The Microsoft Activision case is being fast tracked under the UK’s Competition Appeals Tribunal, as CAT Justice Marcus Smith has scheduled the first hearings of the appeal in July.
As reported by Video Games Chronicle, Justice Smith explained his decision in this way:
“The hearing of the substance of this application will take place in the fortnight commencing July 24, so the weeks commencing the 24th and 31st of July.
I’m not expecting it to take the whole of those 10 days but I would like the parties to err on the side of longer rather than shorter oral submissions. It seems to me that that is an excess that we can afford.
There is a tendency—and it’s very much driven by the Tribunal rather than the parties—to cut submissions to shorter than they perhaps ought to be. I want to do the reverse in this case.
I want to have the parties understand that we will want to give them every opportunity to unpack the difficulties of this case in oral submissions and for us to have the time to do that.”
Justice Smith made this decision in the first case management conference for this appeal. In this conference, lawyers for the CMA, and lawyers for Microsoft and Activision, argued how they would proceed with the case. While the CMA tried to delay the hearing so that they could prepare their arguments, Justice Smith rejected their request and chose to fast track it instead.
The conference was actually livestreamed, though it is no longer possible to view that stream. You can read this oral summary of events from Florian Mueller, but we’ll look at something else.
The CAT provided a summary of this appeal case, some points of which may not have come up in this conference but will appear in the proper trial. So, let’s look at the arguments Microsoft made to the CAT for this appeal:
Microsoft says the CMA made ‘fundamental errors’ in assuming cloud gaming belongs to a separate product category. In fact, many gamers go on to download or get a disc for the games they tried out on the cloud.
The CMA did not take into account the three contracts Microsoft signed with cloud gaming providers Ubitus, Boosteroid, and Nvidia, for Activision games. Subsequently, the CMA was also wrong to conclude that Activision games would eventually go to the cloud on their own.
Interestingly, Microsoft goes on to say the CMA’s conclusion that they could ‘foreclose’ the market, by witholding Activison from competitors, was not only irrational, but ‘unlawful.’
Lastly, Microsoft argues vs the CMA’s decision on their proposed remedies. We’ll share those word for word below:
- Erred in law by proceeding on the basis that it had a duty to impose what it described as a comprehensive remedy, thus failing to consider a range of remedies and assess their benefits and detriments in the round;
- Unlawfully failed to take account of the interests of comity;
- Erred in rejecting the Microsoft Cloud Remedy, which rejection was in all the circumstances disproportionate; and
- Acted in breach of the Respondent’s common law duty of fairness and the CMA’s own remedies guidance.
What did Microsoft mean by the interests of the comity? Wikipedia provides the definition that it is “a practice among different political entities (as countries, states, or courts of different jurisdictions)” involving the “mutual recognition of legislative, executive, and judicial acts.”
In other words, Microsoft is alluding to the claim they had been repeating since the deal was ‘prevented’, that the UK is closed for business. This was the line of inquiry MP Bim Afolami used in grilling the CMA about their decision earlier this month.
The CAT website also indicates that another case management conference is scheduled this June 12, 2023.
Based on accounts from people who viewed and listened in on the livestream, this meeting can be notched as a win for Microsoft, and a poor showing for the CMA.
Now, this appeal clearly won’t be finished in the next few days, and it’s too early to tell if Microsoft will get a favorable verdict. But the consensus is clear that the momentum has now swung on Microsoft’s and Activision’s direction, as they once again have a path to finalize this deal.