Can someone explain to me how a UK regulator has the power to block a merger between two US companies - I get that they can say its blocked - but what kind of powers do they have to enforce it from not happening?
They can issue fines to Microsoft UK and ultimately block Microsoft from the market.
UK is 67 million people, so not as big as USA and EU, but significant enough that in balance it’s not worth the perpetual multi-year headache that Microsoft would have explaining the situation to shareholders if they were not to comply.
They would never be allowed to block Microsoft from the market though - the NHS runs on windows, and basically every other arm of our government - surely the fines wouldn't ever be more than the gain due to the merger?
In antitrust fines are generally not capped, since the whole point is to make giant companies pay attention. The EU fined Google 2.4B euros in 2017, then 4.3B again the following year. Even for Google, 7 billion USD isn’t play money.
A market block wouldn’t have to be all or nothing. Maybe start with the offending products: Activision games, Microsoft’s cloud gaming service, etc.
The CMA can block access to the UK market and impose fines amounting up to 10% of a firm's global revenue plus impose other requirements to restore access to the UK.
It's broader than that. The CMA considers impacts of mergers (and other competition-related concerns) on UK markets regardless of where an entity is headquartered. It has broad investigative and enforcement powers over any entity selling in UK markets with over $70M GBP in revenue from UK markets or 25% of market share in a given vertical. If Microsoft and Activision merged without making accommodations to satisfy the CMA, the CMA would be able to block their access to the UK market and fine them.
Presumably this is an option, but not a good one. I'm not sure what would happen to Activision IP in UK - Microsoft wouldn't be able to use any of their newly acquired Activision IP in the UK?
