Activision Blizzard Inc. (NASDAQ: ATVI) shares rose to the call of duty on July 11, advancing 10.02% in heavy trading volume as a federal judge gave the OK for Microsoft Corp. (NASDAQ: MSFT) to proceed with its acquisition of the game maker. 

It was the stock’s best price action in over a year, with Activision stock finishing at $90.99, approaching Microsoft’s acquisition price of $95, for a total value of $69 billion. 

District Judge Jacqueline Scott Corley nixed the Federal Trade Commission’s motion to get a preliminary injunction to squash the transaction. Many analysts believe the FTC has been more aggressive lately, with concerns about mergers and acquisitions reducing competition in various industries, 

In her comments, Corley wrote, "The Court finds the FTC has not shown a likelihood it will prevail on its claim this particular vertical merger in this specific industry may substantially lessen competition. To the contrary, the record evidence points to more consumer access to 'Call of Duty' and other Activision content."

The acquisition was also challenged by U.K. regulators, but after the U.S. decision, they hit the pause button and agreed to negotiate with Microsoft. 

Activision owns several popular properties, including “Call of Duty,” “Warcraft” and “Candy Crush.” Meanwhile, Microsoft publishes the “Halo” and “Minecraft” series, among others. 

FTC Can Appeal Ruling

Despite the big price move in Activision, reflecting investor confidence that the deal will be completed, the FTC can still appeal the ruling. 

It seems like that’s the next step. In a statement, FTC spokesperson Douglas Farrar said, "We are disappointed in this outcome given the clear threat this merger poses to open competition in cloud gaming, subscription services, and consoles. In the coming days we'll be announcing our next step to continue our fight to preserve competition and protect consumers.”

The FTC can also continue to pursue an antitrust lawsuit even if the deal closes. 

The clock is ticking fast for the companies to complete the transaction. Assuming an appeals court OK’s the deal, or the FTC opts not to appeal, Microsoft has a July 18 deadline to close the deal. Otherwise, under the terms of the deal, it would owe Activision $3 billion and would have to renegotiate. 

FTC's Heavy Hand 

The FTC has been cracking down on deals from several industries. For example, Amgen Inc. (NASDAQ: AMGN) in December said it would acquire Horizon Therapeutics Public Limited Company (NASDAQ: HZNP) for $27.8 billion, initially expecting the deal to be completed in the first half of this year.

However, the FTC filed a lawsuit to block the deal, saying it would stifle competition in the pharmaceutical industry

Regulators indicated that Amgen could employ the tactic of "cross-market bundling" by providing rebates on its current drugs, with the aim of influencing insurers and pharmacy benefit managers to Horizon’s products.

Investors Lost Confidence?

Both Activision and Horizon were trading in ways that indicated investors had lost conviction about the deals’ success. 

A look at the Activision Blizzard chart tells the story: The stock bolted 5.91% higher in March when the Microsoft deal was announced. When the FTC began making noises about preventing it from going through, shares fell 11.45%, but have gradually been rising as analysts saw hopeful signs.

Typically, when a company is being acquired, its stock trades sideways, in an extremely narrow range, just below the acquisition price. If a deal looks likely to go through, there’s no more upside in the stock beyond what the acquiring company is willing to pay. That means it’s out of play for individual investors. 

But Activision, after being pushed down by doubts, had room to run. Hence the big gain on July 11.

Microsoft Shares Up Slightly

Microsoft shares were up 0.19% on July 11, recovering from a bout of selling after the Nasdaq 100 announced it would rebalance later this month, resulting in Microsoft having a smaller index weighting. 

Similar to Activision Blizzard, the Horizon Therapeutics chart shows a stock that gapped down hard once the FTC cast doubts upon its acquisition. Horizon shares rose 0.36% in heavy volume on July 11, perhaps indicating some renewed confidence that the FTC won’t win its fight after all.