EU says Microsoft’s Zenimax deal ‘could fall within rules’ but no approval yet

Competition regulator calls for third parties to submit their observations

EU says Microsoft’s Zenimax deal ‘could fall within rules’ but no approval yet

The European Union has found that Microsoft’s proposed $7.5 billion acquisition of ZeniMax could fall within its competition regulations, but no final decision has been made on the deal.

As reported last week, the EU will decide by March 5 whether to clear the acquisition, which would see the Xbox firm gain ownership of games publisher Bethesda and its many franchises including Fallout, The Elder Scrolls and Doom.

The European Union’s competition law is the most influential in the world alongside the United States’ own antitrust regulations.

In a statement published following Microsoft’s request proposal this month, the EU revealed that Microsoft is planning to acquire ZeniMax by means of a merger with a newly created Microsoft subsidiary called ‘Vault’. This is a similar approach to how EA is proposing to acquire Codemasters.

EU says Microsoft’s Zenimax deal ‘could fall within rules’ but no approval yet
The EU will rule over Microsoft’s proposed $7.5bn acquisition of ZeniMax.

“On preliminary examination, the Commission finds that the notified transaction could fall within the scope of the Merger Regulation. However, the final decision on this point is reserved,” the EU said in its statement.

The Commission is now inviting “interested third parties” to submit their possible observations on the proposed deal to the Commission. Observations must reach the Commission no later than February 15.

The EU can clear the deal with or without concessions during its preliminary review or it can open a full-scale investigation if it has major concerns.

Competition law seeks to maintain market competition by regulating anti-competitive conduct by companies. In the case of mergers and acquisitions, regulators can prohibit deals which are considered to threaten market competition, or suggest remedies such as an obligation to divest part of the new business.

In the last decade, the EU blocked a proposed merger between Dutch logistics company TNT and American rival UPS, as well as a the proposed takeover of Aer Lingus by Ryanair.

Microsoft announced its intention to acquire ZeniMax Media and its game publisher Bethesda Softworks for $7.5 billion in September last year, with the deal expected to be completed in early 2021.

Microsoft’s acquisition of ZeniMax Media will see Xbox Game Studios grow from 15 to 23 development teams.

EU says Microsoft’s Zenimax deal ‘could fall within rules’ but no approval yet

Employing some 2,300 staff worldwide, Bethesda Softworks studios include Bethesda Game Studios (Fallout, Elder Scrolls), id Software (Doom), ZeniMax Online Studios (Elder Scrolls Online), Arkane (Dishonored, Prey), MachineGames (Wolfenstein), Tango Gameworks (The Evil Within), Alpha Dog, and Roundhouse Studios.

Head of Xbox Phil Spencer recently said he believes that Bethesda’s development teams will be “very, very critical” to the future of the Xbox platform.

Discussing Xbox’s plans for the year in an Xbox podcast earlier this month, Spencer said he was excited to finally complete the acquisition “so that we can start working like one company.”

“I’m excited about 2021 and Bethesda is an important part of that,” he said.

“2021 is when we’ll get final approval. I feel really good about that: everything is on track. We’ll start then really getting to some of the planning that we can do with them. Right now we’re really hands-off with them as they continue to do the work that they’re doing, because we don’t own them yet.”

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