Since the disputes over the Activision Blizzard purchase process began, Sony has been one of the main opponents of the operation, along with Google and, until recently, Nvidia. Sony’s arguments have mainly revolved around the possibility that Call of Duty ends up being exclusive and that Microsoft could devalue Activision Blizzard games offered to rival consoles. In addition to the possibility of turning the scales in favor of Xbox services, if Activision Blizzard games come out on Xbox Game Pass.
However, despite its accusations, Sony has repeatedly refused to provide the documentation required by Microsoft to defend itself against them. And this, at a European level, can be very expensive for Jim Ryan’s company: Regulation (EC) No. 139/2004 of the Council of January 20, 2004, on the control of concentrations between companies, the rule by which that is being governed Activision Blizzard and Microsoft merger in the territory of the European Union, prevents the blocking from being carried out by hiding information or hindering the right to defense of the affected parties (Microsoft and Activision Blizzard, in this case).
Sony may not misrepresent Microsoft and Activision Blizzard; This is what the European regulations say:
1.- Right to defense and access to the file: inviolable for Microsoft and Activision Blizzard
To begin with, you have to start with a clear idea: Sony cannot prohibit Microsoft from accessing your information, as long as this information is not reserved. This premise, fundamental in the European Union, derives from the guarantee of the rights of transparency and access to documents of the institutions of the European Union («Every citizen of the Union, as well as every natural or legal person residing or having its registered office in a Member State, shall have the right to access the documents of the institutions, bodies and agencies of the Union, whatever their support (… )«, Article 15.3 of the Treaty on the Functioning of the European Union) and defense («respect for the rights of the defense is guaranteed to all defendants“, Article 48.2 of the Charter of Fundamental Rights of the European Union).
These rights, in addition to the previous regulations, are also provided for in company concentrations. Specifically, Council Regulation (EC) No. 139/2004 of January 20, 2004 establishes the following:
Audience of interested parties and third parties.
1. Before adopting decisions (…) the Commission will give affected individuals, companies and associations of companies the opportunity to express, at all stages of the procedure up to the consultation of the Advisory Committee, their observations regarding the objections raised against them.
3. The Commission will base its decisions solely on the objections regarding which the parties have been able to formulate their arguments.. In the course of the procedure, the defense rights of those interested. He access to the file it will be possible at least for the parties directly concerned, as long as the legitimate interest of companies to protect their trade secrets is respected.
The above makes two ideas clear. The first of these is that Microsoft and Activision Blizzard have the right to access the complete file of the process at all times, being able to exercise their right to argue, express or give an opinion in this regard at any stage of the entire procedure. And what’s more, the European Commission can only block the deal based on objections Microsoft and Activision Blizzard have been able to raise; that is, based on information that they have previously been able to know. Therefore, information not disclosed by Sony cannot be taken into consideration to block the purchase.
2.- What is meant by “confidential information” of Sony?
The second idea is that Sony can only prevent Microsoft from accessing your confidential information, but not to all of your information. To find out what the concept of “trade secret” covers, we have to go to Directive (EU) 2016/943 of the European Parliament and of the Council, of June 8, 2016, on the protection of technical knowledge and business information. undisclosed (trade secrets) against their unlawful collection, use and disclosure, which it defines as trade secret that information that meets these three requirements:
Be secret (in the sense of not being known by the people who belong to the circles where that information is used).
It has commercial value because it is secret.
Have reasonable safeguards in place to keep it secret.
In other words, it is not enough for Sony to claim that your information is secret in order not to divulge it, but it is necessary that this information meets these three requirements for it to be considered private. It is true that Sony has commented that there is some information requested by Microsoft, about patents and business form, that could be included within that confidentiality. So the European Commission would have to separate the information, identifying that which could be confidential and, what is more important, assessing whether the agreements that have been entered into between Sony and Activision Blizzard they comply with the elements of confidentiality.
2.- The breach of the right to defense would throw the blockade to the ground.
In view of the above, a situation could occur that we could call a “deadlock”: what would happen if Sony’s confidential information collided with Microsoft’s right to defense? What if there is some information that Sony may not disclose, but is necessary to either approve the deal or block it? If Sony’s information is confidential, Microsoft will not have the right to access it. But the The European Commission will not be able to block the agreement either if Microsoft has not accessed that information and it is essential to prevent the purchase of Activision Blizzard.
The European Commission can never, under any circumstances, break the right to defense of those interested in the proceedings, because “it will base its decisions solely on the objections regarding which the parties have been able to formulate their allegations”.
Therefore, if the European Commission makes a decision preventing Microsoft’s defense, both Microsoft and Activision Blizzard would have every reason to appeal to the Court of Justice of the European Union and, in the event that the appeal is upheld, the Court could declare the blockade null and void. As provided for in article 263 of the Treaty on the Functioning of the European Union:
“He Court of Justice of the European Union will control the legality of legislative acts, of Council acts, of the Commission and of the European Central Bank that are not recommendations or opinions, and of the acts of the European Parliament and of the European Council intended to produce legal effects against third parties. It will also control the legality of the acts of the bodies or agencies of the Union intended to produce legal effects against third parties.
every person physical or legal may appealunder the conditions provided for in the first and second paragraphs, against the acts of which it is the recipient or that affect it directly and individually and against regulatory acts that affect it directly and that do not include enforcement measures.
Given the current situation and the state of the process at that time, all that remains is to wait for the European Commission to assess the information that is necessary to adopt its decision, separating it from that which may enter the field of confidentiality.