Legal director Sandeep Vaheesan writes an article regarding Activision Blizzard being blocked by the U.K.’s Competition and Markets Authority and how vertical mergers are affected with repercussions.

The U.K.’s competition regulator recently blocked Microsoft proposed acquisition of video game developer Activision. Microsoft plans to appeal the ruling. The decision is a big deal in its own right, but just as importantly, it represents a broader rethinking of consolidations between firms in a buyer-seller relationship. This reassessment of such vertical mergers goes well beyond the U.K.

Microsoft is one of the largest corporations in the world and a major player in video game consoles and services. Activision is the maker of leading games such as the Call of Duty series and World of Warcraft. Antitrust authorities, in the U.S. in particular, have recently taken a much more hostile stance toward vertical mergers. After decades of generally lax enforcement of anti-merger law, this is a welcome development.

In its decision, the U.K. Competition and Markets Authority recognized that owning Activision’s portfolio would give Microsoft a potent competitive weapon. The regulator found that Microsoft could withhold titles such as Call of Duty from competing gaming platforms or license them on discriminatory terms. In other words, Microsoft could use Activision games as a tool to give its own products and services an important leg-upover rivals.

Read full article here.