The European Union’s executive branch, the European Commission, has formally cleared the merger of video game publishers Activision and Blizzard under the corporate umbrella of the French media giant Vivendi. This clears one of the major regulatory questions for the merger, which will create an $18.9 billion publishing giant that will overtake EA as the largest publisher of video games in the world.

The EC looked at two facets of the new Acti-Blizzard business in order to determine if it would stagnate competition in the market due to its massive size: The horizontal, looking at how the company will compete directly with its peers such as EA, Sony, Nintento and Microsoft; and the vertical; looking at how the publisher will be able to leverage its position, particularly within Vivendi which owns several other media companies including a music publishing business.

The conclusion is that Acti-Blizzards competitors are big enough to combat the new entity, which will own some of the biggest ticket franchises currently on the market such as Call of Duty, Starcraft, Tony Hawk, Guitar Hero and World of Warcraft amongst others.

On the horizontal side the new company will be able to leverage both its size and influence, for example with Vivendi’s Universal Music Group from which it can get favourable licensing deals to put music into games; but the EC concluded that other companies have good leverage and deals with music labels as it is and they will not be pushed out of this market by Vivendi.

The removal of the EU’s regulatory questions concerning the merger is significant: If the EC will give the go-ahead then it is quite likely that other bodies, such as the Federal Trade Commission in the U.S., will do so as well. This puts the merger on track to be completed by June, if the would-be CEO of the new company (and current Activision chairman and CEO) Bobby Kotick’s plans go as scheduled.

Thereafter it remains to be seen what will happen to the company on a management level. Mergers and acquisitions can often see top management put into disarray over time, with disagreements, power sharing and different modus operandi getting in the way of doing good business. Sooner or later it is not unusual to see the management team of one of the former companies, usually the lesser partner amongst the equals, falling apart.

This can then trickle down through the ranks, as strife, new decision making processes and new business directions take hold. It’s not always the case, but it is foreseeable that the $18.9 billion company, with all of its teams of in-house developers, new and existing franchises to develop and corporate cultures, will see some teething problems.

What will be the most interesting to watch will be how the company develops new franchises rather than old. Guitar Hero was snapped up for $100 million in 2006 and went on to become the top selling game, earning more profit as well as shifting more units than any other game, on multiple platforms in 2007. This is just one example of what acquiring the right IP’s and developing and nurturing them properly can do for a business, rather than simply going back time and time again to exploit the Call of Duty or World of Warcraft brands.