Judge Allows EA Price Fixing Suit to Proceed

Judge Allows EA Price Fixing Suit to Proceed

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EA is accused of artificially inflating the prices of its football games, as well as hedging out any competition through licensing deals.

A California judge has given the go-ahead for a class action anti-trust suit against EA filed over two years ago, over allegations that the publisher engaged in illegal price fixing for the Madden NFL series. U.S. District Court Judge Vaughn R. Walker decided that the suit should move forward earlier this week.

The suit says that following the release of ESPN NFL 2K5 at a budget price of just $20, EA charged just $30 for Madden NFL 05 in order to stay compettive. But when EA gained the exclusive rights to the NFL brand, prices for the Madden games went back up to sixty dollars. While EA's lawyers will likely argue that it was merely returning prices to what the levels they were at before the release of ESPN NFL2K5, but the suit asserts that EA used its exclusive deals with the NFL to force consumers to pay an artificially high price for certain sports titles.

It also claims that EA - knowing how important an official license was for sports games - used its deals with the AFL and NCAA to prevent anyone from making a competing product based around a different football association or league. The suit calls for EA to pay restitution to those affected, as well as punitive damages.

Anyone who bought a branded NFL, AFL or NCAA game produced and published by Electronic Arts at any point after August 2005 is eligible to join the suit. It only applies to home console releases however, and not any similar games that came out on mobile devices. If you meet the criteria and want to join the suit, you can sign up here.

Source: 1up

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I think that no matter how much they are going to pay if they lose, EA is just gonna laugh. Here's to hoping that at least they knew that this was coming. And that they didn't OK that businessplan thinking they'd get away with it.

Anyone who bought a branded NFL, AFL or NCAA game produced and published by Electronic Arts at any point after August 2005 is eligible to join the suit.

That's worth a laugh right there. Can you think of anyone who buys these games and gives a flying fuck about the case? Yeah, I thought so. That's a bit above the average obsessive compulsive consumer meathead that Madden attracts year after fucking year. And let's not forget the DLC and micropayments.

Sure they do after the lawayers and legal fees anyone that does sign up for it will probably get like 50 cents, if even that.

But yes i hope EA get their ass torn off in court these exclusive deals are just pure bullshit, 2k sport produces better games and cheaper, EA has not made a good sports game in a decade next to their competition and what do they do snap up exclusive rights to NFL, porsche, etc insuring that they have no competition or get payed a big fat check if anyone want to come groveling to them to use anything they hold the rights to.

EA hasn't done anything to innovate and nothing to improve their games since they got their deal with the NFL. The NFL has an anti-trust exemption, EA does not. EA will get killed in court for this, then when they, or someone else, tries to go after the NFL the case will get tossed because the NFL is a legal monopoly.

Sounds like a potential cashgrab for the folks who did purchase these games.

I say, go for it!

Holy crap thats gonna be a lot of money down the crapper for EA if this wins :O

buy teh haloz:

Anyone who bought a branded NFL, AFL or NCAA game produced and published by Electronic Arts at any point after August 2005 is eligible to join the suit.

That's worth a laugh right there. Can you think of anyone who buys these games and gives a flying fuck about the case? Yeah, I thought so. That's a bit above the average obsessive compulsive consumer meathead that Madden attracts year after fucking year. And let's not forget the DLC and micropayments.

I dunno. There are 6 NFL annual installment games right now and that is $180. Not to mention they did the exact same with Tiger Woods/PGA when there was that game Links back in the day. Hockey games, Football, Formula 1? This is a big fat precedent that could really cause future problems.

asinann:
EA hasn't done anything to innovate and nothing to improve their games since they got their deal with the NFL. The NFL has an anti-trust exemption, EA does not. EA will get killed in court for this, then when they, or someone else, tries to go after the NFL the case will get tossed because the NFL is a legal monopoly.

See you say it is an anti-trust issue but the whole thing about anti-trust is that it is set to guard against the consumer being taken advantage of by companies that provide necessary services. It's what stopped that whole thing with the Phone companies in the 80's(?) because a phone is a modern day requirement, NFL games are a luxury.

Wait...are all games not subject to price fixing? I mean, they all come out at €59.99 regardless of length, quality or publisher...?

Generic_Dave:
Wait...are all games not subject to price fixing? I mean, they all come out at €59.99 regardless of length, quality or publisher...?

theoretically but market factors like competition drag other games down in price quicker. Whereas if you want an american football game there is only one thing to buy.

Generic_Dave:
Wait...are all games not subject to price fixing? I mean, they all come out at €59.99 regardless of length, quality or publisher...?

With sports games, it's a bit different, since every yearly installment boils down to it's base parts - a $20 expansion pack.

And I'm being generous with that number.

I'm kind of snickering at all of the comments hoping for EA to get their ass kicked in this lawsuit. Sounds like a bunch of EA haters who know very little about law to me. I don't know how you can justify suing them for putting prices from $30 to $60 when every pther sports game now comes out at $60. That would mean you could sue THQ for having exclusive rights to UFC and Zuffa as well as pricing their games at $60. If this lawsuit took two years to ge the go ahead from a judge, that right there is not a good sign for those suing EA. Also, the kind of sound like pissants who want money because America has become a sue happy country where judges green light the use of courtroom time for everything under the sun.

I'm not against hitting EA with this one, but I DO think that a class action lawsuit is a bit... presumptuous. I mean, obviously somebody thinks they can win, and obviously EA IS price fixing, I just don't know if it matters. Call me a cynic, or even a fool, but Ive been watching from afar and it really seems like Justice is for sale in the United States. Big company worth billions vs. a couple hundred pissed off Madden fans, who still bought the games? Sounds like a bad scenario.

Really, EA hasn't done anything wrong. They pay the ridiculous and exorbitant fees so they get an exclusive contract. Years ago that was a hallmark of an EA Sports title, everything was official because they payed for all the official team and advertisers in the game. As a company that owns the property, they can charge whatever they want for a game. They are the sole proprietors of the official branding.

It's not price fixing because they charge what they want for a product only they have. Price fixing is when a group of individuals or organizations agree on what the product they all make sells for. EA is a single company providing an item of luxury that is aimed at a very specific group of gamers.

Contrary to what people think, they are not price fixing. When it comes down to it, fans of the games keep the price up, because there is a constant demand for the product in question. There is nothing wrong with that, but just keep that in mind.

Perhaps gamers should appeal to the various professional sports organizations to sign contract with multiple game companies, and the competition would drive the prices down. Honestly, if they lowered the negotiating prices for contracts, then the NFL itself, for example, would make out much better because they would spread the contracts about and most likely make more money off the contracts.

I hate to say it because I'm not a fan of Electronic Arts at all, but if this lawsuit is successful it's proof at just how arbitrary the civil justice system in America really is.

Edit: Best thing you can do is boycott EA Sports titles for a year, that would make them rethink their idea of what good pricing is.

buy teh haloz:

Anyone who bought a branded NFL, AFL or NCAA game produced and published by Electronic Arts at any point after August 2005 is eligible to join the suit.

That's a bit above the average obsessive compulsive consumer meathead that Madden attracts year after fucking year.

Yeah, because regulars on this forum such as myself totally don't enjoy a competitive game of Madden every once in a while, no. In fact, this isn't even the person in question. He's over there, hitting himself in the face with a stick. It's all his tiny brain is capable of.

Edit: Yes ladies and gentlemen, sarcasm.

OT: I'll likely join this suit, if my copy of madden is eligible, it has been a while.

manythings:

buy teh haloz:

Anyone who bought a branded NFL, AFL or NCAA game produced and published by Electronic Arts at any point after August 2005 is eligible to join the suit.

That's worth a laugh right there. Can you think of anyone who buys these games and gives a flying fuck about the case? Yeah, I thought so. That's a bit above the average obsessive compulsive consumer meathead that Madden attracts year after fucking year. And let's not forget the DLC and micropayments.

I dunno. There are 6 NFL annual installment games right now and that is $180. Not to mention they did the exact same with Tiger Woods/PGA when there was that game Links back in the day. Hockey games, Football, Formula 1? This is a big fat precedent that could really cause future problems.

asinann:
EA hasn't done anything to innovate and nothing to improve their games since they got their deal with the NFL. The NFL has an anti-trust exemption, EA does not. EA will get killed in court for this, then when they, or someone else, tries to go after the NFL the case will get tossed because the NFL is a legal monopoly.

See you say it is an anti-trust issue but the whole thing about anti-trust is that it is set to guard against the consumer being taken advantage of by companies that provide necessary services. It's what stopped that whole thing with the Phone companies in the 80's(?) because a phone is a modern day requirement, NFL games are a luxury.

FYI, antitrust violations don't have to involve a "necessary" product or service (whatever that may be). Any product or service will do.

JDKJ:

FYI, antitrust violations don't have to involve a "necessary" product or service (whatever that may be). Any product or service will do.

The line still applies. EA made the NFL an offer, the lawyers worked it out and it was legally objected, what 6/7 years ago now? No one accepted and it was a very public arrangement that is worth something the region $1.3 billion. A phoneline can save a life, an NFL game can't make the same claim. At the very worst you can call it an inconvenience or an annoyance, you can just not get it.

manythings:

JDKJ:

FYI, antitrust violations don't have to involve a "necessary" product or service (whatever that may be). Any product or service will do.

The line still applies. EA made the NFL an offer, the lawyers worked it out and it was legally objected, what 6/7 years ago now? No one accepted and it was a very public arrangement that is worth something the region $1.3 billion. A phoneline can save a life, an NFL game can't make the same claim. At the very worst you can call it an inconvenience or an annoyance, you can just not get it.

I'm still not seeing where you're trying to go with this "essential" versus "non-essential" product line of reasoning. Under American antitrust law, it doesn't matter whether the product that is the subject of a price-fixing claim is a cure for cancer or whether it is chewing gum. Either way, both are equally subject to antitrust regulation. That you may "need" the cure for cancer desperately while having no "need" whatsoever to buy chewing gum doesn't matter at all. All that matters is whether or not the price of either product was fixed in violation of the antitrust laws. Indeed, as a matter of proven economic theory, the more elastic a product is (i.e., the more resistant consumers are to an increase in its price), which most non-essential products are (e.g., designer handbags), is the more incentive there is for its producers to collude and fix its price as a means of circumventing the economic reality of elasticity. On the other hand, the more inelastic a product is, which most essential products are (e.g., gasoline), is the less incentive to fix its price because consumers, who have very little choice as to whether to purchase the product or not, are unlikely to discontinue purchasing the product if the price is increased. Therefore, the need to guard against price-fixing is actually greater for non-essential products than it is for essential products because non-essential products are more likely than essential products to be the subject of an illegal price-fixing scheme.

If you look at your example of land-line telephone service, you'll perhaps see where basing antitrust enforcement on whether or not a product is essential makes very little sense because whether or not a product is in fact essential can rapidly change with time and technological advancements. Land-line telephones are increasingly being rendered non-essential as they become replaced in popularity by cellular phones, voice-over-internet, and other alternatives. In fact, most American households have replaced their land-lines with a cellular phone. There's a good argument to be made that a land-line telephone isn't at all an essential product any longer. If fact, it may be a product on its way out the door, destined to be nothing more than a thing you will one day have to describe to your grand-children (kinda like cassette tapes).

JDKJ:

manythings:

JDKJ:

FYI, antitrust violations don't have to involve a "necessary" product or service (whatever that may be). Any product or service will do.

The line still applies. EA made the NFL an offer, the lawyers worked it out and it was legally objected, what 6/7 years ago now? No one accepted and it was a very public arrangement that is worth something the region $1.3 billion. A phoneline can save a life, an NFL game can't make the same claim. At the very worst you can call it an inconvenience or an annoyance, you can just not get it.

I'm still not seeing where you're trying to go with this "essential" versus "non-essential" product line of reasoning. Under American antitrust law, it doesn't matter whether the product that is the subject of a price-fixing claim is a cure for cancer or whether it is chewing gum. Either way, both are equally subject to antitrust regulation. That you may "need" the cure for cancer desperately while having no "need" whatsoever to buy chewing gum doesn't matter at all. All that matters is whether or not the price of either product was fixed in violation of the antitrust laws. Indeed, as a matter of proven economic theory, the more elastic a product is (i.e., the more resistant consumers are to an increase in its price), which most non-essential products are (e.g., designer handbags), is the more incentive there is for its producers to collude and fix its price as a means of circumventing the economic reality of elasticity. On the other hand, the more inelastic a product is, which most essential products are (e.g., gasoline), is the less incentive to fix its price because consumers, who have very little choice as to whether to purchase the product or not, are unlikely to discontinue purchasing the product if the price is increased. Therefore, the need to guard against price-fixing is actually greater for non-essential products than it is for essential products because non-essential products are more likely than essential products to be the subject of an illegal price-fixing scheme.

If you look at your example of land-line telephone service, you'll perhaps see where basing antitrust enforcement on whether or not a product is essential makes very little sense because whether or not a product is in fact essential can rapidly change with time and technological advancements. Land-line telephones are increasingly being rendered non-essential as they become replaced in popularity by cellular phones, voice-over-internet, and other alternatives. In fact, most American households have replaced their land-lines with a cellular phone. There's a good argument to be made that a land-line telephone isn't at all an essential product any longer. If fact, it may be a product on its way out the door, destined to be nothing more than a thing you will one day have to describe to your grand-children (kinda like cassette tapes).

And the assumption for the breach of an Antitrust case requires secret collusion between two or more parties controlling a single service, product or resourse. The EA/NFL deal is public, within the bounds of law and has never been challenged. This deal hinders EA's competition but it is continually renewed and if the NFL ruling body ever recieved a better offer or just didn't want to allow exclusivity anymore (i.e. They start hating money) then that's it done. It's not EA, Capcom, Activision and whoever else you want to name meeting in a smoky boardroom to price fix the entire industry.

My essential/non-essential line is the law can't be rigid, ever, because air-tight law leads to insane things (The three strikes policy). If I am artificially inflating the price of my luxury product then it is YOU'RE own lack of restraint and sense that results in you being screwed. Conversely if I am artificially inflating the price of a life saving treatment (much like the AIDS retro-virals in continental Africa) then I am literally placing a set value on your life and legal institutions tend to take a poor view of that kind of thing (If it happens locally).

manythings:

JDKJ:

manythings:

The line still applies. EA made the NFL an offer, the lawyers worked it out and it was legally objected, what 6/7 years ago now? No one accepted and it was a very public arrangement that is worth something the region $1.3 billion. A phoneline can save a life, an NFL game can't make the same claim. At the very worst you can call it an inconvenience or an annoyance, you can just not get it.

I'm still not seeing where you're trying to go with this "essential" versus "non-essential" product line of reasoning. Under American antitrust law, it doesn't matter whether the product that is the subject of a price-fixing claim is a cure for cancer or whether it is chewing gum. Either way, both are equally subject to antitrust regulation. That you may "need" the cure for cancer desperately while having no "need" whatsoever to buy chewing gum doesn't matter at all. All that matters is whether or not the price of either product was fixed in violation of the antitrust laws. Indeed, as a matter of proven economic theory, the more elastic a product is (i.e., the more resistant consumers are to an increase in its price), which most non-essential products are (e.g., designer handbags), is the more incentive there is for its producers to collude and fix its price as a means of circumventing the economic reality of elasticity. On the other hand, the more inelastic a product is, which most essential products are (e.g., gasoline), is the less incentive to fix its price because consumers, who have very little choice as to whether to purchase the product or not, are unlikely to discontinue purchasing the product if the price is increased. Therefore, the need to guard against price-fixing is actually greater for non-essential products than it is for essential products because non-essential products are more likely than essential products to be the subject of an illegal price-fixing scheme.

If you look at your example of land-line telephone service, you'll perhaps see where basing antitrust enforcement on whether or not a product is essential makes very little sense because whether or not a product is in fact essential can rapidly change with time and technological advancements. Land-line telephones are increasingly being rendered non-essential as they become replaced in popularity by cellular phones, voice-over-internet, and other alternatives. In fact, most American households have replaced their land-lines with a cellular phone. There's a good argument to be made that a land-line telephone isn't at all an essential product any longer. If fact, it may be a product on its way out the door, destined to be nothing more than a thing you will one day have to describe to your grand-children (kinda like cassette tapes).

And the assumption for the breach of an Antitrust case requires secret collusion between two or more parties controlling a single service, product or resourse. The EA/NFL deal is public, within the bounds of law and has never been challenged. This deal hinders EA's competition but it is continually renewed and if the NFL ruling body ever recieved a better offer or just didn't want to allow exclusivity anymore (i.e. They start hating money) then that's it done. It's not EA, Capcom, Activision and whoever else you want to name meeting in a smoky boardroom to price fix the entire industry.

My essential/non-essential line is the law can't be rigid, ever, because air-tight law leads to insane things (The three strikes policy). If I am artificially inflating the price of my luxury product then it is YOU'RE own lack of restraint and sense that results in you being screwed. Conversely if I am artificially inflating the price of a life saving treatment (much like the AIDS retro-virals in continental Africa) then I am literally placing a set value on your life and legal institutions tend to take a poor view of that kind of thing (If it happens locally).

Lemme address your last point first:

If a valid defense to an antitrust action was, as you claim, "it's a luxury item and it's the consumer's fault if they still want to buy it," then 99.9% of all antitrust actions would fail (most all antitrust cases filed and the successful ones which result from those filings do not involve essential goods and services). Sorry, but that it's a non-essential purchase simply isn't an aspect of any proper analysis under the antitrust laws. The antitrust laws are designed and intended to protect consumers against the anti-competitive conduct of producers, not to hold the consumer liable for their own purchasing decisions or to use those decision to absolve a producer of liability. The emphasis is always placed on regulating the producer, it's never placed on regulating the consumer.

As to your first point:

There's no requirement that the collusion involved in a price-fixing scheme occur in secret or is undisclosed (but, not surprisingly, most do involve secret dealings). All that's required is that two or more entities collude to fix the price of a product above or below the price that would have been set if the natural market forces of supply and demand had instead been allowed to set the product's price (i.e., the collusive price is "unreasonable" or "uncompetitive"). The "secret" element you're referring to isn't found anywhere in the Sherman Act or any other antitrust laws. Therefore, the fact that the collusion isn't a secret doesn't do anything to undermine the potential validity of a price-fixing claim. Furthermore, to say, as you do, that the EA/NFL deal in question is "within the bounds of law" is to merely beg the question. That it's not illegal isn't obviously beyond dispute. And it's factually incorrect to say, as you do, that the arrangement has never been challenged. It is in fact being challenged as we speak. That's what the pending litigation does: challenges the legality of the deal.

Baresark:
Really, EA hasn't done anything wrong. They pay the ridiculous and exorbitant fees so they get an exclusive contract.

Well, the suit claims that EA used ties with other leagues to discourage/prevent their competition from making sports titles based on OTHER LEAGUES (non-NFL).

Having an exclusive contract with the NFL is fine, but once you start interfering with other avenues in the same market (other potential football games) then you're venturing into Monopoly territory.

Those are serious allegations being brought up; they are essentially accusing EA of attempting to corner the video game sports market, or at least the football titles (jokes aside, we really do not want other companies doing this in other genres).

To put it another way: The NFL doesn't actually own football itself; they just own a professional league that plays it. EA, in this case, is attempting to virtually "own football video games" so they can charge a markup due to monopoly power.

 

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