Chile's Partial Report.
The FNE approved in Phase 1 the concentration operation consisting of the acquisition of control in Activision Blizzard, Inc (ABK) by Microsoft Corporation (Microsoft), after ruling out that it is suitable to substantially reduce competition.
These companies carry out activities in the same segments: development, publication and distribution of video games; and on different levels, when Microsoft produces the Xbox console and other video game platforms, such as GamePass, so their activities overlap both horizontally and vertically.
The Prosecutor's Office considered that the operation was not suitable to substantially reduce competition considering, among other evidence, patterns and preferences of video game consumers in Chile.
In its analysis of horizontal effects, the investigation ruled out risks, considering that in markets where the parties overlap their activities (development and publication of video games, distribution of computer games and sale of merchandising and digital graphic advertising) the market concentration thresholds set out in the Guide were not exceeded. of Analysis of Horizontal Concentration Operations of 2022, and that a large number of relevant competitors and a dynamic market were observed.
In the vertical risk assessment, the eventual blocking of inputs was ruled out, consisting of Microsoft, after acquiring ABK, ceasing to provide games such as Call of Duty to its competitors. This considers, among other arguments, that ABK faces competitive pressure from actors such as Electronic Arts, Take Two, Ubisoft and Epic Games, Sony and Nintendo, and that the relevance of Call of Duty would be comparatively lower in Latin America than in other regions of the world.
It was also considered that the number of consumers who would prefer to switch consoles over a blocking strategy would also be lower, which was verified by a survey of Chilean consumers, and that the significant revenue generated by Playstation in favor of ABK would discourage the adoption of a blocking strategy.
In its analysis, the FNE also ruled out the risks of tipping in the commercialization of new generation consoles and subscription services (such as GamePass), since ABK video games, although important, are not the most relevant for consumers in Latin America and that the players in this market offer highly differentiated services.
Tipping occurs when, once a certain scale of operation has been exceeded, markets tend to concentrate and eventually close under a single or dominant player.
In relation to a possible risk of blocking customers, the Prosecutor's Office concluded that Microsoft will not stop demanding video games published by third parties, since the distribution market for computer video games has shown significant dynamism with the entry of new relevant players, highlighting the leading position held by Steam.
On the other hand, in the console video game distribution market, there is significant competitive pressure from Sony and Nintendo, which would discipline the resulting entity and operate as a relevant substitute customer for competing publishers, among which are various players and some of them are particularly relevant.
FNE Approves Microsoft Corporation's Acquisition of Activision Blizzard
Last edited by Ryuu96 - on 29 December 2022
