Microsoft, Activision address UK antitrust concerns

Microsoft and Activision Blizzard met with the UK's antitrust watchdog this week to hash out proposals over concerns their $69 billion deal would hamper competition in the video game industry, according to people familiar with the discussions, as global regulators step up their scrutiny of the controversial deal.

Lawyers for Microsoft attended a private hearing with the Competition and Markets Authority in London on Monday to discuss the regulator's provisional findings and assess the feasibility of proposed remedies, said the people, who asked not to be named discussing a confidential matter.

The CMA on Feb 8. took an initial view that the merger could result in higher prices, fewer choices and less innovation for UK gamers. It suggested a number of remedies, including the divestiture of the best-selling Call of Duty game or blocking the deal altogether. The agency did say it would consider other remedies that would safeguard rivals' access to the blockbuster shooter game.

The London meetings came after senior executives and lawyers from Microsoft and Activision gathered in Brussels last week for a closed-door meeting with European Union regulators to try and defend the deal. Microsoft president Brad Smith made it clear there that it wasn't “feasible or realistic” to do the deal unless it came with the blockbuster title Call of Duty.

Microsoft also said it's willing to pay a thirdparty monitor to oversee their compliance, the people said, a measure designed to relieve the CMA from having to devote resources to make sure the tech giant follows through on its promises. The UK watchdog in its provisional assessment left the door open for behavioral remedies. The company has previously said it had a long record of keeping its promises to regulators.

Spokespeople at Microsoft and CMA declined to comment. Activision Blizzard separately met with the CMA on Wednesday on the proposals. A further hearing with Sony Corp., the main opponent to the deal, is scheduled for next week, the people said.

Microsoft announced last week that it struck deals with Nintendo Co. and Nvidia Corp. to share Call of Duty with their platforms, with 150 million more people getting access if the deal is approved.

Competition authorities in the US and UK have soured on so-called behavioral remedies in recent years. In a speech this week, CMA Chief Executive Officer Sarah Cardell said behavioral remedies are disfavored “particularly in a sector where technology or business models are changing quickly.”

The London meetings were led by the case's independent inquiry group, with support from the case team, said the people. The CMA will publish its final decision on the merger on April 26.

The companies plan to submit a revised proposals to EU authorities this week following the closeddoor discussions, the people said. The commission extended the deal review deadline to April 25.

The U.S. Federal Trade Commission is locked in a lengthy legal process after suing to veto the transaction.