Madden NFL 11 News Post

Judge Certifies Class-Action Football Game Pricing Lawsuit Against EA

09:48 PM - December 22, 2010 by Steve_OS

Gamasutra has some new info on the lawsuit.

Quote:


	"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. 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."

Gamespot chimes in as well.

Quote:


	"We believe EA forced consumers to pay an artificial premium on Madden NFL video games" Berman continued. "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."

What do you think happens, out of all this?

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Member Comments

# 41 RaychelSnr @ 12/23/10 12:30 PM

Blog is up, be sure to comment on it THERE

http://www.operationsports.com/MMChr...esented-facts/

# 42 RaychelSnr @ 12/23/10 12:34 PM

Quote:

Originally Posted by LiquorLogic


	Other video games, from other genres, aren't relevant. The issue is that the exclusive deal harmed consumers regarding football video games. NFL 2k5 was priced at 19.95, so EA had to lower the price of their game to 29.99. Soon after this pricing war EA signed the exclusive deal with the NFL, eliminating the competition, and they subsequently raised the price of Madden back to 49.95. The issue is not the price of other video games from other genres. It's the fact that EA sports was selling Madden for 29.99 before the exclusive license, eliminated the competition, and returned the price back to 49.99. For this argument football games, and other games are totally different products. Look at it this way, there are many different soft drinks. Let's say that Coca-Cola and Pepsi are in a pricing war. Coca-Cola signs a deal with Pepsi to stop selling diet Pepsi only, and then raises the price of diet Coke back to it's original price. You don't see any problem with that ?

While there'd be a problem with that your analogy is flawed.

In this case, it'd be like Wal-Mart was selling both Coke and Pepsi and decided they only wanted to sell one or the other so they told both companies to offer bids to them in order to keep the prior arrangement of selling their products in Wal-mart and they award the best bid to Coke and thus Coca-Cola gets to sell their products exclusivly in Wal-Mart. That's not even exactly how this worked, but it's a lot closer than what you said.

# 43 SmashMan @ 12/23/10 01:34 PM

Quote:

Originally Posted by LiquorLogic


	however, the fact remains that EA lowered their price to compete with 2k, eliminated 2k, and then returned Madden to it's original price.

(at the risk of being blunt)...so? That's how business works, doesn't it? When something goes on sale, competing brands will usually counter with their own sale. Those sale prices do not then dictate what the "typical" price would be for that item. It seems that the entire case is based on the (probably incorrect) assumption that all 2K games would be $20 from 2K5 on forward when a quick look at their baseball and basketball games the following year show that's not the case. All discounted in the 2K5 iteration, NBA/MLB received price bumps for 2K6.

This entire suit doesn't take into consideration the idea that EA raised the price back up to 49.99 because that was the typical pricing; not because they had eliminated 2K's game. The two aren't mutually exclusive, but there is a distinction there that needs to be made.

# 44 ODogg @ 12/23/10 02:53 PM

That is precisely how business works, you eliminate competition and then charge what the market will bear. And the football games most certainly should be compared to other games even if they aren't the same genre because the other games provide a baseline. If EA was charging $100 for Madden then this lawsuit might have a point that they were charging an unreasonable amount of money for a game that has no competition but they aren't. They are charging the generally accepted price of a video game.

As for why EA lowered the price to $29.95 and then raised it, it's quite simple, they did so because they had to compete with a product. Then that product ceased to exist, through no fault of EA's but rather through the doings of the NFL, so they then went back to charging the regular price. Why would they sell the game for $20-$30 less than they had to compared to other games when there was no competing product.

I think point here is that yes the price did change when the competing product was gone. That's most certainly true. However the elimination of the competing product isn't the issue, it's how the competing product was eliminated. Did EA eliminate it? The lawsuit seems to blame EA for this and thus that's why they're suing them but the truth is the NFL is the owner of the NFL license and can sell to whom they wish. EA wasn't the party here that was able to eliminate the competition, only the NFL was. The lawsuit is misdirected at EA, if anyone needs sued it's the NFL but they cannot be because of their anti-trust status.

# 45 ODogg @ 12/23/10 02:56 PM

LiquorLogic - that's not the issue, that's how business in a capitalist society works. That's how it should work. And as I said, EA didn't eliminate the competition, the NFL did. The NFL has the right to control their product. You're confusing a privately held copyright with a publicly accepted goods or services. A monopoly can't apply to something like the NFL, it's not coal, wood, water or gas, ie something that is in the public interest to have fair and equal business dealings. The very nature of a privately held copyright is that it's unfair by nature as it's goal is to make maximum profit.

# 46 Only1LT @ 12/23/10 03:00 PM

Quote:

Originally Posted by ODogg


	That is precisely how business works, you eliminate competition and then charge what the market will bear. And the football games most certainly should be compared to other games even if they aren't the same genre because the other games provide a baseline. If EA was charging $100 for Madden then this lawsuit might have a point that they were charging an unreasonable amount of money for a game that has no competition but they aren't. They are charging the generally accepted price of a video game. As for why EA lowered the price to $29.95 and then raised it, it's quite simple, they did so because they had to compete with a product. Then that product ceased to exist, through no fault of EA's but rather through the doings of the NFL, so they then went back to charging the regular price. Why would they sell the game for $20-$30 less than they had to compared to other games when there was no competing product. I think point here is that yes the price did change when the competing product was gone. That's most certainly true. However the elimination of the competing product isn't the issue, it's how the competing product was eliminated. Did EA eliminate it? The lawsuit seems to blame EA for this and thus that's why they're suing them but the truth is the NFL is the owner of the NFL license and can sell to whom they wish. EA wasn't the party here that was able to eliminate the competition, only the NFL was. The lawsuit is misdirected at EA, if anyone needs sued it's the NFL but they cannot be because of their anti-trust status.

Anti-trust status, that they may not soon have.

# 47 DaggerSwagger @ 12/23/10 03:05 PM

Quote:

Originally Posted by khaliib


	What EA does not want is for this case to go before a "Jury" of mostly older individuals who believe the current price tag for video games is way too expensive and most likely will focus on that aspect along with buying exclusive rights to be the sole maker for these games. It's different if the case would be determined by a judge who would go by the letter of the law. But instead, older individuals who mostly believe video games are an issue one way or another. This case will not be about an EA Sports Title by itself, but about their emotional feelings towards video games in general. Or they will get that individual that has been burned by purchasing an EA product before and wants such an opportunity to get back at them. It doesn't look good when during a year your competitor (a much smaller company than EA) sells their game at a lower price than EA's, then the following year an exclusive deal is done removing any/all pricing alternatives for consumers while increasing your price. Also, it might be hard for EA to justify an increase from $29.99 to $59.99 for their football title when this titles market was/has been driven by EA itself. There was/is no football market to say this is what drove the standard for pricing, because EA is the "ONLY" producer with the exclusive deal. Another area that doesn't look good for EA is that they forenew about the new Next Gen consoles hitting the market and the exclusive deal made them the Only football developers when the units were in "HIGH" demand which coinsides with the increase in price of their football titles. This really adds to the justification of the lawsuit that EA "Price Gauge" as the sole maker. On top of this, EA has lawsuits from players from both the NFL and NCAA which lends to the assumption that EA has/is doing something that is illegal. Again, not good to have this lawsuit decided by Jurors instead of a Judge. And to add more pressure, it's being submitted as a "Class Action" suit. Can EA, after closing one of their sites, afford to lose such a case? Can you imaging the cost of damages for this "Class Action"? On a good note to us that want a 2k Pro/College Football game, because the company is mentioned in the lawsuit, it has to mean that they are involved in pushing it in some way or another. I wouldn't be suprised if other game makers (989, Acclaim etc..) decided to participate on the grounds that they to were locked out of the football market. I would also say that this is not only about any future licenses, but damages due to the money lost because of the lock-out. **Remember the Exclusive football deals and price increase came right as the Next Gen consoles where in High demand. In 2006, everyone purchased Madden to play on these "New" consoles. This is very important within the lawsuit. If this is what it takes for another game developers to have the opportunity to provide the football community with alternatives, then I'm all for it.

I'm All In As Well!!!!!

# 48 TreFacTor @ 12/23/10 03:10 PM

I think this suit gets settled quietly allowing anyone who joined the lawsuit to claim about $10 for the years before madden hit next gen. As for what it means for another company being able to make another nfl game, I don't think this will have any bearing on that issue especially considering the american needle case didn't do it.

# 49 SmashMan @ 12/23/10 03:24 PM

Quote:

Originally Posted by LiquorLogic


	This is really getting tiresome. Seriously, the "typical" pricing doesn't matter.

Why not? The entire suit depends on the assumption that 2K would've strayed from this "typical" pricing for the foreseeable future. 2K lowered all their games for their 2K5 versions. Both MLB and NBA experienced price increases in subsequent years. While we obviously don't know because of the exclusivity deal, 2K's behavior with their other budget-priced sports titles suggests that their NFL game's price would've increased. 2K5's price point was a one-year anomaly, and shouldn't be used as the base line for setting prices.

Quote:


	Here is what matters: the typical price was in fact $50. At some point EA lowered the price to $30. Now why did they (EA) do that ? Clearly, the price point of 2k5 was the reason. Now why did EA return the price of Madden to $50 ? Obviously it was because they signed an exclusive contract with the NFL, and eliminated T2 or any other potential competitor. In a nutshell, EA sold Madden at the "typical" price of $50. Because of the competitor's price, they lowered the price of Madden below the "typical" price. They then got rid of the competition and returned Madden to it's original (and typical) price. That's the issue.

And thus begs the question...why would the $30 price of the 2005 year become the new standard pricing for Madden games?

# 50 RaychelSnr @ 12/23/10 03:25 PM

Quote:

Originally Posted by LiquorLogic


	That's how business works, but that's not how business is supposed to work in this country. Sure, companies break the rules; sometimes they get away with it, and sometimes (hopefully this time) they don't. How isn't EA at fault ? First, the signed the deal to get rid of 2k, didn't they. They didn't have to make the deal. Sure they would've lost the license, but it that an excuse to break the law ? Also, hasn't EA admitted to lobbying for the exclusive deal for years before they actually got it ?

It takes two to tango, and why can't the NFL be sued ? Are they not currently involved in a lawsuit with American Needle because of their exclusive license ?
Eliminating competition is illegal no matter how a company (unless they buy out the competitor) does it.[/quote]
EA didn't break the law by bidding on a license from the NFL which was offered to anyone who wanted to bid on it. Take Two also put a bid in and lost. That's called just getting beat in business. It's not unreasonable or unrealistic for any company to inquire about an exclusive license, Take Two would have been inquiring about the possibility as well.

What you are failing to understand is A)The basis of the case B)The background behind how EA got the license and C)The nature of anti-trust laws. I've outlined all of these things and why the case is not a good one from an anti-trust standpoint in my blog -- it's just not a good case. As I'll say there in a bit, the basis of any anti-trust case is that you can prove harm has been done to the consumer -- which isn't as easy as it sounds. You and other people are assuming the law is easy and that since you feel wronged then it's obviously a open and shut case.

The reason why most anti-trust suits fail, class action or not, is because to prove material harm has been done to the customer requires building a case which involves an entity working to completely take over a market of consumers which have then been materially harmed. From the text of the suit, the case the Plantiffs are pursuing is not good at all. Read my blog for more info, but until then I'd recommend you do a bit more research into anti-trust law and not defend a point you really don't have much of an idea about.

Sure you may think you do, and sure you may think you've been wronged....but quit finding facts and trying to make them fit your opinion. That's not how you build a logical case.

# 51 ODogg @ 12/23/10 03:29 PM

No, that is how capitalism works, companies do their best to put out a product, maximize profits and follow the rules. As long as they are doing all three of those things then putting competition out of business is the fastest way to accomplish maximizing profits. There was nothing done here by EA nor the NFL to break any rules so there should be no issue with them attempting to maximize their profit margin.

It's not EA's fault because they were at the mercy of the NFL. If they had declined to accept the NFL's offer of exclusivity they would have seen it go to another company and thus impact their company's bottom line significantly. EA put forth the only option that was available to them, offer the necessary money to secure the exclusive agreement. If they had not then 2K would have gotten the contract and I seriously doubt so many folks would be here wanting 2K to be on the bad end of this lawsuit.

The NFL cannot, nor should not be sued, because they have the right to sell their exclusive product to all companies or one company, as they see fit. As I stated before, they cannot be sued based upon them holding some sort of monopoly on their product considering it's not a product or service that is something that is critical to the public welfare (such as wood, water, coal, natural gas, etc). Take the NFL Sunday Ticket for example, the NFL and DirecTV could raise the price of that to $3,000 per year if they wanted and there's not a damned thing anyone could do about it. If you don't want it then don't pay it. It's the NFL's product and they should be able to manage (or mismanage) it any way they see fit.

# 52 ODogg @ 12/23/10 03:46 PM

You're argument would make sense if EA made the deal themselves but they didn't, they made it with the NFL who owns the product to sell to whomever they desire. In this case they chose ONE company so that's their call, not EA's.

Oh and neither is EA 32 separate companies.

# 53 RaychelSnr @ 12/23/10 03:54 PM

Quote:

Originally Posted by LiquorLogic


	You put competition out of business, legally, by offering a better product, or a cheaper product of the same quality. You don't make a deal that prevents you competitor competing altogether. Also, in case you haven't heard, the SCOTUS doesn't consider the NFL a single-entity. Single entities can decide to partner up with one company exclusively, but multiple entities, which the NFL is, can't conspire to exclude a competitor from the market. DirectTV is one company;DirectTV, to my knowledge, is not comprised of 32 separate companies.

That's a very loose and very wrong interpretation of how the American Needle case decision was worded. Each NFL club can still decide to collectively enter into agreements together -- just the NFL cannot negotiate on their behalf without an agreement between each team. This is what the Plantiffs are going to have to prove, hattip to Law Professor Marc Edelman, who I hope to have an interview with on OS soon:

Quote:


	A plaintiff is going to have to show three things: (1) that the NFL clubs collectively exercise market power in a some relevant market related to video games, (2) that the NFL�s exclusive licensing practices overall are anti-competitive in this market, and (3) that as a result of the NFL�s exclusive licensing practices consumers have been harmed through either higher prices or a reduction of output within that relevant market.

So basically, this case has to prove that EA and the NFL's practices are a part of a singular football market (which is easily disproved by showing how other games affect the sales of Madden which aren't football games). Then if they somehow proved a market exists, they'd have to show that how the NFL divvies out their license was anti-competitive -- which means they'd have to purposefully shut out companies other than Take Two from negotiations. So long as a bid is done for the license, the process is competitive. Then, if they somehow proved that, they'd have to prove material harm to the consumer either by price gouging or by purposeful manipulation of game quantities. Which we already know that case is NOT valid because to gouge prices you have to price your game at a level well above what the market demands and there be no other option to turn to. You say the other games don't matter BUT THEY DO because that's the market Madden is operating in. This is a simple set of facts to dissect. Now what you do with them is up to you

# 54 ODogg @ 12/23/10 03:59 PM

tlc - you cannot have a monopoly on a privately held copyright. No one is stopping football video games from being made here (APF2K8 anyone??). Why is that so hard for people to understand??

# 55 RaychelSnr @ 12/23/10 04:02 PM

Quote:

Originally Posted by tlc12576


	I don't see why people are acting as is Liquor's point has no logic to it.(haha) Unless I am mistaken, part of the antitrust law is to prevent collusion between entities to create a monopoly also. With all the facts together, a pretty clear picture is painted that makes for a compelling argument that collusion took place, between the NFL and EA, to eliminate competition and allow EA to sell Madden at its' original, higher price.

I could make a compelling argument that there is a group of pink lizards which live in my basement and play Jazz music as well, but it doesn't mean it can be proven in a court of law.

People are assuming collusion of some sort took place between EA and the NFL, and currently there is only wild speculation from people who hate EA about it, but there is zero proof that collusion took place. From all accounts, the manner in which EA got the NFL license was done via a fair bidding process which everyone, including Take Two, had the opportunity to bid. The only way you can prove the action was wrong is to prove that bidding process was fixed in EA's favor. And as I said in my blog, short of having Roger Goddell's hard drive with e-mails between him and EA Execs, that case is going to have some issues.

# 56 RaychelSnr @ 12/23/10 04:16 PM

Quote:

Originally Posted by tlc12576


	No, if they can show that EA approached the NFL in the past for an exclusive license, was rebuffed until immediately following the competitions price drop and maybe even directly link the price dropping to a loss of revenue to the NFL from this, that makes collusion seem "more likely than not".

Seem and proof are two different things. It may seem like one thing, but without proof it's just unsubstantiated speculation. Like I told LL, don't think your emotions in this and just dissect the facts and the law with your head. Then start to form opinions on what you should do. In this case I think it's simple, you don't like Madden? Don't buy it. If the number of people who don't like the game actually didn't buy it, then at that point sales would suffer enough for EA to take notice. You might not buy the game, and that's good....you are acting like a consumer should. Otherwise, think about this with some rationality for a bit

# 57 RaychelSnr @ 12/23/10 04:17 PM

Quote:

Originally Posted by tlc12576


	Ok MMChris, was the American Needle case a civil suit though? I am NOT a lawyer but I have watched enough Judge Judy, Mathis, etc, to know that the burden of proof for a civil suit is only that it what your are accusing is more likely than not. Like with OJ Simpson's murder trial case vs the civil suit that was brought against him. With the burden of proof being more likely than not for this civil case, the facts present a good argument for this suit to win.

This is an anti-trust case, as with the American Needle case. The crux of the argument is that Anti-Trust laws were broken and the consumer is entitled to damages. That's tough to prove in ANY setting.

PS, I'd think referencing watching Judge Judy as a basis for why a legal anti-trust case might pass or fail is grounds for disqualification to have your point heard

# 58 RaychelSnr @ 12/23/10 04:33 PM

Quote:

Originally Posted by tlc12576


	What am I saying that is irrational? Are you saying because I see the case in the way I described that means I hate EA or have some emotional vendetta? LOL I am just trying to discuss the topic of this thread in a constructive manner and don't see how the some of the stuff you are saying is relevant to that. I will ask you, in this class-action suit, is or is not the burden of proof for what is more likely than not? If not, then I will have to disbar myself from practicing law in OS forums.

This stuff is relevant because it's THE CASE at hand. The case argues that EA violated anti-trust laws and that consumers are entitled to damages from those violations. So the Plantiffs have to establish that EA violated anti-trust laws with Madden, which will be next to impossible to do -- THEN they have to establish that consumers are entitled to damages -- which I haven't even discussed that aspect of the case because the first part will be so hard to prove it's difficult to see the case reaching that point to begin with.

If you can't see how everything I've said in this thread relates to this case, then you don't have a firm enough grasp on Anti-Trust law and this case to do more than speculate. That's fine, message boards are here for speculation -- and I appreciate your civility. I just assume (falsely) anyone arguing for this case is a Madden *****. For the most part that's true, but it's not completely true.

Anyways, just read my points again and then think about what I just said. You have to prove EA broke anti-trust laws...which since the NFL is NOT named, you have to have some smoking gun proof that the bid process for the NFL gaming license was fixed so EA would win it. Otherwise, from what we know, EA obtained the NFL license in a legal manner. The American Needle case doesn't change that (it might change how future license bids are handled however). The only way this gets prosecuted and EA has to pay up is if it is proven that they obtained the NFL license in a non-competitive manner. Otherwise, the NFL can market it's brand HOWEVER it likes in terms of the terms of its video game brand licensing and EA simply won the bid. Is that popular among gamers? No. But it's the law.

# 59 RaychelSnr @ 12/23/10 04:45 PM

Quote:

Originally Posted by LiquorLogic


	EA approached the NFL for years for exclusivity. It wasn't until the price war that the NFL agreed go exclusive. EA doesn't have to be 32 separate companies. They made a deal with 32 separate companies to freeze out the competition. The NFL did that with the American Needle, and now the NFL is currently being sued. The NFL can sell the use of their brand to whomever the want, but they can't exclude whomever they want.

The NFL wasn't strong-armed into the deal like you are insinuating. They decided it was in their best business interest to award the exclusive license to a single company to develop NFL video games. That's perfectly legal so long as they gave everyone a chance -- which they did. They contacted companies and asked them to submit bids to get the license to themselves exclusively. EA's bid won and that was that. Unless you know something no one else does, that's where you'd have to start on any anti-trust case and unless the bidding process was fixed so that EA would win, there is no possible way the process was illegal if companies were given the option to submit a bid for the license.

Is that policy from the NFL good for sports gamers? No. But it's far from illegal. So unless something nefarious is uncovered, it's going to be awful hard to prove a monopoly and customer harm in this regard. It also fits within the American Needle ruling in the sense that the NFL gave companies the chance to get the license to develop NFL games -- they simply didn't take advantage of it. If the NFL isn't allowed to negotiate exclusive deals with companies, then TV rights would become a gigantic mess because no one network would be able to not broadcast NFL games, among other things.

# 60 RaychelSnr @ 12/23/10 04:47 PM

Quote:

Originally Posted by tlc12576


	I think you are misunderstanding my point. I'm not trying to rehash that old discussion about is the exclusive deal a monopoly or not, I am talking about this class-action suit having merit. If they can show that the EA and the NFL conspired to eliminate the competition for whatever reason and this allowed EA to sell Madden at its' original higher price, then the case could win. What is so hard to understand about that? You don't have to agree with it but I think what I am saying is pretty clear, even if it turns out to be complete BS. LOL

What you just said is true. HOWEVER, to prove that requires you to have evidence which no one currently has or knows about. So you'd basically be uncovering massive fraud and collusion to the nth degree -- which would be a HUGE story all to itself.

And I'm not saying it's not possible EA and the NFL didn't collude, I'm just saying in the context of a court of law that unless the evidence is clear, you can't go forward with speculation and no facts and from what we know there is no evidence that took place. Always subject to revision of course

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