14 DAY TRIAL // The European Commission, the executive branch of the European Union, has given the all clear in regard to the attempted merger between Activision and Vivendi Games, part of the Vivendi Universal conglomerate.
The Commission has been investigating the merger on the grounds of its possible impact on the economic competition within the European economic zone. Any big business move has the potential to create a monopoly or promote unfair business practices. In the case of the proposed union between Activision and Vivendi Games there were concerns that the new company would have the power to enforce its own market practices in disregard of the best interest of the European customer. There was also some concern that games companies based in Europe, like for example Ubisoft, would have a disadvantage in competition with the new company.
But the report of the European Commission concluded that the upcoming merger "would not significantly impede effective competition in the European Economic Area or any substantial part of it." Furthermore it found that the new company (a suggestion, decide on a name already; something like Activendi or Victivision, because it's getting harder and harder to type "new company") would not be in a virtual monopoly position as it still faces clear competition for the likes of Electronic Arts, Sony, Nintendo or Microsoft.
The only concern expressed was the position of the future Activision Vivendi entity in the music business. It's a bit messy but it goes as follows. The merger is actually a buy-out. Vivendi, which owns Vivendi Games, will buy a controlling stake in the newly founded company. Control will rest with current Activision Chief Executive Officer Bobby Kotick but Vivendi would own more than 50% of the shares.
Vivendi currently also owns Universal Music and the European Commission feels that this ownership could put the new company in a position to have an unfair advantage. But such fears are not sufficient cause to stop the merger itself.
Vivendi has initiated several financing initiatives to fund the deal, including securing loans of some 6.3 billion dollars by January and then adding an additional 1.4 billion dollars earlier this month by issuing corporate bonds.
The progress on the merger is deemed good by the parties involved and by June the process should be complete. We also hope the new company will get a cool name. Something involving Activision and Blizzard, the best known part of Vivendi Games (sorry, Sierra).