May 7 (Reuters) - A federal appeals court on Wednesday

rejected a legal challenge by the Federal Trade Commission to

Microsoft's ( MSFT ) $69 billion purchase of "Call of Duty"

maker Activision Blizzard.

The San Francisco-based 9th U.S. Circuit Court of Appeals

upheld a lower judge's order that said the FTC was not entitled

to a preliminary injunction blocking the deal, which closed in

2023.

A three-judge panel unanimously ruled that the lower judge

had applied the correct legal standards and said the FTC had not

shown it was likely to succeed on its claims that the merger

would restrict competition.

A spokesperson for the FTC declined to comment.

Microsoft ( MSFT ) did not immediately respond to a request for comment.

The decision came in an antitrust lawsuit filed by the

Federal Trade Commission in 2022 against Xbox maker Microsoft ( MSFT ).

The FTC, which enforces antitrust law, separately

challenged the merger in an internal administrative action. That

proceeding was placed on hold in 2023 during President Joe

Biden's administration, pending the 9th Circuit's decision.

The Activision Blizzard transaction marked the

largest-ever acquisition in the video gaming market. The deal

closed in late 2023 after competition authorities in the UK

approved it. The purchase also faced regulatory scrutiny in

other international markets.

The FTC's lawsuit sought an order freezing the

Activision transaction while the agency pursued its

administrative challenge.

The agency claimed the Microsoft-Activision tie-up would

allow the merged company to fend off competitors to the Xbox

console and to its subscription and cloud-based gaming business.

U.S. District Judge Jacqueline Scott Corley had

refused

to block the acquisition in July 2023, finding that the FTC

had not shown Microsoft's ( MSFT ) ownership of Activision would

"substantially lessen competition in the video game library

subscription and cloud gaming markets."

The FTC argued in

its appeal

that the court applied an overly stringent standard in

weighing whether to grant a preliminary injunction.