The FTC filed suit Thursday to block Microsoft’s proposed $68.7 billion buy of Activision Blizzard (see 2204280041), claiming the deal would allow Microsoft to “suppress competitors to its Xbox gaming consoles and its rapidly growing subscription content and cloud-gaming business.” The FTC voted 3-1 along party lines to pursue the lawsuit, with GOP Commissioner Christine Wilson the lone opponent. A copy of the FTC’s complaint wasn’t immediately available. “Microsoft has already shown that it can and will withhold content from its gaming rivals,” said FTC Competition Bureau Director Holly Vedova. “Today we seek to stop Microsoft from gaining control over a leading independent game studio and using it to harm competition in multiple dynamic and fast-growing gaming markets.” Activision “is one of only a very small number of top video game developers in the world that create and publish high-quality video games for multiple devices,” but “that could change if the deal is allowed to proceed,” the FTC said: “With control over Activision’s blockbuster franchises, Microsoft would have both the means and motive to harm competition by manipulating Activision’s pricing, degrading Activision’s game quality or player experience on rival consoles and gaming services, changing the terms and timing of access to Activision’s content, or withholding content from competitors entirely, resulting in harm to consumers.” Microsoft CEO Brad Smith vowed in a statement to fight the lawsuit, noting the company offered “proposed concessions” to the FTC earlier this week. Microsoft “has been committed since Day One to addressing competition concerns,” he said: “While we believed in giving peace a chance, we have complete confidence in our case and welcome the opportunity to present our case in court.” The FTC’s action “sounds alarming, so I want to reinforce my confidence that this deal will close,” said Activision Blizzard CEO Bobby Kotick in a letter to employees Thursday. “The allegation that this deal is anticompetitive doesn't align with the facts, and we believe we’ll win this challenge.”
The four-day hearing that opened Thursday in U.S. District Court for Northern California in San Jose on the injunction the FTC seeks to block Meta’s Within Unlimited buy is “the most significant effort to date by the current antitrust agencies to expand antitrust powers in the digital economy,” reported New Street Research. “This is litigation that both the progressive forces pushing for more aggressive antitrust enforcement and the forces seeking to stop such enforcement have been hoping for,” it said. The progressives wanted a case that would test “novel theories of antitrust harm,” by applying antitrust law to potential competition, and preventing established big tech companies from buying up potential competitors in nascent markets, it said. Those who advocate for reining in the FTC and DOJ “have wanted a case that would enable a court to shoot down the theories and send a clear signal to antitrust agencies that traditional antitrust jurisprudence is sufficient to prevent anticompetitive behavior in digital markets,” it said.
TikTok owner ByteDance asked the U.S. District Court for Northern California in San Jose Tuesday to keep under seal the “competitively sensitive” information it provided as a nonparty to the FTC’s lawsuit to block Meta’s Within Unlimited buy (see 2212040001). “Its public disclosure outweighs the public’s interest in accessing it,” said the ByteDance statement (docket 5:22-cv-04325). If confidential information on product development, business strategies and internal evaluations in Meta’s second amended exhibit list were disclosed, “ByteDance’s competitors would have an unfair advantage allowing them to replicate ByteDance’s potential business plans and circumvent the time and resources necessary to develop their own practices and strategies,” it said. Meta’s proposed redactions are “narrowly tailored to the specific portions of the list that reflect ByteDance’s highly confidential information” and therefore don’t unnecessarily limit the public’s general right to inspect public records, it said.
The 3rd Circuit U.S. Court of Appeals on Monday docketed the appeal (docket 1:20-cv-00186) of Smart Communications that seeks to vacate the Nov. 1 memorandum of U.S. District Judge Jennifer Wilson for Middle Pennsylvania in Harrisburg, granting the motions of Global Tel-Link (GTL) and other defendants to dismiss Smart's antitrust complaint. Smart alleged competitor GTL colluded with the York County, Pennsylvania, prison and its warden, Adam Ogle, in an unlawful "exclusive dealing" arrangement when Smart tried to replace GTL as the prison's vendor for inmate calling services. The prison and Ogle were named as GTL's co-defendants. The case was listed for possible dismissal due to a “jurisdictional defect,” said the 3rd Circuit clerk in an order Monday.
U.S. District Judge Edward Davila for Northern California in San Francisco vacated the hearing he previously scheduled for Feb. 23 on Meta’s Oct. 13 motion to dismiss the FTC’s Oct. 7 amended complaint to block Meta’s Within Unlimited buy on antitrust grounds, said a text-only entry Friday (docket 5:22-cv-04325). Davila will take Meta’s motion under submission without oral argument, said the entry. The FTC’s amended complaint leaves the agency with “no viable claim” to block the transaction because the commission’s only remaining argument is that Meta’s Within buy would lessen the “potential competition” in the market for dedicated virtual-reality fitness app, said the company’s motion to dismiss. “In the past four decades, no court has accepted a ‘potential competition’ theory to find an acquisition in violation of Section 7 of the Clayton Act,” said Meta. “On the contrary, every time the FTC has sought to enjoin such a transaction on that theory, the court has denied injunctive relief.” This court’s evidentiary hearing on the FTC’s motion for an injunction to block the transaction (see 2211300059) will start Friday. The hearing is scheduled to span portions of seven court days, said an Aug. 18 text-only docket entry.
Defendant Softbank was served Sept. 21 in Tokyo through diplomatic channels with the antitrust class action that seeks to overturn T-Mobile's Sprint buy, said a certificate of service newly docketed Thursday (docket 1:22-cv-03189) in U.S. District Court for Northern Illinois in Chicago. The case has been somewhat in limbo as the plaintiffs work to serve court papers on another foreign defendant, Deutsche Telekom, also through diplomatic channels. Plaintiff attorneys told U.S. District Judge Thomas Durkin in an Oct. 21 telephone status hearing they expect service to Deutsche Telekom to be complete by January, prompting the judge to schedule the next telephone status hearing for Jan. 27 (see 2210210032). Seven AT&T and Verizon customers brought the class action, alleging the T-Mobile/Sprint transaction caused their rates to skyrocket through reduced competition in the wireless space.
Midwest Cabinet Suppliers seeks a 10-day extension to Dec. 12 to respond to Verizon’s Nov. 11 motion to dismiss Midwest’s tortious interference complaint, said its motion Thursday (docket 3:22-cv-00493) in U.S. District Court for Western Kentucky in Louisville. Midwest’s counsel hasn't had time to fully review the motion to dismiss and prepare an appropriate amended complaint or response, it said. Verizon, in an immediate reply, said it consents to the extension. Midwest, the former supplier of retail store cabinets to a wireless reseller in Tennessee, alleges Verizon caused “significant damage” to its business when it forced the reseller to source its store fixtures from another supplier under an unlawful tying agreement (see 2210090003). Verizon’s motion to dismiss the lawsuit for failure to state a claim called Midwest’s allegations “meritless.”
There’s “clearly a stronger appetite” for antitrust litigation under the current leadership of the FTC and the DOJ’s Antitrust Division, Hogan Lovells partner Edith Ramirez said on her firm’s webinar Wednesday. She chaired the FTC during President Barack Obama’s second term. “We are seeing greater inclination on the part of the agencies to litigate, and I don’t see that changing anytime soon,” she said. “A lot of the cases that we’re seeing the agencies bring are ones that we would have seen in the past, but there are also cases that likely would not have been brought,” said Ramirez. “The upshot is that the review process is taking a lot longer, it’s a lot more burdensome and a lot more uncertain for the parties.” Those parties, she said, “are facing a number of high-stakes strategy decisions today as a matter of course, including whether they will be prepared to litigate if the agency disagrees with their arguments.” On how the FTC and DOJ “are being tested in court,” Ramirez thinks “so far, they have a mixed record.” In DOJ’s November 2021 lawsuit to block Penguin Random House’s buy of Simon & Schuster, “that was a matter in which DOJ did prevail,” said Ramirez. DOJ successfully argued “that the combination of the two publishing companies would lead to diminished competition,” she said. The U.S. District Court for the District of Columbia also agreed with DOJ that the transaction “would increase the likelihood of coordinated conduct among the remaining players,” she said. “I think we’re going to see more coordinated-conduct theories being asserted by the agencies going forward.”
Monday’s prehearing conference in the FTC’s lawsuit to block Meta’s Within Unlimited buy on antitrust grounds was moved to 10 a.m. PST from 9:30 a.m., said a text-only clerk’s order entered Wednesday (docket 5:22-cv-04325) at the U.S. District Court for Northern California in San Jose. Both sides requested the conference in a joint stipulation Nov. 15. The FTC and Meta tried to reach agreement on procedural and logistical issues “to facilitate the efficient presentation of evidence at the preliminary injunction hearing” scheduled to begin Dec. 8, said the stipulation. They said they agreed there are “specific issues regarding the procedures and presentation of evidence on which the parties would benefit from the Court’s guidance.”
U.S. District Judge Edward Davila for Northern California in San Jose signed an order Monday (docket 5:22-cv-04325) granting the motion for leave from 23 states, plus Washington, D.C., and Guam, to file an amicus brief supporting the FTC’s lawsuit to block Meta’s Within Unlimited buy. Davila's order said the Nov. 7 brief is "accepted as filed." The FTC supported the states’ motion, and Meta opposed it. The states urged the court in their brief to let the FTC “fully adjudicate” Meta’s Within acquisition by granting the injunction (see 2211080041).