Britain’s Competition and Markets Authority said on Thursday it was referring the mega deal to further scrutiny as part of a so-called phase two investigation.
The watchdog said that based on the information available, “the transaction may be expected to significantly reduce competition” in the UK.
The all-cash deal, which is set to be the largest in the history of the tech industry, faces scrutiny from competition regulators around the world. Microsoft, the maker of the Xbox console and game system, will give control of popular game franchises such as Call of Duty, World of Warcraft and Candy Crush.
In the UK, regulators opened a preliminary investigation and threatened to escalate it earlier this month unless companies come up with proposals within five days to allay their concerns.
“Microsoft has informed the CMA that it will not make such pledges,” the agency said last week.
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Microsoft declined to comment and cited a statement this month from President Brad Smith, who said the company was ready to work with UK regulators and was committed to making Activision’s popular Call of Duty game available on both the Xbox and rival Sony PlayStation.
More than eight months after Microsoft announced the deal, only Saudi Arabia approved it. Competition watchers from New Zealand to Brazil and the United States are still scrutinizing the purchase, while the European Union is soon expected to announce its own investigation.