LONDON (Reuters) - Microsoft (NASDAQ:MSFT) said Britain's competition regulator had relied on objections from its rival Sony (NYSE:SONY) in referring its $69 billion Activision Blizzard (NASDAQ:ATVI) deal to an in-depth inquiry, in particular "misplaced" concerns about 'Call of Duty'.
The Competition and Markets Authority (CMA) said last month that the acquisition could harm competition and needed to be investigated in depth.
Microsoft could use its control over popular games to harm rivals, including those operating in multi-game subscription services and cloud gaming, it said.
It was a "game-changing merger", it said in its full decision on Wednesday, which would give Microsoft best selling franchises including 'Call of Duty', 'World of Warcraft' and 'Candy Crush'.
"The CMA is concerned that having full control over this powerful catalogue (...) could result in Microsoft harming consumers by impairing Sony's — Microsoft's closest gaming rival— ability to compete," it said.
Microsoft said the CMA had adopted Sony's complaints without the "appropriate level of critical review".
In its submission, it said Sony's PlayStation had been the largest console platform for more than 20 years, and it was not credible to suggest its dominance would be challenged by losing access to one title.
"The Referral Decision incorrectly relies on self-serving statements by Sony which significantly exaggerate the importance of 'Call of Duty' to it and neglect to account for Sony's clear ability to competitively respond," Microsoft said.
It added that it had committed to keeping 'Call of Duty' on PlayStation.
"Our inquiry is about protecting competition in the interests of UK gamers and businesses. The Phase 1 decision identified three areas where the deal could cause harm: gaming consoles, multi-game subscription services and cloud gaming services," a CMA spokesperson said in a statement.
"We have now launched an in-depth investigation and our findings will be published in the New Year."
A spokesperson for Microsoft said: "This deal will benefit gamers, developers, and the industry as we seek to bring more games to more people."
A spokesperson for Sony PlayStation reiterated its view that the deal was "bad for competition, bad for the gaming industry and bad for gamers themselves".
"This deal would give Microsoft's Xbox ecosystem a unique combination of tech and content, and hence a dominant position in gaming, with devastating consequences for consumers, independent developers, and Sony itself," he said.
The deal, which was announced in January, will require approval in the United States as well as other major jurisdictions including the European Union and China.