I am willing to team up with anyone as I was looking to get into this game myself.

After ABK, MS will not be able to purchase a paper clip for a while.

So this for sure pushes into mid/late August for any real big things to happen? 

No, Microsoft and CMA wanted this so they can discuss final remedies without the CAT trial looming over them, the CAT has accepted the evidence from them both to adjourn the hearing. All Microsoft needs to do is submit their final proposal to the CMA, the CMA does market research and then accepts or denies it but nobody knows how long that will take aside from the CMA saying it will come before August 29th.

Idas Said:

They also published this:

- Non-confidential version of the second witness statement of Mr Prevett (for the CMA)
- Order of the President (Adjournment)

Some highlights from the second witness statement of Mr Prevett (CMA):

The CMA's duty under section 41(3) EA02 to assess whether there has been a material change in circumstances or special reasons not to adopt the proposed final order

Third, as when exercising all its functions, the CMA is (and has always been) acutely conscious of the need to act in this matter in the public interest and having regard to the legitimate interests of individual citizens (whether natural or legal persons). The CMA made the Joint Application because it believes that there is a realistic chance of a more certain outcome more quickly that resolves its competition concerns and protects consumers, whilst allowing a modified form of the transaction to go ahead.

On 26 June 2023, Microsoft submitted a 20-page response to the CMA's consultation on the proposed order (the "Microsoft Submission") [CP2/2/3], in which it argued that there was a material change of circumstance or special reason to make a different form of order from that set out in the Final Report under section 41(3) EA02. In my experience, submissions of this nature are very rare given the high legal standard to meet any test for material change of circumstance or special reason under s.41(3) EA02 (as exceptions to a legal duty), and the relatively short period between the publication of a final report and the making of the final order. That is not to say that, notwithstanding a high legal standard, certain developments arising after a final report will not be capable of amounting to an arguable material change of circumstance or special reason.

First, Microsoft relies on the fact that, on 15 May 2023, the European Commission issued a decision approving the Merger that had been notified to the Commission on the condition that Microsoft complies with legally-binding commitments offered to the Commission on 20 April 2023. Microsoft explains that (amongst other things):

a) The commitments require Microsoft to grant royalty-free, worldwide licenses to stream Activision games for a period of ten years from the closing date of the Merger on the terms set out in the commitments. Microsoft submits that the commitments also require it to comply with the agreements that it has entered into with NVIDIA, Boosteroid and Ubitus (which are addressed in the Final Report).

b) The commitments are supported by a monitoring and enforcement regime, including a fast-track resolution regime if any cloud gaming providers consider Microsoft is failing to comply with its obligations and significant adverse consequences for Microsoft if it is found to have breached its commitments.

The Microsoft Submission contends that these commitments fundamentally change the factual basis on which the assessment of the cloud gaming agreements was conducted in the Final Report, including in particular as to the level of certainty that they provide. Microsoft's position is that the commitments therefore constitute a material change of circumstance and, separately, a special reason to depart from the Final Report (particularly in light of the requirements of comity).

Second, Microsoft relies on the fact that the terms of the proposed order are far-reaching and provide for restrictions which are unnecessary to prevent a SLC arising in relation to cloud gaming services in the UK. In particular, Microsoft argues that it is disproportionate for prohibition to extend to: (i) the acquisition by Microsoft of an interest in all subsidiaries of Activision (in particular Activision's King segment, which is focused on native mobile games); and (ii) the acquisition by Activision of all subsidiaries of Microsoft (the vast majority of which have no gaming activities and most of which have no activities in, or connection to, the UK).

Third, as discussed at the CMC on 17 July 2023, on 16 July 2023, various media outlets reported that Sony had signed an agreement with Microsoft providing access to Call of Duty following the Merger. I understand, based on the oral submissions of Microsoft's leading counsel at the CMC on 17 July 2023, that Microsoft considers that this constitutes a further material change of circumstance or special reason.

At the time of filing this statement, the CMA has not seen a signed version of the Sony Agreement. I have, however, read the statement of REDACTED dated 19 July 2023, which outlines the terms of the Sony Agreement. The Inquiry Group will of course consider any such materials in connection with its assessment of the appropriate form of final order under s.41 as and when they are received.

Fourth, as the Tribunal is also aware, the CMA expects to receive a notification from Microsoft for a restructured deal to acquire Activision. Once any notification is made, it is possible Microsoft may submit that the restructured deal can amount to a further material change of circumstance or special reason.

The CMA's assessments under s.41(3) and s.33(1) EA02 may well therefore take place in parallel. They would be distinct insofar as: (1) the CMA must consider whether there is a material change of circumstance or special reason under s.41(3) on the grounds set out above; and (2) as explained at the hearing on 17 July 2023, the CMA may still consent to Microsoft acquiring an interest in Activision under the terms of the proposed final order.

Whilst further investigation would be required, it is arguable that the matters outlined above may give rise to a material change of circumstance and/or special reason under s.41(3). Ultimately, any decision would be for the Inquiry Group. The Inquiry Group extended the statutory timetable for making a final order in order to give full and proper consideration to Microsoft's submissions on the draft final order. Nothing in this statement is intended to prejudge either the Inquiry Group's consideration of the representations made by the parties and third parties or its final decision.

Third party consultation on any changes to the proposed order

Given the Inquiry Group has received a submission from Microsoft that there has been a material change of circumstance or there are otherwise special reasons for the final order to depart from the Final Report, recognising the request of the President of the Tribunal in paragraph 15(3) of the Ruling about the need for third parties to have an opportunity to comment on the submissions put forward by Microsoft, the Inquiry Group has approved that the CMA should publish details regarding Microsoft's submissions as soon as possible and provide a short window for third party submissions.

Further, if the Inquiry Group reaches the provisional view that there has been a material change of circumstance, or there are otherwise special reasons for modifying the proposed order, the CMA would give notice of the modified order in accordance with the requirements paragraphs 2(4) to 2(6) of Schedule 10. The CMA would set out the proposed modifications and the reasons for them and give third parties a chance to respond. Whilst it will be for the Inquiry Group to determine the precise process to be followed, and this will depend on the progress of any further evidence gathering, my current expectation is that the Inquiry Group may be able to reach a provisional view in the week beginning 7 August 2023. Third parties would then have a period of 7 days to make representations.

Why the first adjournment application did not refer to Microsoft's proposal to modify the transaction

In its application of 28 June 2023, the CMA sought an adjournment on the basis that: (i) the CMA had not at that time been able to instruct leading counsel with previous experience of this matter to appear at the substantive hearing and had encountered significant difficulty in obtaining suitable alternative representation; (ii) First Treasury Counsel, who had been instructed as leading counsel for the CMA, had confirmed that it was not possible for the CMA's case to be prepared and presented effectively on the current timescales with a hearing at the end of July; and (iii) there had been a range of other developments in relation to the proceedings which either had already, or would soon, divert significant resources of the CMA away from the preparations for the hearing, including an increase in the scale of work that would be involved in relation to the consultation procedure on the final order.

This application did not refer to discussions between Microsoft and the CMA about a modified transaction because the adjournment was not sought in order to pursue any such discussions. On 28 June 2023, there were no ongoing discussions between Microsoft and the CMA. An adjournment was instead sought on the distinct basis that it was necessary to secure a fair hearing, for the reasons summarised above.

The CMA's application of 28 June 2023 was opposed by Microsoft and refused by the Tribunal in a ruling on 29 June 2023. In the light of that ruling, the CMA made arrangements to put together a counsel team (including by moving counsel away from other cases, as explained in a letter to the Tribunal dated 5 July 2023). The Joint Application was made on the distinct basis from the first application for adjournment, as explained in the parties' submissions at and in advance of the CMC on 17 July 2023.

Extent to which the FTC's failure to obtain an interim injunction from the US courts is relevant to the Joint Application

The FTC's failure to obtain a preliminary injunction was irrelevant and immaterial to the CMA's decision to participate in the Joint Application. The CMA's decision was taken on the basis of its assessment that the public interest is now best served by an adjournment for the reasons outlined at the beginning of this statement. The CMA believes that there is a realistic chance that the adjournment will lead to an outcome that is in the interests of consumers, and that gives the parties (and the public) greater certainty more quickly, without the cost and delay of litigation.

While the CMA cannot comment on whether or not the US developments were a relevant consideration for Microsoft in deciding whether to make the Joint application, as this is a matter for Microsoft, I confirm the US developments were irrelevant to the CMA's decision to participate in the Joint Application.

Yeah, I was already saying before that the CMA is gonna take up until the last day possible. Considering MS hasn't even submitted their proposal yet(?) and the time the CMA needs to review and market test, Late August looks more likely.