Japan FTC expresses favor for Activision merger days after U.S. lawmakers’ USTR letter submission

On Tuesday, the Japan Fair Trade Commission (JFTC) announced its conclusion favoring the proposed $69 billion Microsoft-Activision deal. The news came after the members of Congress sent letters to U.S. Trade Representative Katherine Tai, urging actions from the Biden administration to address the competition issues U.S. companies are facing in the Japanese market.

The two letters were dated March 23, five days after JFTC issued its conclusion for the Activision acquisition review. It is unknown whether the lawmakers’ actions influenced the decision, but it can be recalled that the letters stressed the “imbalance” in the Japanese gaming market, which is expected to observe the U.S.-Japan Digital Trade Agreement. The lawmakers also asked USTR “to seek consultations with Japan to address this issue.”

“USTR should seek consultations with Japan under the Agreement to address concerns about unequal application of its antitrust law and the resulting discrimination against U.S. companies,” one of the letters reads. “In addition, USTR should consider identifying barriers to access to the Japanese gaming market in the forthcoming 2023 National Trade Estimate.”

Interestingly, days after the letters were made public, JFTC released its decision, expressing favor for the Activision deal, which is continuously being opposed by the Japanese business Sony. 

“The JFTC concluded that the transaction is unlikely to result in substantially restraining competition in any particular fields of trade,” wrote JFTC, which started its phase 1 review on March 10, on its website.

JFTC joined the list of other competition watchdogs expressing approval for the proposed merger. Its decision, however, is a huge blow for Sony, the biggest opponent of Microsoft in persuading different watchdogs to approve the deal.

Despite this, Microsoft has been experiencing gradual progress in the matter. Aside from JFTC’s decision, U.K.’s regulator also dropped one of its main concerns regarding the merger, agreeing with Microsoft’s consistent explanation that removing Call of Duty from PlayStation and other platforms is irrational for the business. After this news, Microsoft’s chance of closing the deal jumped from 50% to 70% at Citi.