U.K.’s CMA blocks Microsoft-Activision deal

The U.K.’s CMA said it will block Microsoft’s (MSFT) proposed acquisition of Activision (ATVI). It said: "The decision to prohibit the Microsoft/Activision merger should be viewed in that context. Gaming is the UK’s largest form of entertainment, and cloud gaming is the fastest growing gaming market. Microsoft already has important advantages in this market: it owns Windows, by far the leading PC operating system on which most PC games run; it has a global cloud infrastructure; and it has a strong gaming console and collection of games. No other cloud gaming operator has this combination of advantages, which partly explains Microsoft’s current UK market share of between 60-70%. A CMA independent inquiry group found that Microsoft would have the incentive to withhold Activision’s portfolio of leading games from competitors after the merger, and that this would substantially weaken the competitive dynamics in cloud gaming. Whilst the inquiry group considered carefully a remedy proposed by Microsoft to constrain its behaviour, it found that the remedy would have been ineffective in remedying the loss of competition. Moreover, implementing the ineffective remedy would have replaced market forces with ongoing regulatory obligations overseen by the CMA, when competitive forces in a free market are much better placed to achieve the right outcome for competition and consumers. As such, they concluded that prohibiting the transaction was the only effective and proportionate way to protect competition. Other authorities have investigated similar concerns, and the US Federal Trade Commission has issued an administrative complaint seeking to block this merger." Reference Link