The endless saga of the litigation between the Federal Trade Commission (FTC) versus Microsoft and Activision Blizzard has taken a dramatic turn today.
The US Court of Appeals denied the regulator's request for emergency injunctive relief hours before the temporary restraining order keeping the deal from closing is set to expire on Friday, July 14, at 11:59 p.m. PDT after a Federal Judge denied the preliminary injunction earlier this week.
The order does not explicitly state the court's reasoning besides implying that the FTC has not met the standard to enjoin the deal pending appeal according to case law.
This means that, at least for now, all obstacles in the United States to the closure of the merger have been removed. The appeal can still theoretically go through, but a closure of the deal before the ruling would effectively negate it.
The matter is still pending in the United Kingdom before its own regulator, the CMA, but a negotiation between the parties is ongoing. The FTC can still go through its administrative process later this year to try to reverse the situation, but this involves considerable hurdles.
Microsoft reacted via President Brad Smith, who commented via Twitter.
We appreciate the Ninth Circuit's swift response denying the FTC's motion to further delay the Activision deal. This brings us another step closer to the finish line in this marathon of global regulatory reviews.
From the Activision side, CCO and EVP of Corporate Affairs Lulu Cheng Meservey also commented:
The FTC’s desperate attempt to block our merger with Microsoft has been denied again, now by the Ninth Circuit.
As the House Judiciary Committee highlighted yesterday, Lina Khan has been 0-4 in merger cases.
Despite the FTC’s waste of taxpayer money on protecting the entrenched market leader, our deal will bring more games to more players and more platforms than ever before.
If you're interested in reading more about the hearings that led to the Federal Judge's ruling against the FTC, you can read our summaries of the first day, second day, third day, and fourth day (including Bobby Kotick and Satya Nadella's testimonies).
Yesterday, the agency's head Lina Khan received harsh criticism from three congressmen during an oversight about the regulator's conduct in trying to block the merger and the appeal. Congressman Kevin Kiley predicted that the FTC would lose its appeal during that hearing.
Elsewhere, most regulators have ruled in favor of the acquisition, including recent decisions by the European Union, China, South Korea, South Africa, and Turkey, with a total of 40 countries clearing the acquisition. New Zealand expressed doubts about the deal and Canada expressed its disapproval with a letter, but neither has formally moved to block the acquisition yet.