FTC faces uphill appeal battle against Microsoft-Activision settlement

The attempt by the United States Federal Trade Commission (FTC) to temporarily block the Activision Blizzard purchasedeveloper of “Call of Duty”, by Microsoft for US$ 69,000 million must overcome some obstacles to succeed, according to legal experts.

On Tuesday, US District Judge Jacqueline Scott Corley gave the green light to the largest settlement in video game industry history, rejecting the Biden administration’s argument that it would hurt consumers but forcing the FTC to appeal.

A U.S. federal appeals court will have several options available to it while it considers that appeal, but legal professionals noted that the pressure of time and the need to prove any alleged errors by the district court judge that would justify annulment of their decision could hinder the efforts of the antitrust authority.

On Thursday afternoon, the FTC asked the San Francisco-based US Court of Appeals for the Ninth Circuit, which hears cases from California and other western states, to issue a preliminary injunction halting the deal while the agency prepares to challenge it in a trial in August.

In its appeal, the FTC asserted that Corley’s order, which allowed Microsoft going ahead with the deal, incorrectly imposed too high a legal standard on the agency.

Some lawyers said that the FTC he had presented a compelling argument, but also that there was no certainty of success. Also, these types of merger cases are rare in federal courts.

Corley’s temporary injunction prohibiting the deal expires at 11:59 p.m. Pacific Time on Friday (0659 GMT on Saturday), so the appeals court is expected to issue an order on Friday. Microsoft and Activision are scheduled to close the deal on July 18.

The appeals court could block “administratively” the agreement for at least a few days, giving a group of judges more time to study the dispute and rule, according to several legal experts.

Alternatively, the court could grant the FTC’s request for injunctive relief—which could create a much longer pause—or deny it outright.

The president of MicrosoftBrad Smith, has described the demand of the FTC of “manifestly weak case”, and has said that the company “will oppose further efforts to delay the possibility of moving forward”.

Kathleen Bradishwhich oversees legal defense in the American Antitrust Institutesaid that the FTC “He certainly has valid reasons.” to challenge the order of the trial judge.

Bradish said that any mistakes by Corley “Not only will it relate to this case, but it has the potential to affect any vertical merger challenges for the foreseeable future.”. A vertical merger refers to an agreement between two companies from different parts of the same supply chain.

Antitrust expert Sean Sullivan, a professor at the University of Iowa Law School, said that an appellate court can modify or vacate a lower court’s ruling based on “errors of law”.

“But not every supposed error is a real error.Sullivan said. “And not all real errors require intervention”.

The appeals court is expected to act quickly. But the race against time is the FTC’s fault, he said Douglas Rossprofessor of antitrust law at the University of Washington School of Law.

The FTC it could have sued Microsoft in federal court in December, but instead filed suit in the agency’s internal forum, where an administrative law judge has no power to issue a preliminary injunction.

The appeals courtcan be unsympathetic with the argument that you need to hurry up and do something when the fault for the emergency lies entirely with the FTC“, said Ross.

Source: Reuters