Microsoft's planned $69 billion acquisition of Activision Blizzard will be probed by a California federal judge at a March 23 hearing, as she mulls whether to issue a temporary block on the deal – although that hearing date could slip if Microsoft stipulates that it won't close the deal by the end of March.
In a San Francisco courtroom, US District Judge Jacqueline Scott Corley said she will deny Microsoft's motion to stay the private litigation in California from a proposed class of video game buyers who say the deal violates Section 7 of the Clayton Act.
Discovery questions in the case will be discussed further at a Feb. 2 case management hearing, Corley said. The plaintiffs are seeking depositions of top Microsoft executives including Chief Executive Satya Nadella, as well as representatives of Sony and Nintendo, it emerged today.
The US Federal Trade Commission challenged the merger on Dec. 8, warning that it would harm competition in high-performance gaming consoles and subscription services by denying or degrading rivals' access to Activision's content. Meanwhile, the EU's competition regulator is also expected to issue formal objections to the deal (see here).
Activision owns a number of popular video game titles including Call of Duty. As the in-person hearing started, Judge Corley disclosed that her son works for Microsoft's medical AI division – which is not a disqualifiable conflict. "And I disclose that my children did play Call of Duty," Corley added.
For the plaintiffs, lawyer Joseph M. Alioto agreed there was no conflict. "I would play the games if I understood how to do it," he added.
Corley then cut straight to the point.
"So, reading the papers, it's established, I think, that the plaintiffs have to have the opportunity to bring a motion for preliminary injunction before the merger consummates," she said. "I'm not going to grant the motion to stay for all the reasons that [the plaintiffs] say."
The judge then asked Microsoft lawyer Anastasia Pastan whether the company was willing to stipulate that the deal would not close before March 31, giving the plaintiffs time to litigate their case.
Given the ongoing regulatory procedures around the world, "there is no chance that the deal can close before March 31," Pastan told the judge.
Alioto said the plaintiffs are concerned that the deal could close "overnight" without a clear stipulation from Microsoft. Pastan replied that this "mischaracterizes" the state of the deal, given the multiple regulatory procedures underway.
"Then put your money where your mouth is" and stipulate to a specific date, Corley told the Microsoft lawyer. In the meantime, Corley said she would set a March 23 date for a hearing on the plaintiffs' motion for a preliminary injunction. With Microsoft's verbal stipulation that the deal can't close before March 31, the plaintiffs are protected, she noted.
"If Microsoft wants to drag it out beyond that, Microsoft needs to stipulate that it will not close," Corley told Pastan.
For the plaintiffs, Alioto suggested that the motion for a preliminary injunction and the motion for a permanent block on the merger could be heard at the same time. "We would be prepared to go to trial certainly in the first week of April, if not the last week of March," he said.
Corley replied that she'd make a decision on that only once she's reviewed all the papers in the case.
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