Kemi Badenoch defends CMA's rejection of Microsoft/Activision merger

Thu 21 Sept 2023
Posted by: Benjamin Roche
Trade News

CMA's logo on screen

Business and trade secretary Kemi Badenoch defended the Competition and Markets Authority’s (CMA) decision to block a major tech merger during her evidence session with the Business and Trade Select Committee on Tuesday (19 September).

Merger meddling?

Earlier this year, the UK’s competition watchdog rejected a proposed merger between Microsoft and Activision, saying this was done to protect “innovation and choice in cloud gaming” and that the move would have “stifled competition in this growing market.”

Stoke-on-Trent North MP, Jonathan Gullis, raised Microsoft president Brad Smith’s comments on the CMA’s decision.

Smith said the decision was “bad for Britain” when the merger had already been approved in several other markets.

The FT has reported this week on comments from former CMA deputy director Ronan Scanlan, now a member of law firm Arthur Cox, who said that the controversy has “done a lot of damage to the reputation of the UK regime and to certainty” in the mergers space.

Case for the defence

Badenoch defended the agency’s decision and made the point that the merger had not been approved in the US, Microsoft’s main market. She said:

“If the CMA is doing something wrong, that will become evident through a pattern, which is not yet the case. The CMA’s job is to protect the consumer.”

She added that adjusting the regulator’s stance each time a business complained that a decision was unfair would create a “lopsided regime”, and that the independence of the CMA was important.

That role is one that requires technical expertise, Badenoch said, while noting that there is also ministerial oversight of the body’s work.

The business secretary described the UK’s tech sector as “very healthy”.

‘Diminished’ WTO?

Charlotte Nichols raised the subject of trade deal negotiations in a question to the minister on comments by Crawford Falconer, the Department for Business and Trade’s (DBT) second permanent secretary, suggesting WTO has a “diminished role” in global trade.

Badenoch said:

“WTO has many countries, many of them at loggerheads at an existential level. That sometimes makes getting things through quite difficult—when you have blocs of like-minded partners, there’s a lot more you can do.”

On the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Badenoch argued that progress was quicker than at WTO level.

“Those of us who want to do business together and get an agreement can just move on.”

Speaking more broadly on the global economy, the minister said it was being “distort[ed]” by the US’s Inflation Reduction Act.

She also refused to put a deadline on any India-UK trade deal.