Monopolization Claims Relating to Video Football to Proceed

In Pecover et al. v. Electronic Arts Inc., Northern District of California Judge Vaughn Walker refused to throw out Sherman Act and California’s Cartwright Act claims in a proposed consumer class action alleging that Electronic Arts Inc.’s exclusive licenses with various football leagues have “killed off” competition for its Madden series of football games, which allowed EA to hike prices by nearly 70 percent.  In its motion to dismiss EA argued that 1) plaintiffs had not shown that there was a recognizable product market for football video games for the purposes of the Sherman Act; and 2) multiple exclusive agreements with different leagues cannot constitute restraint of trade under the Cartwright Act because such a rule would deny licensors the benefit of bidding competition.  The court rejected EA’s arguments and held that 1) based on the complaint, there is little to no market for football games that are not based on real teams and players, so the allegations that the licensing deals forced competing football games out of the market and allowed EA to raise prices are sufficient to allege a product market under the Sherman Act; and 2) while multiple licenses are not per se illegal under the Cartwright Act, they could still constitute a violation by “depriving the marketplace of independent sources of economic power.”

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