Last week the CMA announced that it has provisionally found so-called ‘vertical’ competition problems with the Microsoft/Activision deal, centring on the popular game ‘Call of Duty’.
A vertical problem is one that results from of the coming together – or greater coming together – of different levels in a supply chain, rather than a combination at the same level.
In the past few days there has been a lot of commentary on last week’s announcement, some of it suggesting that this case is somehow unique or unusual.
So – How unusual is this outcome?
As always, it depends how you measure it. But here are a couple of thoughts………
This case is one of 14 where the Phase 1 investigation identified vertical competition problems sufficient to justify reference to an in-depth Phase 2 investigation.
To put this is context, there have been around 90 completed CMA Phase 2 investigations to date.
Five of the previous thirteen survived the CMA process.
This is a very similar survival rate to other Phase 2 cases
In my assessment, the Microsoft/Activision CMA Phase 2 investigation is one of eight to focus primarily or exclusively on vertical matters.
If the CMA decided to prohibit the current transaction it would mean that three of the eight did not survive the CMA process.
If, instead, the CMA accepted a remedy to the competition problems identified, this would the first among these eight cases.
There may well be other ways of looking at the question of how distinctive this case is.
Do comment below or drop me a line if you have other perspectives.
This post builds on data from a briefing on this case held in the first week of the year which also looked at the detail of the Phase 2 process and the significance of the extension to the Phase 2 timetable.