A US federal court on Thursday rejected the Federal Trade Commission's (FTC) request that it order Microsoft to temporarily hold off on closing its $69 billion purchase of Call of Duty maker Activision Blizzard, a court filing showed.
A federal judge had previously ruled for Microsoft on
Tuesday, saying the agency had failed to show the deal would be illegal under
antitrust law. The FTC appealed that loss late on Wednesday, and Microsoft said
it would fight that appeal.
Earlier on Thursday, the FTC asked for an order preventing
the deal from closing until after the 9th US Circuit Court of Appeals ruled on
a separate stay request filed with that court.
Any outstanding regulatory hurdle makes it more likely the
agreement between Microsoft and Activision will expire on July 18 without the
deal having been completed. After July 18, either company will be free to walk
away unless they negotiate an extension.
The FTC had asked for the court to decide on the pause as
soon as possible, noting that an existing temporary restraining order on the
deal was meant to end just before midnight on Friday.
"We're disappointed that the FTC is continuing to
pursue what has become a demonstrably weak case, and we will oppose further
efforts to delay the ability to move forward," Microsoft President Brad
Smith said earlier in an emailed statement.
In its motion for the pause to Judge Jacqueline Scott
Corley, the FTC argued her denial of a preliminary injunction to halt the deal
"raises serious, substantial issues for the Court of Appeals to
resolve."
"The FTC asks this Court to enjoin the merger at issue
pending resolution of the FTC's appeal to the Ninth Circuit Court of Appeals.
The motion is denied," the judge said in the order late on Thursday.
The FTC had said it was seeking a preliminary injunction to
temporarily stop the deal until an internal FTC judge could assess it. But
Corley applied the standard needed to permanently stop the deal instead, which
the agency argued was inappropriate.
The FTC had also said the judge erred in assessing the
deal's effect on multi-game subscriptions and in how much credit she gave
Microsoft for striking deals with rivals in order to save the proposed
transaction.
To address the agency's concerns, Microsoft had agreed to
license Call of Duty to rivals, including a 10-year contract with Nintendo,
contingent on the merger closing.
The deal, the largest in the history of the video game
industry, was also struggling in Britain until this week. After the ruling in
California, Britain's Competition and Markets Authority, which had opposed the
transaction, said a restructured deal between Microsoft and Activision Blizzard
could satisfy its concerns, subject to a new investigation.
It is rare for a merger fight to go to an appeals court.
That said, the FTC appealed a ruling more than 10 years ago when it lost its
fight against Whole Foods' purchase of Wild Oats. The agency settled with the
companies before the appeals court made a decision. © Reuters