On June 16, Microsoft, currently in the process of acquiring Activision, is facing two impending legal battles against U.S. antitrust authorities who are determined to block the $69 billion deal.
Microsoft has expressed the urgency for a prompt decision, highlighting that the purchase agreement has a termination date of July 18. However, it's worth noting that such dates are often extended, as was the case with AT&T's acquisition of DirecTV in 2015 when the termination date was extended twice.
The first legal fight will take place in a federal court in California, commencing on June 22 and concluding on June 29. The second battle, scheduled to begin on August 2, will occur before an administrative law judge from the Federal Trade Commission (FTC), if it proceeds as planned.
Regarding the California hearing, there are four potential outcomes:
- Judge Jacqueline Scott Corley may grant the preliminary injunction, leading to the termination of the deal. Historically, most companies that have lost at this stage have abandoned their proposed transactions.
- The judge may grant the preliminary injunction, prompting the companies to extend the deadline beyond July 18, and continue the legal battle before an FTC administrative law judge in August.
- Corley may deny the preliminary injunction, resulting in the FTC dropping its fight. This occurred most recently with Meta Platforms' acquisition of VR content maker Within Unlimited, where the FTC lost in federal court and withdrew its internal challenge.
- The judge may reject the preliminary injunction, and the agency chooses to pursue further legal action. In this scenario, the case can be appealed to a federal appeals court. Regardless, arguments about the deal are scheduled to be heard by an administrative law judge at the FTC in August.
If the case proceeds to the FTC judge Michael Chappell as planned in August, several potential outcomes arise:
- If Microsoft emerges as the victor, the FTC staff can request Chair Lina Khan and the commissioners (who voted in favor of pursuing the case) to overturn the verdict. Subsequently, the case could be escalated to a federal appeals court. A similar situation occurred with Chappell's ruling against the agency in the Illumina's acquisition of Grail, where Khan and the commissioners overturned the decision, and the case is now being reviewed by an appeals court.
- If the FTC wins the case, the companies also have the option to appeal to the commission, seeking a reversal of the decision. If necessary, they can then pursue the case in an appeals court.
The legal battles ahead will determine the fate of Microsoft's acquisition of Activision and the involvement of the U.S. antitrust authorities in the deal.
