FTC to appeal judge’s decision to let Microsoft move ahead with Activision deal

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The filing had no details on the appeal, which will go to the Ninth Circuit Court of Appeals on the West Coast.

Microsoft did not immediately respond to a request for comment.

U.S. District Judge Jacqueline Scott Corley in San Francisco rejected on Tuesday the Biden administration’s argument that the deal would hurt consumers by giving Xbox game console-maker Microsoft exclusive access to games including the best-selling “Call of Duty.”

Experts disagreed on Tuesday over whether the agency had good grounds for an appeal, with some saying that appeals courts tend to defer to judges on matters of fact but others said that Judge Corley may have erred in stating the standard for stopping a deal.

In her 53-page order, Corley said it was not enough for the FTC to argue that “a merger might lessen competition – the FTC must show the merger will probably substantially lessen competition.”

Legal scholars questioned that standard, saying that the U.S. antitrust law required the FTC to prove the proposed deal “may” harm competition, not that it “will.”

The deal is Microsoft’s biggest ever, and the largest in the videogame industry’s history. Microsoft’s shares gained 1.4% on Wednesday to close at $337.20.

To address the agency’s concerns, Microsoft agreed to license “Call of Duty” to rivals, including a 10-year contract with Nintendo, contingent on the merger closing.