Is there even a hearing? I thought it was just the appeals court looking over the case to see if it's even worth moving forward.
Idk if it is a hearing, I just thought it was. Im assuming we don't know when the appeals court is either huh?
Inside me there are two wolves:
The one who thinks they're getting removed because they're about to be delisted after closing the deal and
the one who thinks they're getting removed so the plunge in $ATVI stock after the deal fails doesn't
Nobody knows. The 9th Circuit had a huge case load, being both geographically large and containing California, where there's a lot of cases. It will be literal months before the Court would hear this.
The more immediate thing is "will the Court rule on a TRO extension?"--IE: will the court decide to put a hold on the merger until they decide the case. At this point, given how things generally go, they just won't have time. The current TRO expires Friday. The FTC needs to ask for an extension and MS needs to ve given the opportunity to write a response. There's no guarantee that the 9th Circuit will rush to deal with the request (or that they will grant it). Assuming MS and ATVI have things lined up, they likely can merge before the Court decides the point.
This entire thing has been a rollercoaster and I ain't ruling anything out.
They just look over the arguments that were presented in writing I think.
Agreed, provided they manage to work something out with the CMA. Which I'm still very skeptical about.
Also wanted to say thanks for your insight on stock markets today. I know about law but nothing about the markets, so I've appreciated learning from your posts.
Indices are by nature "passive". They wouldn't play the market by timing what's in the index.
And if the merger does happen, the appeal will be dismissed since it was just about stopping the merger, not stopping the FTC from moving with an anti-trust investigation. So now the FTC has to decide if they want to do this ALJ pony show or not, which 100% would be a waste of time as the only way to unwind this post-merger will be a new case in Federal Court (and unwinding this is extremely unlikely to be frank...)
I know people want this endgame but the idea of going hard on nascent markets while also pushing for that "may" distinction would be insane. No acquisition would ever be allowed to go through.
Yep, and probably why you won't see a TRO extension. Just nothing egregious for the appellate Court to say "now hold on" too. Corley actually went by the book.
Essentially yes. An Appeal is generally never a place for new evidence. The FTC as appellant will write a memorandum of law, arguing that Corley either misinterpreted the law or her read of the facts was literally irrational (on appeal, the appellate Court reviews the law independently of the lower court, but gives deference to their interpretation of fact). Microsoft will write a response memo. The FTC might get its reply to MS's response, et cetera.
Most appellate cases, especially a case this big will have an oral argument. This is NOT a hearing or trial. No witnesses will be called. The judges (appeals are heard by 3-judge panels) will listen to the attorneys and ask questions of them, sorta like how Corley opened up on the FTC during closing.
Then they take a matter of weeks or months to write up their decision.
I can't see them closing over CMA. It would be unlawful, and they'd face a huge fine and reputational damage. Regulators wouldn't trust them in future.
The only way I see it closing in the next few days is with CMA consent. They've clearly been in talks for a while now.
What we don't know is how far they've got in reaching a solution. I don't see CMA saying "OK go ahead and close and then we'll work it out later." They've blocked the deal, they aren't letting it through without structural changes.
We can say with some degree of certainty that MS wouldn't have agreed to pause CAT proceedings if they didn't think there was a viable way forward with CMA.
CMA of course loses nothing by agreeing to pause, because they wanted a delay anyway. It's also highly unusual for CMA to take this step.
So both sides can likely see some sort of way forward. But I'm skeptical they can sort it all out by Tuesday.
ABK delisted from Nasdaq? FAQs and more
Idas Threadmark please.
Wrt "Nasdaq delisting".
The stock is not being delisted (yet?). On Monday, ATVI leaves the Nasdaq 100, to be replaced with Trade Desk.
What does the delisting from the Nasdaq 100 mean?
Funds, pensions, individuals, all commonly buy into ETF's, and all the boats in that fund benefit from that liquidity and buying pressure. Note that Trade Desk has been +5% to +6% all day so far, for that reason. If this merger weren't happening, ATVI would likely be down a similar amount.
Was this instigated by the exchange or by ATVI?
It doesn't make sense that it's the exchange choosing this. ATVI is far from the lowest market cap in the 100. It's double the market cap of EA for example. The exchange already has a scheduled rebalance in a week, and this is separate from that. The leaving date is also before the deal deadline date. Anything could theoretically happen next week, including the deal collapsing, ABK walking away any time after the 18th, etc. There is no reason I can think of for the exchange to jump the gun.
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EDIT hours later:
Barron's writer speculates it's Nasdaq deciding the merger is "highly probable" and therefore removing ATVI.
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I also cannot think of why Kotick would choose this... unless the deal is being closed. See the first point above about liquidity.
What is significant about the 17th?
It's the first day after the FTC's TRO expires.
Are they closing over the CMA?
Maybe, but I doubt it. That would likely mean a fine of billions. I suspect they've come to an agreement with the CMA to close the deal, perhaps excluding the UK.
Last night, LuLu said "the 39 countries where the merger can close."
View: https://twitter.com/lulumeservey/status/1679279055613448195
Wrt "Nasdaq delisting".
The stock is not being delisted (yet?). On Monday, ATVI leaves the Nasdaq 100, to be replaced with Trade Desk.
What does the delisting from the Nasdaq 100 mean?
Funds, pensions, individuals, all commonly buy into ETF's, and all the boats in that fund benefit from that liquidity and buying pressure. Note that Trade Desk has been +5% to +6% all day so far, for that reason. If this merger weren't happening, ATVI would likely be down a similar amount.
Was this instigated by the exchange or by ATVI?
It doesn't make sense that it's the exchange choosing this. ATVI is far from the lowest market cap in the 100. It's double the market cap of EA for example. The exchange already has a scheduled rebalance in a week, and this is separate from that. The leaving date is also before the deal deadline date. Anything could theoretically happen next week, including the deal collapsing, ABK walking away any time after the 18th, etc. There is no reason I can think of for the exchange to jump the gun.
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EDIT hours later:
Barron's writer speculates it's Nasdaq deciding the merger is "highly probable" and therefore removing ATVI.
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I also cannot think of why Kotick would choose this... unless the deal is being closed. See the first point above about liquidity.
What is significant about the 17th?
It's the first day after the FTC's TRO expires.
Are they closing over the CMA?
Maybe, but I doubt it. That would likely mean a fine of billions. I suspect they've come to an agreement with the CMA to close the deal, perhaps excluding the UK.
Last night, LuLu said "the 39 countries where the merger can close."
View: https://twitter.com/lulumeservey/status/1679279055613448195
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Maybe they do a midnight close on Saturday and do a lot of work to disrupt Activision structure before the CMA fine and order comes down on monday
The judge really gave Microsoft a near best case scenario if they wanted to protect their acquisition from the CMA
So while closing over is technically unlawful, the changes they would have made would not be because Microsoft can legally own Activision in the USA so they have a little buffer time
Also thank you too for your posts on listings and the markets. Really insightful and informative.
I personally think something has been worked out due to the silence and the smoke from the delisting, but even if there wasn't a deal, if Microsoft on their own closed everywhere BUT the UK by some setup, which is in defiance of the "global order", it would require the CMA to go to court to make the case they can execute fines on business dealings outside the UK which would be an interesting Court case I'm sure.
The fine wouldn't come on Monday even if they did close on Saturday. I could be wrong, because this merger saga has had more twists than Shyamalan's entire oeuvre. But having agreed a truce with CMA, MS isn't going to close unless CMA gives them the nod.
OP
OP
If someone wants to read about the Amazon/iRobot case, the new CMA - EC divergence and the connections to the MS/ABK case, a good article:
Amazon/iRobot: Does Amazon have an incentive to preference its own products? - The Platform Law Blog
Amazon’s acquisition of the iRobot for $1.7 billion has now been cleared by the UK Competition and Markets Authority at Phase 1, and referred for an in-depth investigation by the European Commission. We therefore have another case of diverging outcomes between London and Brussels. So what’s...theplatformlaw.blog
How would they close "everywhere BUT the UK"? I'm open to ideas but I don't see how that's realistically possible. ABK has operations in UK. They can't feasibly or practicably acquire every other part of ABK but leave the UK part for later. Outside of some kind of wildly impractical and complex ringfencing.
Thank you both for your analyses! This is very stimulating because I was heavy into debate in college. This stuff is taking me back 😅
I agree w/ Sheepinator. Lulu's wording on "the 39 countries where the merger can close" hints that they've worked something out with the CMA regarding countries beyond the UK.
Is there a way to know if the Interim Order blocking MS from acquiring any part of ABK has been amended? The CMA stated yesterday that they may need a new merger case and that the prior Final report still applies until then. However, the final report wasn't stopping the merger in other countries, the interim order was (i believe).
Also, if the UK starts a new merger case then wouldn't the CMA be able to consider remedies and events that happened after April 26? Like the EU approval, FTC denial, FTC trial information, other global approvals, and 10 year agreements? it's seems that this new evidence would be the new baseline if they get to reset the clock for a 2nd investigation.
Is there a way to know if the Interim Order blocking MS from acquiring any part of ABK has been amended? The CMA stated yesterday that they may need a new merger case and that the prior Final report still applies until then. However, the final report wasn't stopping the merger in other countries, the interim order was (i believe).
Also, if the UK starts a new merger case then wouldn't the CMA be able to consider remedies and events that happened after April 26? Like the EU approval, FTC denial, FTC trial information, other global approvals, and 10 year agreements? it's seems that this new evidence would be the new baseline if they get to reset the clock for a 2nd investigation.
Who knows and it may be novel. Could be that Activision still exists, but is HQed in London for example with Kotick as CEO. Microsoft just suddenly owns all of their overseas assets and IPs, with Activision "UK" having full license to all old IPs within the UK.
I mean even with the CMA's blessing they have to do something like this...
I actually don't think Lulu's wording is that surprising. The FTC hasn't "approved" the deal but they cannot block it (right now) so the right terminology would be "countries where the deal can go through" not "countries where it's been approved".
One of the very best posts in this entire thread. Thanks for this.
Well yes, it would certainly be a novel solution at this stage in the game :)
This isn't really true at all. The FTC has an enormous amount of power. It just so happens that no matter who is in control of the administration- that power is never used productively.
They don't even really need the law to change- they need to pursue cases where there's a probability of significant lessening of competition, penalize companies that use anti-competitive practices, and negotiate with companies that are willing to work within the spirit of competition. That's all they need to do, and they simply won't do it
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Great post.
I guess my next question would be, what would closing everywhere except for the UK mean for UK and what would it mean for everywhere else?
For example: Diablo IV on Gamepass in the US but not in the UK?
Gonna guess Microsoft will acquire Activision, Blizzard and King from the holding company and the Holding company remains with the UK parts
Though not sure if that can be done or not
The interim order is a public document available, with all other such things, on the CMA website. If it were amended, the new version would also be published.
You can just change your region on the fly on Xbox so I'm not sure how that would work.
I'll say it again: The FTC should be for pre-merger analysis with remedy discussions, recommendations of anti-trust to DoJ if need be, current marketplace rule enforcement, and post-merger market analysis with possible actions (like LiveNation!).
FTC should not be blocking with these ALJs (at least pre-merger)...leave that to the DoJ since they are also titled to do anti-trust enforcement.
https://www.courtlistener.com/docket/67605176/ftc-v-microsoft-corporation/
Appeal court docket on court listener for the FTC's appeal
Appeal court docket on court listener for the FTC's appeal
it means the 9th circuit appeals court received the FTC's notice of appeal and so a docket was opened for it
It's a link on where to publicly find documents related to the FTC's appeal of the preliminary injuction denial decision.
ok. Thanks for the explanation.
If they want to beat the clock, probably last night. Alternatively this morning. Otherwise the opposing party won't have time to respond.
The law is not in their favor and hasn't been for decades. Any legal expert worth their salt agrees. (https://som.yale.edu/centers/thurman-arnold-project-at-yale/modern-antitrust-enforcement)
Yes, it is true that the FTC should focus on the easy cases, they can absolutely crush those but the ones they want to stop whether due to consolidation, potential reduction of competition or political desire to prevent consolidation they have struggled with.
Additionally their current strategy is not all bad.
Are the FTC and DOJ Losing Antitrust Battles but Gaining Ground? | Insights | Skadden, Arps, Slate, Meagher & Flom LLP
While the FTC and the DOJ Antitrust Division have lost a number of recent cases, they have developed government-friendly case law they can rely on to expand their enforcement reach in future cases.
As someone who practices in this area, it's an uphill battle for the other side.
america strikes back
meanwhile I'm still kinda expecting an update from the UK, before the 18th. With NASDAQGate being a thing I have to imagine they've come to some sort of agreement?
meanwhile I'm still kinda expecting an update from the UK, before the 18th. With NASDAQGate being a thing I have to imagine they've come to some sort of agreement?
If closing on Monday or Tuesday is actually a possibility, I would expect some kind of notice from the CMA and MS about some agreement tomorrow or Monday morning. The interim order needs to be removed for MS to be able to close without being subject to fines and other penalties.
Closing over the interim order from the CMA would invite fines and other penalties for MS. The pause request for the litigation through the CAT shows they're trying to work something out ahead of next week.
I wonder if it'd be something like rescinding their final report and interim order while they do another investigation into the deal under a different agreement. This would allow them to close while the CMA can potentially order them to break up later. Microsoft argued in the FTC vs Microsoft-ABK case that they usually keep businesses separate so if the FTC wanted to break them up later, they could. Wonder if there's something similar here.