The Competition and Markets Authority (CMA) blocked what would have been the largest deal in the gaming industry to date on April 26, 2023. This decision brings attention to various significant trends, including:
- In dynamic markets, regulators are focusing in on whether a deal harms or could harm future competition (i.e., innovation based on predications raising significant uncertainties). The CMA speculated that the deal would “alter the future of the fast-growing cloud gaming market” and preferred to maintain the status quo with the block.
- Regulators are focusing more and more on non-horizontal relationships and supply chain issues, particularly if one party is vertically integrated. Whereas in the past, concerns could often be remedied via behavioral commitments, more and more deals with a vertical component are now being outright prohibited.
- While the industry expects the European Commission (Commission) to accept the behavioral remedy (license package) offered by Microsoft, this case shows once again that the CMA and the Commission can reach different conclusions when reviewing the same transaction.
Transaction Lawyer Nils Stock contributed to this article.