In their latest attempt to block the transaction, U.S. antitrust enforcement officials contended on Wednesday that a federal judge erred in her decision to find that Microsoft’s $69 billion acquisition of Activision Blizzard, the company that makes “Call of Duty,” was lawful under competition law.

On October 13, Microsoft completed the acquisition following clearance from British authorities. The proposal was first put up in January 2022 as the largest acquisition in the gaming industry’s history.

Attorney Imad Abyad spoke on behalf of the Federal Trade Commission, claiming that the lower court judge had set too high a bar for the agency, essentially forcing it to provide evidence that the agreement was anticompetitive.

He informed a three-judge panel of the Californian appeals court that the FTC needed to demonstrate that Microsoft had the capacity and motivation to keep Activision’s games off of competing gaming platforms in order to support its claims.

Referring to claims that Microsoft made some Zenimax games exclusive after purchasing that company, he stated the FTC “showed that in the past that’s what Microsoft did.”

Given that the EU and Britain have approved the deal and that the FTC lost the lower court challenge, it is up against a steep hill.

The legal dispute is a part of the Biden administration’s larger campaign to oppose mergers and price increases that have an impact on consumers’ access to products like prescription drugs and airline tickets.

Microsoft’s attorney, Rakesh Kilaru, described the FTC’s case as “weak” and claimed that the agency had requested an excessive amount of latitude from the lower court judge. “It is also clear that the standard can’t be as low as the FTC is suggesting,” he stated. “It can’t be kind of a mere scintilla of evidence.”

He contended that the agency was unable to demonstrate Microsoft’s motivation for keeping “Call of Duty” exclusive from competing gaming systems.

Judge Daniel Collins vigorously questioned the FTC’s attorney about how Microsoft’s concessions to British antitrust regulators affected the American market, while the other judges questioned both lawyers.

Additionally, he seemed to disagree with Abyad’s claims that further investigation into the pact was required, particularly in light of Microsoft’s prior agreements—including one with Sony this past summer.

“This was not a rush job on the part of the FTC,” he said.

After hearing the arguments, two antitrust experts predicted that the FTC would have a difficult battle to win.

Alden Abbott, a former chief counsel for the Federal Trade Commission, called a lower court judge’s judgement of “clear error” “really stark,” likening it to the notion that a court disregarded important testimony from a witness. The appeals court, according to Abbott, observed that the trial judge had taken into account “a huge amount of record evidence.”

In December 2022, the FTC filed a lawsuit to halt the agreement, claiming that Microsoft would exploit Activision’s well-known titles to stifle competition for its Xbox systems and control the rapidly expanding subscription and cloud gaming markets. However, in July, a federal judge in California decided that the case was not well-made.

(Adapted from Reuters.com)