Reuters reports that Microsoft vs. FTC’s first pre-trial hearing will take place on January 3rd.
In the past, the US Federal Trade Commission has decided to challenge a Microsoft deal that would enable Microsoft to suppress competitors. With control over Activision’s games, Microsoft could manipulate prices and improve its own game quality by degrading competitors on rival consoles. Consumers would suffer from these actions.
Just before Christmas, Microsoft responded with a 37-page document arguing against the FTC’s thesis and including claims of constitutional violations. In addition, Microsoft’s lawyers attacked Sony (which has been vocal about the alleged dire effects of the acquisition).
It may be that Sony prefers to protect its revenues from more expensive individual game sales, but antitrust laws do not protect the dominant market player and its preferred business model.
Andre Barlow, an antitrust lawyer at Doyle, Barlow & Mazard PLLC, told Reuters that the FTC may struggle to prove its thesis in court.
There have been at least three judges who have accepted remedies sought by the merging parties. The legal precedent is not in favor of the FTC.
Added Roger Alford, a law professor at Notre Dame:
It will be an uphill battle for the FTC to win vertical merger challenges.
Alternatively, the FTC’s attempts to block the merger may have emboldened regulators in the United Kingdom and the European Union, both of which would be tougher to challenge.
Chile has approved the deal, following approvals in Brazil, Saudi Arabia, and Serbia.
