CMA Chief Executive Sarah Cardell has sent a letter to UK parliament, with some bombshell revelations about their work on the Microsoft Activision deal.
If you may remember, Conservative Party MP Bim Afolami grilled the CMA a few weeks ago about their decision to ‘prevent’ the deal. In particular, he pointedly asked Sarah about the communications the CMA had with other regulators, and she promised to send something to parliament.
So this is that letter, explaining the CMA’s conduct when talking to the US FTC, the European Commission, and Microsoft themselves in regards to this case. She had basically explained the situation with each case, but only had one surprise revelation when it comes to their interactions with the FTC.
I will let Sarah speak for herself. Here is the pertinent excerpt from that letter, on page 2:
“As part of the CMA’s investigation of Microsoft’s anticipated acquisition of Activision, there was engagement with numerous overseas competition authorities. The CMA had waivers in place from the merging parties, as well as some third parties, in relation to several overseas authorities, including the FTC and the European Commission. This enabled the CMA to share certain information with those authorities more freely.
One difficulty which the CMA can face in cases such as this, and indeed did face in this case in relation to the FTC in the latter stages of the investigation, is that these waivers can be withdrawn, which – while not preventing engagement with counterparts – can limit the extent to which the CMA can exchange certain information, unless other gateways for information exchange are available.”
Sarah also disclosed that the CMA and FTC held 26 meetings, and sent 74 emails with each other, in the period when the CMA was deciding the case. Sarah claims they are still working on retrieving these communications to provide to UK’s parliament.
As Florian Mueller made clear in his tweet about this situation, Sarah passive-aggressively admitted that one of the parties involved in the case withdrew their waivers. This could have been Microsoft, or Activision, or both. Whoever withdrew their waivers, what it effectively meant is that the two regulators were legally bound to no longer talk about the deal.
As has been established before, it is part of the CMA’s and US FTC’s job to communicate with other regulators across different countries and regions to discuss competition and antitrust concerns. Sarah did not share enough information here to conclude that any form of collusion had taken place. However, such evidence could be found in the two regulators’ communications with each other.
Even without any evidence going public at this time, it seems either Microsoft or Activision saw red flags and withdrew their waivers. While Florian expresses hope that the CMA will eventually just resolve this situation quietly and let the deal go through, there is now a potential issue of misconduct between the two regulators.
It certainly sounds strange to be talking about this in relation to video games, but as should be clear to even the casual observer, this case has wide reaching implications that go beyond video games.