MAGGIE PAGANO: Game on for Britain’s competition watchdog

The special relationship just got more special. In a surprise twist, the US government has sided with Britain’s competition watchdog in its controversial attempt to block Microsoft’s £55billion takeover of video game publisher Activision Blizzard.

US regulators at the Federal Trade Commission (FTC) have asked the courts to temporarily block Microsoft from completing its bid for Activision.

They claim the deal – which would be the biggest in the history of the video game industry – would ‘substantially lessen competition’ in the sector.

If Microsoft’s bid for the Call of Duty creator went through, the combined group would be the third biggest gamer in the world after China’s Tencent and Japan’s Sony.

The FTC injunction comes after the Competition and Markets Authority (CMA) blocked the deal in the UK on grounds that it would damage competition and stifle innovation, leaving less choice for gamers.

Blocked: Regulators in the US at the Federal Trade Commission have asked courts to temporarily block Microsoft from completing its bid for Activision

Both Microsoft and Activision deny this, arguing that the move towards ‘cloud gaming’ opens up the market.

Indeed, Microsoft claims that gaming groups will become more like streaming services – such as Netflix – with players becoming subscribers to a bigger library rather than having to pay for individual games for their PCs or consoles.

The European Commission bought the Microsoft story, helped by the computer giant promising to offer ten-year free licensing deals, allowing European customers access to Activision’s PC and console games.

But the CMA didn’t. 

The UK regulator took the view that the growth of the emerging cloud gaming markets is changing the sector so dramatically that the two combined companies would, in effect, become a monopoly.

Its decision to block the takeover in April provoked outrage from Activision’s boss Bobby Kotick, who accused the CMA of being a ‘tool’ of the FTC, while Brad Smith, Microsoft’s president, branded the UK regulator an outlier, suggesting that start-ups were better off in the EU than the UK.

Technically, the CMA’s opposition to the deal should be enough to halt the takeover. But the FTC went to court on Monday because of concern that Microsoft and Activision might try to go ahead this week and seal the deal, rather than wait for the July 18 deadline. 

The main worry was that the two gamers were looking for ways to get around the veto by re-organising their respective UK businesses.

Smith – who is also suing the CMA – says he now welcomes the chance to present his case in the federal court in August. 

Much of Microsoft’s case will rest on persuading the court that the merger won’t impact competition.

He will have his work cut out. The FTC and the CMA mean business.

It is correct to say they have worked closely together on this deal. The two sides have met 26 times for discussions.

But to describe the UK regulator as a ‘tool’ is grossly unfair hot air from Kotick.

What the FTC’s trip to court does show is that the CMA has been vindicated in its original decision, and how much more seriously our regulators are judging the impact of mergers to be for the consumer than even a few years ago.

That is no bad thing.

CBI’s poor show

Fewer than a third of the CBI’s direct members backed the group during last week’s crunch vote on whether it should survive or not. That’s even worse than at a local election.

After the vote, director general Rain Newton-Smith claimed that 93pc of members were in favour. 

The CBI has always been secretive about membership but open about its reach, boasting that it speaks for 190,000 businesses and 7m employees.

But thanks to questioning by MPs on the Commons business committee, it turns out the CBI has only 1200 companies and 120 trade bodies as members.

Achieving a turnout of 28 per cent is pathetic, and an embarrassing admission for Newton-Smith. 

Some humility as well as greater transparency would help if she wants to restore credibility after the sexual misconduct scandals.

Out the door

JP Morgan has followed Goldman Sachs, Exane and Morgan Stanley in cutting ties with Odey Asset Management. 

JP Morgan was a key Odey partner, and a custodian of its assets. It will now have to find a new partner to take on these assets as a depositor. 

Not an easy task to undertake during the sex drama swirling around the firm.

This post first appeared on Dailymail.co.uk