The staff of the Federal Trade Commission (FTC) has just uploaded an order (PDF) by the agency’s Chief (and only) Administrative Law Judge (ALJ) D. Michael Chappell dated February 23, 2023. The order addresses Sony’s motion to quash or limit Microsoft’s subpoena in the FTC’s in-house adjudicative proceeding concerning the acquisition of Activision Blizzard King. For the most part it’s a defeat for the PlayStation maker that makes it look absurd that Sony had accused Microsoft of “obvious harassment” (in the form of discovery requests):
Sony’s request to limit custodians (people whose documents must be produced) is denied even with respect to a Sony in-house antitrust counsel. Also, Sony had argued that searching a Japanese executive’s files would be unduly burdensome because those documents are in Japanese, and that didn’t persuade the judge either.
Judge Chappell mentions that according to Sony, Microsoft would have been willing to drop one of those custodians from the list if the two parties had reached an agreement on the scope of discovery through negotiations. But in the absence of such an agreement, Judge Chappell decided that part against Sony. It’s possible that not only in that respect but also in others, Sony could have obtained a better result through an agreement with Microsoft.
Sony’s requests to quash document requests are largely denied.
The only somewhat meaningful win for Sony is that various of Microsoft’s document requests are limited to the time period from January 1, 2019 to present (as opposed to the last ten years). However, that period should really be sufficient for Microsoft’s lawyers to find material that strengthens their defenses (such as with respect to the importance of Call of Duty).
Judge Chappell also granted Sony’s request to quash document request 13, which related to performance reviews of Jim Ryan and those directly reporting to him. On Feburary 17 I already wrote about that one:
Some narrowing of Microsoft’s subpoena may happen. For example, Sony objects to Microsoft’s request for access to performance reviews for the relevant Sony executives. While Microsoft is right that courts have decided that type of request in different ways, there is no guarantee that the FTC’s Chief (and presently only) Administrative Law Judge (ALJ) D. Michael Chappell will require the production of such documents here.
As you can see, I correctly identified the most ambitious discovery request at issue.
It was in this context that Sony alleged “obvious harassment”, but the fact that its motion as a whole largely failed shows that Sony exaggerated.
A footnote mentions that Judge Chappell also denied Sony’s motion for leave to file a reply brief in support of its motion. Judge Chappell did not see anything in the proposed reply brief that couldn’t have been raised in the original motion.
Sony knows that its opposition to Microsoft’s acquisition of Activision Blizzard King may–as I wrote in January–have unintended consequences.
In other news related to this merger, the European Commission has extended the deadline by another ten working days until April 25, 2023. As a result, decisions are now scheduled for the last week of April in three jurisdiction: the EU (25th), UK (26th), and New Zealand (28th). I’ve updated my timeline chart:
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