Microsoft Corp’s planned $68.7 billion acquisition of “Call of Duty” maker Activision Blizzard Inc. hit another hurdle Tuesday, when a group of gamers challenged the deal in court, claiming that the purchase will unlawfully squelch competition in the video game industry.
The federal antitrust lawsuit, filed in San Francisco, comes less than two weeks after the Federal Trade Commission sued to block the merger between Activision Blizzard, one of the world’s top video game publishers, and Microsoft, the manufacturer of the Xbox console.
The private lawsuit was filed on behalf of 10 video game players in California, New Mexico and New Jersey.
Similar to the FTC case, the gamers are seeking a court order prohibiting the companies from consummating the merger, nullify the break-up fee and pay their legal costs.
The gamers’ suit alleges that the merger would violate the Clayton Antitrust Act by reducing competition in the gaming sector and by extension harming the public.
Their complaint cites concerns that the union would give Microsoft power over multiple levels of the gaming industry “to foreclose rivals, limit output, reduce consumer choice, raise prices, and further inhibit competition.”
“Microsoft has already shown that it can and will withhold content from its gaming rivals,” Holly Vedova, Director of the FTC’s Bureau of Competition wrote in a press release. “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.”
A Microsoft representative on Tuesday defended the deal, saying in a statement that it “will expand competition and create more opportunities for gamers and game developers.”
Following the FTC lawsuit, Microsoft President Brad Smith said, “We have complete confidence in our case and welcome the opportunity to present our case in court.”
In a statement, plaintiffs’ attorney Joseph Saveri in San Francisco said, “As the video game industry continues to grow and evolve, it’s critical that we protect the market from monopolistic mergers that will harm consumers in the long run.”
Private plaintiffs can pursue antitrust claims in U.S. court, even while a related U.S. agency case is pending.
The takeover, announced in January, also faces antitrust scrutiny in the European Union.
