The Brazilian government has just given its approval to the Microsoft Activision-Blizzard merger.
The Brazilian competition authority (CADE), despite Sony’s earlier claims that the Call of Duty franchise is irreplaceable in the shooter genre and that Xbox exclusivity may very well affect console purchases, has now allowed the translation without any conditions or concessions. Given that the Brazilian authority is one of the more scrutinised authorities, this is pretty interesting.
The authority noted that it is not their responsibility to defend Sony’s or PlayStation’s position or interests in the market in addition to authorising the agreement. Brazil’s statement also cites their belief that the market wouldn’t become less competitive even if Microsoft made the Call of Duty or Activision libraries Xbox-exclusive.
With regard to the possibility of foreclosure in downstream markets, the analysis pointed out that, despite their relevance and popularity, Activision Blizzard’s games – and especially the Call of Duty series – would not be essential assets for the activities of Microsoft’s current and potential competitors in the console and digital game distribution markets (considering, in the latter, both digital shops and subscription services for multiple PC and console games). Thus, even if Activision Blizzard’s game catalog were to become exclusive to Microsoft’s ecosystem after the Transaction, the SG/CADE considers that such exclusivity would not result in a substantial reduction in the levels of competition in the downstream markets, even if it could translate into a competitive advantage for Microsoft.
It is also important to emphasize that the main objective of CADE’s actions is the protection of competition as a means to promote the welfare of the Brazilian consumer, and not the defense of particular interests of specific competitors.”
-Translated version of the statement
The CADE decision goes on to say that it thinks exclusive material has been “very important” for the industry’s rivalry and a key component in PlayStation and Nintendo’s leadership positions.
Exclusive games are a benchmark of competition between Microsoft and SIE, although no company has so far developed or acquired an exclusive game that has decisively shifted the balance in favour of a console. This is because proprietary exclusive games are less popular and represent less revenue than third-party AAA games, which, until then, are available on Xbox and PlayStation.”
One of the trendsetters in making its correspondence over the merger public was the Brazilian regulator, who also had unprecedented access to Q&A responses from firms including Sony, Ubisoft, Amazon, and Google. The decision is in accordance with the General Authority for Competition of Saudi Arabia, which stated in August that it had “no objection” to the proposed acquisition of the games business.
Regulators from around the world are currently reviewing the proposed $68.7 billion acquisition because of antitrust concerns at a time when the gaming sector is consolidating more and more.
It would be interesting to watch how the other major authorities will treat the merger now that Brazil has given its clearance.
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