By Paul Sandle

LONDON (Reuters) -Activision Blizzard said its studio that developed "Call of Duty" would set up shop in Barcelona, putting into action its pledge to invest in Europe after Brussels approved Microsoft's $69 billion acquisition of the company in May.

The U.S. company said on Wednesday its game developer Infinity Ward, which created the blockbuster first-person shooter game, would join its Digital Legends mobile games unit in the Spanish city.

The decision comes after Britain blocked the Microsoft takeover, prompting Activision, which has studios in Guildford and Warrington in England, to say it would "reassess" its growth plans in the country.

In contrast, it said it would "meaningfully expand" its investment and workforce in the European Union after the deal received the green light there.

Microsoft and Activision Blizzard are battling antitrust regulators on both sides of the Atlantic to clinch the deal, the biggest ever in video gaming.

Activision Blizzard CEO Bobby Kotick and his Microsoft counterpart Satya Nadella are due to testify in a court in San Francisco on Wednesday to urge a judge to allow the merger.

The Federal Trade Commission, which is seeking to block the deal, wants the transaction temporarily stopped in order to allow the agency's in-house judge to decide the case.

Microsoft is appealing the British veto with the "aggressive" support of Activision.

The games company, which also owns the "Candy Crush Saga" and "World of Warcraft" franchises, said in April that Britain was "clearly closed for business" after the deal was blocked.

It said on Wednesday it was looking closely at the EU to enlarge its studio footprint.

"For good reason: Europe has played a key role in the evolution of gaming — particularly mobile gaming — across the globe and it's not unreasonable to expect developers on the continent to maintain that momentum thanks to ample skills, ambition, and government support," it said in a blog post.

(Editing by Kate Holton and Alexander Smith)