Activision’s most notable content is the Call of Duty series of games, World of Warcraft, and Candy Crush, a mobile game. File
The Competition Commission reiterated yesterday its recommendation that the proposed $68.7 billion (R1.26trillion) transaction whereby Anchorage, a wholly owned subsidiary of Microsoft Corporation, intends to acquire Activision, be approved without conditions.
In a hearing held by the Competition Tribunal on Wednesday, the Commission told the Tribunal that despite competitors have expressed concerns regarding the merger, the Commission found that it was unlikely that the transaction would result in any substantial lessening of competition.
The Commission recommended that the Tribunal approve the deal in South Africa without conditions in April.
The hearing comes after the Commission recommended that the Tribunal approve the deal in South Africa without conditions in April 2023.
The acquiring group Anchorage is controlled by Microsoft. It is a global technology company that provides information technology-related services. Its gaming activities are relevant to this proposed merger.
Activision develops games for computers, consoles, and mobile devices and publishes them in most countries around the world. Activision’s most notable content is the Call of Duty series of games, World of Warcraft, and Candy Crush, a mobile game.
The Commission said it assessed the activities of the major parties and found that there was horizontal overlap, which was present as both parties were active in the development and publication of games for PC and games for consoles and mobile phones.
“But the acquiring group Microsoft is mainly in the US for PC and console. So we assess the overlap and found that the merging parties have small market shares below 10% in total, so given the low mortgage shares, (the merger) it's unlikely to result in any substantial lessening of competition, at least not from the horizontal perspective,” it said.
The Commission said it had received some concerns from competitors of Microsoft in the console space, who worried that if the merger goes through, they might be foreclosed access to Activision gaming content in particular, the Call of Duty game which they indicate that even though the target firm looks small in terms of market shares, the popularity of the game makes it a must-have game.
The Commission said while the Call of Duty was a popular game, it was not the most popular game.
“There are games like fortnight, there are games like your FIFA, that are always on the top two and currently Call of Duty hoovers around number three and number two, so it is not the only game that one needs to have to be able to compete effectively in the console space,” it said.
The Commission said the merging parties also made public undertakings and that they would continue making the Call of Duty game available to those compared the competitors who wished to have access to and they have also made offers to their competitors Sony and Nintendo.
“The merging party's internal documents suggest strongly that should the merging party stop making Activision game available to third parties, they stand to lose significant revenue stream, which is projected to be around hundreds of millions in this the end. It might be even worse. I mean this for 2023, and it might be worse in 10 years,” it said.
While Microsoft was allowed to proceed with the deal elsewhere, the UK and US regulators have been difficult to win.
The UK’s Competition and Markets Authority rejected the deal based on potential anti-competitive harm to the cloud gaming sector.
The European Union (EU) was the only entity that approved the deal with the condition that Call of Duty is made available to Nintendo and cloud game streaming providers for at least 10 years from the transaction date.
The merging parties represented by Steven Budlender said his submission was that this was not a merger that raised any South African competition law concerns.
“The real question is does it have any anti-competitive effects? It's revealing in our submission that they are already eight regulators in eight jurisdictions that approve the transaction conditions,” he said.
Budlender said the deal would, in fact, not undermine the local cloud gaming market but help grow it.
On the competition position, Budlender said: “We simply submit that there is no competition problem, no competition harms, the question of remedies doesn’t arise. We would submit that the merger should be approved that should be abandoned conditionally,” he said.
The Tribunal said it would give its decision at a later date.
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