Microsoft said it would license Activision Blizzard's "Call of Duty" (CoD) to Sony for 10 years to address concerns raised by Britain over its $69 billion takeover of the games maker, according to a document published by the regulator.
Microsoft last month struck a similar deal with Nvidia Corp.'s gaming platform, dependent on it getting the go-ahead for the much-contested acquisition.
Microsoft President Brad Smith had said he hoped that rival Sony - which has strongly opposed the takeover - would consider doing the same type of deal.
Britain's Competition and Markets Authority (CMA) in February said the deal could weaken the rivalry between Microsoft's Xbox and Sony's PlayStation, and stifle competition in cloud gaming.
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It suggested that structural remedies could be needed to allay its concerns, including divesting the business associated with 'Call of Duty.'
Sony, in its response to the CMA's findings, said the package of remedies it would offer protected all CoD players in Britain and provided substantial benefits to consumers and developers.
"Microsoft is proposing a package of licensing remedies which (i) guarantee parity between the PlayStation and Xbox platforms in respect of CoD and (ii) ensure wide availability of CoD and other Activision titles on cloud gaming services," Microsoft said in the document published on Wednesday.
It added that it believed that the criteria for the CMA to consider behavioural remedies, such as those offered, had been met.
Sony, in its own submission to the CMA, rejected Microsoft's proposals, saying the only way to preserve competition in consoles and cloud gaming was to block the deal or subject it to a structural remedy, such as making Microsoft sell CoD.
The biggest-ever deal in gaming, announced in January last year, is facing scrutiny in the United States and in Europe.
Microsoft is expected to secure EU antitrust approval with its offer of licensing deals to rivals, three people familiar with the matter told Reuters earlier this month, helping it to clear a major hurdle.
The CMA will rule on the deal on April 22.