Compass Lexecon Clients Microsoft and Activision Prevail in FTC’s Appeal of Landmark Merger Case

The US Court of Appeals for the Ninth Circuit rejected the Federal Trade Commission’s challenge to the $69 billion Microsoft/Activision merger, affirming a lower court ruling that the enforcer failed to show the deal would likely harm competition for console and cloud gaming.

Compass Lexecon was retained by Microsoft and Activision Blizzard to provide economic analysis and expert testimony regarding the competitive effects and procompetitive efficiencies arising from Microsoft’s proposed acquisition of Activision. The Federal Trade Commission sought a preliminary injunction in federal court in the Northern District of California to halt consummation of the merger while the FTC’s administrative court process proceeded.

Professor Dennis W. Carlton served as the key economic witness for Microsoft at the preliminary injunction hearing. The district court ruled in favor of Microsoft and Activision, relying heavily on Professor Carlton's “unscathed and persuasive” testimony that rebutted the analysis of the FTC’s economic expert. The appellate court agreed with the district court’s analysis and denied the FTC’s appeal.

Professor Carlton was supported by a Compass Lexecon team led by Yoad Shefi that included Joseph Goodman, Junyan Guan, Ali Hortacsu, Theresa Sullivan, Tal Wolfson, Dan O’Brien, and Ali Yurukoglu.

Compass Lexecon worked closely with attorneys at Wilkinson Stekloff led by Beth Wilkinson and Rakesh Kilaru that included Sarah Neuman, Jenna Pavelec, and Emily Clarke; with attorneys at Skadden, Arps, Slate, Meagher & Flom led by Steven Sunshine that included Julia York, Michael Sheerin, and Evan Kreiner; and with attorneys at Weil, Gotshal & Manges led by Megan Granger and Michael Moiseyev.