UK MPs question why the CMA blocked Microsoft's $68.7B Activision Blizzard deal, CMA says it won't be 'turning a blind eye to anti-competitive mergers'

An image of the UK outlined in neon colours.
(Image credit: Getty Images)

Yesterday saw Microsoft's proposed $68.7 billion acquisition of Activision Blizzard given regulatory approval by the EU Commission. That's one major stumbling block out of the way, but Microsoft still faces an uphill battle in the UK and US (and other territories) to get the deal approved. In the UK's case the Competition and Markets Authority (CMA) dropped the bombshell several weeks ago that it would block the deal, which Microsoft and Activision Blizzard are extremely unhappy about. 

In the immediate aftermath of this decision, various executives from both companies tore at their garments while bemoaning their "darkest day" in the UK, issuing dire warnings about the country "not being open for business" and so on. In a way that's just chest-beating corporate talk from people who all stand to make a lot of money if the deal does go through, but it's also clearly made an impression on some members of parliament. The UK is currently governed by the Conservative party, which represents the traditionally pro-business right wing, but the Business and Trade Committee (BTC) has MPs from all parties, and its role is to scrutinise government.

This morning saw the CMA's chair Marcus Bokkerink and chief executive Sarah Cardell being grilled by the BTC about the decision (thanks, Eurogamer). The session lasted just over an hour (it can be viewed here) and the CMA bosses were asked to justify the regulator's decision, asked why the EU Commission came to a different decision, and even asked about whether it had considered the effect on the UK's global reputation.

"I understand the inference that when a decision is made that blocks a deal, there are questions over whether the UK is open for business," said Bokkerink. "All businesses know there's a very big difference between building a business, investing in a new business, investing in a startup, creating a new business: there's a big difference between that and buying an already-established, well-established firm with established positions. The two are not the same. We are vigilant, as it is our duty to be, to investments that consolidate an already-entrenched market power."

Bokkerink disagreed that there would be an impact on international confidence in the UK as a place to do business, and indeed argued that it should inspire confidence that the UK's regulator was not "turning a blind eye to anti-competitive mergers."

Sarah Cardell addressed the question about the EU Commission's decision, and emphasised that the core reason for blocking the deal was what the CMA saw as a problem in the cloud gaming market. She pointed out Microsoft's proposed remedy to this was all the 10 year deals it's been handing out like candy, and that while the EU considered this an appropriate solution, the CMA did not think this went far enough.

"[The EU Commission] agreed the deal would give rise to competition concerns, there's no difference between the CMA and EC there," said Cardell. "but the Commission has however concluded it appropriate to accept that remedy. They have their own test to apply and they've reached their own view, and obviously they're fully entitled to reach that view. But we remain of the view, from a UK perspective, that it was not appropriate to accept that remedy."

Cardell went on to outline the situation with the deal globally. "The final thing I would add just in terms of where we are across global jurisdictions is that the deal is also subject to review in the US," said Cardell. "The US Federal Trade Commission is suing to block the deal, it's a litigation approach in the US, [and] the current position in summary is that the CMA has concluded that the deal should be prevented, the US DoJ is also suing to block the deal, and the EU Commission has indicated that it will accept the remedy that has been tabled."

Asked about the substance of the disagreement over the remedy, Cardell said the parties were given multiple opportunities to engage with the CMA and offer remedies. "We want competition to flourish in that [cloud gaming] market," said Cardell, "and there was a real concern on the part of the group that, if you accepted the remedy offered by Microsoft [...] it would constrain how the market would evolve going forward. It would not replicate the conditions of full and free competition that we would see in the absence of the merger."

In layman's terms, the CMA thinks that were this deal to go through, it may well end up giving Microsoft a de facto stranglehold on a sector of gaming that, while not huge now, is almost certain to be a key market in future. Microsoft's proposed remedy to this, which is granting 10 year licenses for its games to anyone who wants them, does seem like a bit of a short-term solution in that context, even if it was enough to assuage the EU's doubts.

Rich Stanton

Rich is a games journalist with 15 years' experience, beginning his career on Edge magazine before working for a wide range of outlets, including Ars Technica, Eurogamer, GamesRadar+, Gamespot, the Guardian, IGN, the New Statesman, Polygon, and Vice. He was the editor of Kotaku UK, the UK arm of Kotaku, for three years before joining PC Gamer. He is the author of a Brief History of Video Games, a full history of the medium, which the Midwest Book Review described as "[a] must-read for serious minded game historians and curious video game connoisseurs alike."