Activision (ATVI) gains 5% as UK's CMA narrows concerns scope in Microsoft (MSFT) deal

March 24, 2023 8:49 AM EDT

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Shares of Activision Blizzard (NASDAQ: ATVI) are indicated 5.5% higher in pre-market trading after the UK’s Competition and Markets Authority (CMA) said the new evidence showed that “the transaction will not result in a substantial lessening of competition in console gaming in the UK.”

The regulator said it received “a significant amount of new evidence,” including Microsoft’s financial incentives to make Activision’s games, including Call of Duty (CoD), exclusive to its own consoles, which is described as the “most significant new evidence.”

“While the CMA’s original analysis indicated that this strategy would be profitable under most scenarios, new data (which provides better insight into the actual purchasing behaviour of CoD gamers) indicates that this strategy would be significantly loss-making under any plausible scenario,” the CMA said in today’s update.

The CMA expects to publish its final report by April 26.

“Having considered the additional evidence provided, we have now provisionally concluded that the merger will not result in a substantial lessening of competition in console gaming services because the cost to Microsoft of withholding Call of Duty from PlayStation would outweigh any gains from taking such action,” Martin Coleman, chair of the independent panel of experts conducting this investigation, said.

Earlier this week, the decision on Microsoft’s $69 billion deal was pushed back to May 22 from April 25 by the European Commission.

By Senad Karaahmetovic

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