Revolut boss Nick Storonsky (right) with Chancellor Jeremy Hunt, who called fintech «a shining example»; sectors Credit: LinkedIn
Activision is one of the largest gaming companies in the world, owning games such as Call of Duty, World of Warcraft and Candy Crush Saga.
CMA has blocked its takeover by Microsoft, which owns the Xbox console, warned that the deal would leave the company dominating the fast-growing cloud gaming market.
This week, the European Commission approved the deal on the condition that Microsoft make Activision games available on other game streaming services.< br />
This decision strengthened control over the CMA, given the divergence from its nearest neighbor.
Mr Bockerink said the CMA did not agree with the EU decision. He argued that Microsoft's concessions would «replace the free competitive market with a market that is subject to new permanent regulation of the games Microsoft sells, the platforms it sells them on, and the terms of the sale.»
He defended more broadly regulation at a time when the authorities are accused of holding back growth.
“Competition and competitive markets can be an amazing force for good. Good for people who get real choice at high quality and low prices. Good for businesses that are free to innovate, grow and reap the rewards. And good for the economy through productivity gains, innovation, business investment, job creation and rising real wages.»
Mr Bockerink wrote: competition.”
Microsoft has promised to appeal the CMA's decision, and the complaint is expected to be filed with the Competition Court of Appeals within days. The US Federal Trade Commission is filing a separate lawsuit to block the deal.
“The UK is more open for business than ever because it supports competition”,
Markus Bockerink
Over the past 30 years, I have had the honor work with more than a hundred companies of all shapes and sizes, from long-established multinational corporations to scattered start-ups. I helped create their customer offerings, their business models and their competitive strategies.
So when I look at the role of competition in the UK economy, I am not from an economist's or a lawyer's perspective. It's like a businessman.
What I have learned in my career is that competition and competitive markets can be an amazing force for good. Good for people who get real choice at high quality and low prices. Good for businesses that are free to innovate, grow and reap the rewards. And good for the economy through higher productivity, innovation, business investment, job creation and real wage growth.
The importance of competitive markets and the hugely positive impact this has had on investment and growth has been key motive when I assumed the role of chairman of the CMA. This is at the heart of our new strategy at CMA.
If we allow entrenched market power to grow, we will all suffer. Companies that want to compete suffer. Innovators who want to bring their innovations to market suffer. People who strive for choice and continuous improvement in quality and price suffer.
This is why I fundamentally disagree with the suggestion that the CMA's decision to prevent Microsoft's acquisition of Activision means the UK is closed for business. Indeed, I was surprised that some took this statement at face value.
Let me recap the solution. Last month, a panel of independent commissioners completed a thorough year-long investigation into Microsoft's proposed $69 billion (£55 billion) purchase of Activision. New post-Brexit powers have allowed us to focus on impacting people and businesses in the UK.
1605 Microsoft acquisitions in the top 10
Activision's turnover in the UK is £700m a year, 10 times the threshold at which we can consider deals, and more than a tenth of its global turnover. Millions of UK citizens play their games and millions more will play in the future. So it was very clear that we needed to consider this deal.
As in the United States and in Europe, the CMA found serious competition concerns about how the deal would affect the future of cloud gaming — a way to play games more like streaming TV, which is predicted to grow in the coming years.< br />
Unlike the European Commission, the CMA concluded that Microsoft's proposed solution would not address these issues comprehensively and effectively. What's more, they will replace a free, competitive marketplace with a marketplace that is subject to new, permanent regulation of the games Microsoft sells, the platforms it sells them on, and the terms of the sale. The FTC is also suing to block the deal.
Not that merge prevention isn't something the CMA takes lightly. Of the thousands of mergers and acquisitions that affect the UK every year, only a few are banned. Almost everyone goes ahead and does business rather than getting into the news. This includes Microsoft's 2021 purchase of speech software company Nuance, the company's second largest acquisition.
The UK is more open to business than ever with its competitive approach.< /p>
How can we effectively implement this approach in today's world? One of the most effective ways to protect competition and innovation is to prevent the development or growth of entrenched market power in the first place. This is where merger decisions play a decisive role.
In other words, for the CMA, the starting point is prevention, not regulation. Surely it was better to have Sainsbury's and Asda compete with each other and other supermarkets than let them merge and regulate? That's why we blocked him.
There are times when powerful companies may want to take over an otherwise independent business by offering to regulate how, when and where they do business. We need to be careful about this, replacing the uncertainty and energy of competition with regulation frozen in time. Very seldom is it good for competition, other businesses or consumers.
The UK has the largest technology sector in Europe and one of the largest in the world. At the heart of this are tech entrepreneurs and emerging companies working around the clock to grow and thrive. We are indebted to them so that they can compete freely. A world dominated by a few powerful businesses does not benefit anyone but those businesses and, of course, British tech and the UK economy.
Merger control can prevent the acquisition of market power, but where that power is already ingrained, strong regulation may be required. But it must be competitive. That is why the Digital Markets, Competition and Consumers Bill, which was debated in Parliament this week, is so important. This ensures that any regulatory action is flexible, sensible, individual, tailored and, most importantly, directed only at those firms with the most market power.
Competition is not a given, it is hard work. It takes constant effort to stay ahead of the competition, innovate, and become even more efficient and productive. This is why some firms end up looking for workarounds in an attempt to limit, disarm, or even eliminate their competitors. We must constantly look to blunt the competitive process.
Free and open competition is an unrivaled force for innovation, productivity and growth in the UK. The CMA's job is to keep it that way, and that's our job.
Markus Bockerink — Chairman of the Competition and Markets Authority
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