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Judge Certifies Class-Action Football Game Pricing Lawsuit Against EA
Judge Certifies Class-Action Football Game Pricing Lawsuit Against EA
December 22, 2010 | By Kyle Orland

December 22, 2010 | By Kyle Orland
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    25 comments
More: Console/PC



A U.S. district judge has certified a class-action anti-trust lawsuit against Electronic Arts that alleges the company illegally inflated prices for its football titles after attaining exclusive rights to league licenses.

The decision by U.S. District Court Judge Vaughn Walker lets consumers who bought EA's NFL, NCAA or Arena Football console and PC games during or following 2005 to sign on as plaintiffs in the lawsuit and be represented by the legal team at firm Hagens Berman during an expected jury trial.

The suit itself alleges that EA used its monopoly control over various football league licenses during that period to increase the asking price of its football games, amounting to an illegal price-gouging scheme.

"We believe EA forced consumers to pay an artificial premium on Madden NFL video games," said Hagens Berman partner Steve Berman in a statement. "We intend to prove that EA could inflate prices on their sports titles because these exclusive licenses restrained trade and competition for interactive sports software."

In a 67-page complaint [PDF], the legal team specifically cites the 2004 pricing battle between Sega and Take-Two's NFL2K5, which retailed for just $19.95, and EA's Madden NFL 2005, which was lowered from a $49.95 asking price to $29.95 in November of that year.

A month after this price decrease, EA signed its exclusive licensing deal with the NFL, following with similar deals for the NCAA and Arena Football leagues in later months. The next year's Madden NFL 2006 faced no competition in the football game market at its usual $49.95 price point.

Current Madden NFL games retail for $59.95, which is standard for high-profile console retail titles. "But for Electronic Arts' exclusive agreements... the price of interactive football software produced by Electronic Arts would be substantially lower than its current price," the suit reads, alleging that such a price-inflating monopoly violates several anti-trust and unfair trade laws.

The suit seeks a jury trial to settle the matter as well as "restitution and/or damages to class members for the purchase of the software."

The case is unrelated to separate class-action lawsuits that argue EA illegally used player likenesses in its NCAA and Madden NFL football titles.


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Comments


Kris Morness
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I remember when all this went down and wow are the case facts distorted. All premium new 360 games and PS3 games retail at $59.99. We all know that. NFL2K5's really low price was not even close to industry standard. It was an attempt to try to get EA out of their dominant position. It worked but didn't have the intended effect. It was actually quite smart of EA to pay likely obscene amounts of money for the exclusive licenses. That to me was a very good check-mate back at them. It is just not feasible to be able to sell premium games at $20 once you factor in all the costs of development, manufacturing, distribution, advertising, console fees, and license fees. T2 were taking a loss as a calculated move that backfired big time.



And then EA just went back to normal, selling their sports games for the same price as any other console game. No artificial price fixing... just coincidence with the new higher prices with games on new consoles.



I'm calling this one: EA will win this case, hands down (as they should). What's with all these fodder cases lately?

Fábio Bernardon
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I don't see a problem with EA charging whatever they want for the games they make, using bought licenses or not. Other companies can still build Football games if they want and charge whatever they want, even if they will not use said license.

Sherman Luong
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If EA sold it at 69.99 there might be some wiggle room to talk about it. But the fact that a retail game right now is 59.95 you cannot say they are inflating the price when its the normal price of a high profile title.



What other companies do to drop the cost to bring in revenue is their problem and not EA's.



I mean if they can lose in this. I would release a FPS War game and sell it at $20 bucks and then sue Activision for Call of Duty for monopolizing all the FPS War game sales.

CJ Connoy
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@ Fabio. in the US, if your sports game doesn't have an official license then it probably won't sell.

Patrick Dunlap
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"We believe EA forced consumers to pay an artificial premium on Madden NFL video games,"



With that logic, you can say that about almost every consumer product that has released. To say that lowering the price to be competitive is anti trust is stupid- no matter if it was at a loss when they did or if they profited any way. What they did was fair game as it could be considered a marketing strategy.

Jason Chen
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LOL. Judge Vaughn Walker, probably is a Madden fan who got really pissed at the dropping quality of the Madden game.

Kris Morness
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I got a little more curious. It's just a couple of individuals that sued because they felt EA had a a monopoly. But reading up a little on the laywers, looks like they've been involved in a ridiculous amount of class action lawsuits: Enron, Countrywide, Valdez, the ipod nano scratch case, etc...



http://en.wikipedia.org/wiki/Steve_Berman_%28lawyer%29



Anyways, this case stinks. Guess they didn't really do their homework on this one. "They raised their prices by 70% after negotiating the exclusivity deal! Yeah, let's do it!!!" They forgot context.

Adam Bishop
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Lawyers tend to specialise in particular kinds of law. It's not at all surprising that a lawyer who leads one class action suit would lead another, since they are dealt with quite differently from other kinds of lawsuits. Also, some of those lawsuits were pretty major news and hardly unwarranted (Enron, Exxon, the makers of OxyContin, etc.) It doesn't look like he's just running around leading lawsuits against random, blameless companies.

Isaac Lanier
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EA is getting in a deeper hole with this every moment they have the license. and we cant say EA paid a lot for the license. isnt there a case ongoing about EA and the NFL sending memos back and forth saying this is what they are working on long b4 this happened.

What about the suit opened by the NFL all pros????? i think the all pros are suing the NFLPA, and ???? because they sold all the all pros to EA for less then what Take-Two offered.



tell me if im wrong

but EA loses and the NFL if they really want to follow the money trail.

david paradis
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Question marks are cool HUH???????????????????????????

Mark Stewart
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Oh, of course, since it is up to the courts to decide how much EA can sell its own goods for.



This is ridiculous. Anybody who signs on as a plaintiff should renounce citizenship at the same time, because they just don't get America.



There is also a woman suing McDonalds because she can't handle the fact that her kids ask her to buy them happy meals.



The number of people who think the government (and society in general) is their mommy is disheartening.

Adam Bishop
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So I take it you think all anti-trust laws should be immediately thrown out?



This isn't about whether the courts can decide "how much EA can sell" products for, since the judge isn't going to tell them what price point they have to hit. This is about whether EA broke anti-trust laws and illegally pushed competitors out of business. I don't know enough about anti-trust laws or this case in particular to say who is likely to win the case, but I certainly think there's a need for anti-trust laws and that it's perfectly reasonable for judges to hear anti-trust cases.

Christopher Enderle
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What is it about America that people don't get? Why is it wrong for people to go to the government/court when they feel they have the evidence required by the law to prove price gouging was performed?



And McDonald's advertising directly to children is a whole different can of worms, but if M rated games can't be advertised toward children (and if they were there would be laws made it against it so fast...) then it makes sense that inappropriate food shouldn't be advertised towards children.

Paul Waterman
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Really, it's not price fixing, but it IS the clear definition of a monopoly when you look at American football video game licensing and the football game industry as a separate .5+ billion dollar industry. I think EA should win against this suit, but in the long run, they should be looking at anti-trust issues.

Robert Green
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The very fact that madden games sell for the same price as almost any other game, including dozens of examples of games with very strong competition (for example, you don't see Gran Turismo having to discount its launch price because a good NFS just came out), makes this case seem DOA.

If actually selling for more than the default price isn't necessary for something to be monopolistic behaviour, then think of the precedent this would set: basically every game series based on an exclusive license (WWE, UFC, Dragonball, Naruto, James Bond, etc) would potentially fall under the same conclusion. Unless there's something unique about sports that makes it some kind of public property?

Paul Waterman
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Yes, there is something unique about the NFL. It's a government sanctioned monopoly that can be legislated upon. Also, the video games and the developers that were crushed were actually decent competition. The football videogame market was an industry unto itself, and the NFL conspired with EA to end all competition. It's the very definition of collusion and monopoly. The WWE, UFC and Naruto (thpfft, lol) cannot consider themselves as a single industry as they have direct competitors. The NFL however, is the exact opposite. Like I said, it's a government sanctioned monopolistic enterprise that creates 'whole' industries under it like football videogames that should be allowed competition by law.

Robert Green
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Forgive my non-american-ness. I did a little research and you're right that the US government has explicitly handled the case of the NFL in regards to being anti-competitive. I also remembered seeing that an apparel company sued the NFL over the exclusive contract reebok got, and apparently the courts agreed that for the purposes of licensing, each team can be treated as an individual entity. This could potentially be a road for a competing publisher to go down if it wanted to enter the NFL market, unless EA has an individual agreement with each team. But that doesn't especially relate to this particular case.

Basically, what I think they'd need to show in this case is that, had EA not gotten an exclusive license, NFL games would be less than the usual US$60. Given that there are other sports games without exclusive licenses that sell for that price, I give them almost zero chance. The one year that they were less was clearly a last ditch effort by 2K to address the fact that people kept buying madden games despite their lower reviews, and there's no reason to believe it would have become a trend.

Paul Waterman
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I can dig it. I don't think the price fixing approach has merit either. Like you mentioned, the more likely approach would be through a prospective direct competitor to Madden or NCAA.

Robert Green
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Now that I think about it, I don't really think that approach would work for a competing football game. There's an obvious benefit to being able to make jerseys or hats for a single football team (i.e. that people generally only buy those for one team), but unless you can argue that there's a market for games that have some of the NFL teams but not all, then you can't make the same argument that the teams should be licensing on an individual basis.

Nick Donaldson
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The NFL is a private organization consisting of voluntary members. Being wildly successful does not make it a de facto public property. Anybody can make a football game, but the NFL has the authority to allow (or, more importantly, disallow) the use of their IP, trademarks, logos, etc, as well as that of their members. The members of this organization (the teams) could change this if they felt it was in their best interest - the league holds regular negotiations with the Players Association over all manner of contract related issues. If fans of NFL games want to put pressure on someone to end this exclusivity deal - beyond just boycotting the Madden games - petition the franchise owners, the league commissioners, and even the players themselves to explain why its in their best interests to open the license up for the fans.



Fact of the matter is, the NFL is not a government sanctioned monopoly. Anybody can start a football league. Granted, competing directly with the NFL, on the same scale, would be nearly impossible for a start up league (see: the XFL), but that is because of the marketplace, not the government. It's only a monopoly because no one has yet found a way to compete on the same scale in the open market.

Ronaldo Fernandes
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I have no special understanding about the chances of this class action. However, I would be very pleased if EA loose its monopoly over the NFL license as competition would definitely lead us to better games.

Ben Hopper
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Here's my issue: Sega's NFL2K games were way more fun than the Madden games and at almost half the price! Can someone sue EA for that?

Daniel Sopel
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Ha I was trying to think of a way to express my rage about it when it happened, thank you for opening this up. 2K had a very different feel to it, much more loved among me and my football fan friends, and I was so bummed when that happened.



I don't see it as a last-ditch effort at all by 2K. They realized that 4/5 years the NFL games were nothing but roster updates, and charged accordingly. This was before downloadable content was popular... Truthfully, a company could just put out a new version once every few years, and have paid roster updates in between, and it would make no difference.



I remember the last year 2K was around... EA's only addition besides the roster update was that you control the pricing of hot dogs and whatnot in your stadium. For $60. What a joke.

Jay Simmons
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That should be the crux of the lawsuit. EA selling all its sports titles at full retail price when these are not complete games at all. They just update the roster make a few minor graphical changes and call it a 'new' game and charge full price for it. Occasionally you might get some pointless game play 'enhancement' that doesn't even survive to the next title iteration.

A W
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Monopoles are supposedly un-American...


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