SAN FRANCISCO – Madden NFL game purchasers will soon have their day in court after a U.S. District Judge recently denied Electronic Art’s (NASDAQ: ERTS) motion to dismiss a class-action lawsuit that claims the company engaged in unlawful and anticompetitive agreements that monopolized the market for football videogames and nearly doubled the price of its popular game, Madden NFL.
The lawsuit alleges EA established agreements with the National Football League (NFL), The NFL Players Union, Arena Football League and the National Collegiate Athletic Association (NCAA), that drove competition out of the market and prevented new competitors from entering.
The agreements resulted in the company’s flagship product, Madden NFL, to increase 70 percent from a cost of $29.99 to $49.99, the suit states.
“There is nothing wrong with good, strong competition in a free market, but we believe EA rigged the game to take advantage of consumers,” said Steve Berman, lead attorney and managing partner at Hagens Berman Sobol Shapiro.
In 2004, EA experienced a blow to sales when competitor game NFL 2K5 gained popularity forcing EA to lower the price of its popular Madden NFL game and other football games. Soon after, EA entered into an agreement with the NFL and NFL Players Union that prevented any other company from producing NFL-branded interactive football software, the suit states. EA followed that agreement by entering into additional agreements with the NCAA and Arena Football League.
“EA knows that the demand for these games is based on how realistically the players and teams are portrayed,” said Berman. “When EA signed into exclusive agreements it knowingly killed the only competing game of comparable quality, NFL 2K5.”
The suit claims that EA’s manipulation of the market allows the company to sell Madden for as much as $59.95 a game.
In the company’s annual report to investors, EA notes, “that if it were unable to maintain licenses with major sports leagues and players associations, revenue and profitability will decline significantly.”
In February 2008, EA extended its anticompetitive agreements with the NFL and NFL Players Union until 2012. Two weeks after signing the extension, EA announced a $2 billion offer for Take Two Interactive, the maker of NFL 2K5.
The lawsuit, filed in U.S. District Court in California, seeks to represent anyone who purchased Madden NFL, NCAA or Arena Football branded videogames from Electronic Arts from August 2005 until present.
Recently, the court dismissed two counts against EA, allowing four to move forward including violation of the federal Sherman Act, violations of California’s Cartwright Act, violation of California’s unfair competition act and unjust enrichment.
Purchasers of Electronic Arts’ football videogames can learn more about the case and participate in this class action at www.hbsslaw.com/maddennfl.
About Hagens Berman Sobol Shapiro
Hagens Berman Sobol Shapiro is a nationally recognized class-action and complex-litigation law firm based in Seattle with offices in Chicago, Boston, Los Angeles, Phoenix and San Francisco. Among recent successes, HBSS negotiated a $300 million settlement in the DRAM memory antitrust litigation, the largest antitrust settlement in U.S. history, recovered $340 million on behalf of Enron employees, and was part of the leadership team in the $3 billion Visa/MasterCard settlement. In pharmaceutical litigation, the firmýs recent successes include a $350 million settlement with McKesson, more than $200 million with other parties in drug-pricing litigation, and a $150 million settlement regarding Lupron. HBSS represented Washington and 12 other states against the tobacco industry that resulted in the largest settlement in history. For a complete listing of HBSS cases, visit www.hbsslaw.com.
Thanks to Laura for the news tip!