nascent markets'

When asked if the FTC in the U.S. was also part of these discussions, Cardell replied:

"I'm not sure it's appropriate to get into the specifics of the case. In the latter stages we did not have a waiver in place and therefore we were more restricted in our ability to have discussions."

When asked how late the latter stages of the CMA's process were, Cardell said:

"I don't have the specific details on that position chain."

Cardell was pressed further on a better definition on the timeline--did the CMA have talks with the FTC during X number of weeks or months before the CMA passed its decision?

Her response:

"It would have been general conversations with the FTC, but we were limited in the conversations that we had because there was no waiver in place."

The Committee posed an interesting question to Cardell: In the mergers and acquisitions space, it's seen that the CMA can act on future theories of harm because the process is not litigation, but in the United States, the FTC has to demonstrate evidence of harm due to its litigation process.

Cardell was asked to respond, and she said:

"The CMA makes its decisions based on our assessment of the merger and absolutely not--I would like to clarify this because there's been some misconceptions, particularly in the press--we're absolutely not doing the bidding of other agencies. We undertake our own analysis, and as I've mentioned before, we have our independent panel who are responsible for those decisions and take those responsibilities incredibly seriously.

"The forward-looking nature of merger control assessment is common to all jurisdictions. It's inherent in nature of a merger control assessment that you are looking at the impact of the merger. So essentially you are saying 'let's take the position in the market without the merger, how do you think that will evolve, how will competition evolve in the absence of the merger,' and then you compare the position in the event of the merger goes ahead, what impact that will have on competition.

"So that's a forward-looking assessment in any jurisdiction.

"We are in common with other agencies who draw in a whole range of different evidence. To do that, we will hear from the merging parties or third parties, we're looking at business plans, we will undertake economic analysis and draw on a whole host of different evidence.

"And we will undertake a forward-looking assessment because that's inherent in the regime.

"Our standard in the UK is that we have to establish on the balance of probabilities, if it's more likely than not, that the merger will resolve in a lessening of competition.

"The standard in the U.S. is a litigation standard, but the analysis is inherently the same. The evidential base will be inherently the same, and that's also true with the European Commission.

"Our assessment is then subject to judicial review by the Competition Appeal Tribunal in the UK. That is a rigorous process of judicial review. We take it incredibly seriously in making sure that our case is well-evidenced and our positions are well-founded."

Question on the CMA's discussions with the FTC:

"In relation to the issue of the US FTC, you weren't terribly clear about the extent of your communication. Are you happy to say details to the committee, in private if necessary, how many contacts you've had or have written with the US FTC in relation to the case."

We can provide further to the committee, yes.

"So you'll be able to say...over the last X number of months, these are the amount of discussions that were had?"

Subject to appropriate confidentiality, we will follow up with the committee, yes.

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Derek joined the TweakTown team in 2015 and has since reviewed and played 1000s of hours of new games. Derek is absorbed with the intersection of technology and gaming, and is always looking forward to new advancements. With over six years in games journalism under his belt, Derek aims to further engage the gaming sector while taking a peek under the tech that powers it. He hopes to one day explore the stars in No Man's Sky with the magic of VR.

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