Microsoft’s bid to acquire Diablo 4 publisher Activision Blizzard has hit another snag. The US Federal Trade Commission just won a temporary restraining order to block the deal. On Tuesday, a US judge sided with the US FTC’s request to block Microsoft’s proposed acquisition of Activision Blizzard.
US District Judge Edward Davila has scheduled a two-day evidentiary hearing on the FTC’s request for a preliminary injunction against the finalization of the deal. The measure retains the status quo and prevents the closure of the deal until the FTC’s lawsuit gets a verdict.
The FTC filed a temporary restraining order and preliminary injunction on June 12th as the antitrust regulator is concerned that Microsoft may be moving to close the deal despite not getting approval from the UK CMA. The proposed acquisition has been approved in several countries including Japan, Saudi Arabia, and Brazil. The European Commission also gave its approval for the merger.
"Until recently, Defendants indicated that they would not complete the proposed acquisition unless and until they received clearance from European regulators, including in proceedings before this Court in a private case challenging the proposed acquisition," the FTC's filing states.
"Press reports began circulating suggesting that Defendants were seriously contemplating closed the proposed acquisition despite the pending administrative litigation and the CMA orders." If proven true, this would be a really poor look for both companies.
The temporary restraining order prevents Microsoft and Activision from closing the deal until "until after 11:59 pm PT on the fifth business day after the court rules on the FTC's request for a preliminary injunction." The Federal court will then be conducting a hearing to apply a longer preliminary injunction that will prevent finalization of the deal until all the legal proceedings are completed.
If the court grants the FTC a preliminary injunction, Microsoft will have to wait for the full complaint to be heard, given a verdict, and appealed (if necessary). If the court doesn’t side with the FTC then Microsoft may opt to get the deal finalized to avoid paying a hefty penalty.
Activision Blizzard CEO Bobby Kotick, who is still at the center of the gaming world's largest corporate sexual harassment controversy, welcomed the move from the FTC. "This is a welcome update and one that accelerates the legal process. We will now have the opportunity to more quickly present the facts about our merger."
He adds, "Our excellent legal team has been preparing for this move for more than a year, and we're ready to present our case to a federal judge who can evaluate the transaction on the merits. The facts are on our side, and we will continue to keep you updated throughout the process."
Microsoft and Activision are required to submit their opposition to the preliminary injunction request by June 16. The FTC will have until June 20 to submit its reply. The evidentiary hearing has been set for June 22 and 23.
