By Paul Sandle

LONDON (Reuters) – Britain’s competition regulator on Friday extended its final deadline on Microsoft’s Activision Blizzard deal to Aug. 29 after its received a “detailed and complex” new proposal from Microsoft that claimed material changes in circumstance.

The Competition and Markets Authority (CMA) in April became the first and so far only major regulator to block the $69 billion acquisition of the “Call of Duty” maker, citing concerns about the impact on competition in cloud gaming.

The U.S. Federal Trade Commission is also opposed, but it suffered a major defeat on Tuesday when a federal court ruled in favour of Microsoft.

It is battling on and filed an emergency motion to an appeals court requesting a “temporary pause” to the deal closing late on Thursday. However, that appeal faces some significant hurdles.

In Britain, the CMA’s final report is usually the last word. Companies cannot offer remedies after its publication and their only recourse is the Competition Appeal Tribunal (CAT).

Yet on Tuesday, less than an hour after a U.S. federal court ruled the deal could go ahead, the CMA said it could look again at a modified proposal. The next day it said a restructured deal could satisfy its concerns subject to a new investigation.

All sides have applied to the CAT to pause the appeals process that is in train.

The CMA extended the deadline for its final ruling by six weeks to Aug. 29 on Friday, although it said it would aim to do it as soon as possible and before that date.

A Bloomberg report said Microsoft and Activision were considering giving up some control of their cloud-gaming business in Britain to appease the CMA.

Microsoft declined to comment on its new proposal.

FLEXIBILITY

Microsoft president Brad Smith met Britain’s finance minister Jeremy Hunt for talks last month according to a source, and he said later the same day he was “in search of solutions”.

“If the UK wants to impose regulatory requirements that go beyond those in the EU, we want to find ways to fulfil them,” Smith said.

Gareth Mills, a partner at law firm Charles Russell Speechlys, said the CMA was going to have to find a way through.

“They’ll be trying to rush this through as expeditiously as possible,” he said. “The matter of form is they can’t reopen a decision they’ve already taken. But that is what they will be doing in all but name.”

The CMA has declined to say how any investigation will be conducted. Under a normal investigation, a Phase 2 probe can take up to a year.

(Additional reporting by Muvija M; editing by Jason Neely and Louise Heavens)

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