By Sam Tobin and Paul Sandle
LONDON (Reuters) -Microsoft's (NASDAQ:MSFT) appeal against Britain's block on its $69 billion takeover of Activision Blizzard (NASDAQ:ATVI) was formally paused by a London tribunal on Monday, to give the parties more time to resolve the dispute.
Microsoft, Activision and Britain's competition regulator, the Competition and Markets Authority (CMA), had all asked for a two-month stay of the case after the CMA said it would consider a modified deal put forward by Microsoft.
The Competition Appeal Tribunal (CAT) ruled on Monday that the full hearing of Microsoft's appeal, which was due to begin on July 28, should be adjourned.
Judge Marcus Smith said he was willing to adjourn next week's hearing if the CMA provided set out why it considers there has been a material change in circumstances or special reason justifying its adjournment application.
The judge also asked for the CMA to set out any new consultation process "so that everybody is clear as to how it will work".
The CMA in April became the first major regulator to block the acquisition of the "Call of Duty" maker, citing concerns about the impact on competition in cloud gaming.
The U.S. Federal Trade Commission (FTC) has also opposed the tie-up, but suffered a major defeat last week when a federal court rejected the FTC's application to temporarily halt the deal.
In Britain, the CMA's final report is usually the last word. Companies cannot offer remedies after its publication and their only recourse is to the CAT.
But last week, less than an hour after a U.S. federal court ruled the deal could go ahead, the CMA said it could look again at a modified proposal. It later said a restructured deal could satisfy its concerns subject to a new investigation.
All sides applied for a two-month pause of the case at the CAT, which the CMA's lawyers said in court filings will "allow the CMA and the parties to engage swiftly and constructively in relation to Microsoft's proposals".
David Bailey, a lawyer representing the CMA, told the tribunal that the FTC's initial defeat "formed no part of the CMA's thinking" when it decided it would look at a new deal.
He added: "Based upon the discussion to date, both sides - Microsoft and the CMA - have confidence that Microsoft notifying a restructured transaction is capable of addressing the concerns that the CMA has identified."
Microsoft's lawyer Daniel Beard said: "The UK is the only impediment to closing (the deal) and speed is of the essence."