Microsoft Request FTC Drop In-House Trial With Judge Chapell

Microsoft alongside Activision has made a request that the FTC drop their in-house case for their deal.

As reported by Leah Nylen, the case’s next scheduled court date is on August 2, 2023. FTC has to decide to accept Microsoft’s request, or to go ahead with the trial, by tomorrow.

The request cites FTC rule 3.26. The rule explicitly states that in the situation where the FTC fails to get an injunction to block a business merger, they can decide to end their own internal litigation.

Microsoft says on page 2 of the document that:

“Withdrawal would advance the public interest and the core purpose of Rule 3.26(c). After a five-day evidentiary hearing, the district court found that the FTC is unlikely to succeed on any of the theories of competitive harm advanced in its Complaint for multiple, independently sufficient reasons.”

Of course, Microsoft also cites the deals they had struck with competitors like Sony and Nintendo, that handles the matter of possible anticompetitive concerns with the deal.

Earlier in the day, the judge assigned to the FTC case, Chief Administrative Law Judge D. Michael Chappell, spoke up about this case, while he was in the middle of a different case.

Leah Nylen was again on the beat when she tweeted this:

“FTC’s ALJ Chapell, in a hearing for another case, says they are “in limbo” on the Microsoft case right now.

But he thinks its a “waste of time and energy” to have admin trials move forward when the federal courts are considering issues related to the same merger.”

This indicates that Judge Chappell was likely already thinking around the same lines as Microsoft and Activision. If the FTC continues their case, it’s likely for Judge Chappell to defer to Judge Corley’s decision in federal court, as well as the abovementioned Rule 3.26. It probably means Judge Chappell is going to dismiss the case anyway.

And in a way, this trial already didn’t matter in a completely different way. The FTC changed their own internal rules around in such a way that they can decide to disregard Judge Chappell’s ruling if it isn’t to their satisfaction.

So, truthfully, this internal hearing may be nothing more than a waste of taxpayer money and the time of everyone involved. Whether Judge Chappell’s comment or Microsoft’s and Activision’s formal request would sway the FTC to end this exercise is another thing entirely, unfortunately.