THE NFL'S EXCLUSIVE VIDEOGAME CONTRACT - A MONOPOLY THAT MUST END Louis M. Peters I. INTRODUCTION Every new NFL season brings so much excitement. Teams have brand new players, new coaches, new plays, and even new stadiums. Children and adults across America are excited by the opportunities their respective teams have to be successful. Everyone is equalized, teams have a clean slate, and fans and players alike hope to build on previous years or to erase their memories of losing. One of the most realistic ways that NFL fans are able to engage with the sport is through playing video games. But year after year, fans are disappointed by the new NFL video game that is released. The Madden franchise has had an exclusive contract to produce the NFL's only licensed video game since December 2004.1 Capitalizing on this, Electronic Arts (EA or EA Sports), the maker of the Madden video game franchise, fails to please its enthusiastic fan base year after year. Instead, each new Madden release in August is essentially a roster update of the teams and nothing more. The games are glitch-ridden, the game play is unrealistic, and the fans are left disappointed.2 Year after year, kids are ecstatic for the new Madden release only to be disappointed with the game after a week. This phenomenon is not common among video games. New and innovative games such as Rockstar San Diego's Red Dead Redemption 2 and Epic 1 Matt Richtel, Electronic Arts Gets an Exclusive N.F.L. Deal, THE NEW YORK TIMES (Dec. 14, 2004), https://www.nytimes.com/2004/12/14/technology/electronic-arts-gets-an-exclusive-nfl-deal.html. 2 Brett Molina, Ready for some football? 'Madden NFL 20' is officially here: What you need to know, USA TODAY (Aug. 2, 2019, 10:01 AM), https://www.usatoday.com/story/tech/gaming/2019/08/02/madden-nfl-20-everything- you-need-know-football-video-game/1898094001/ (“It ain't Madden season without the glitches…Did the weird bugs that appear to accompany Madden every year become part of its charm? Most notable: the ball sticking to players' helmets… Is this funny? Yes. Is it also kinda frustrating since this seems to happen pretty much every season? Also yes. Some other glitches I spotted: my receiver celebrating a touchdown then suddenly disappearing, my Cincinnati Bengals quarterback deciding to wear a Tampa Bay Buccaneers jersey during training.”). 1 Games' Fortnite dominate in their popularity.3 This is for one primary reason, those games are fun.4 It is time to expose the NFL's exclusive video game contract with Electronic Arts for what it is, an illegal monopoly. The NFL's exclusive contract with Electronic Arts to produce NFL licensed interactive football software is violation of US antitrust law. This monopoly has allowed EA to release an inferior and flawed product year after year.5 Without competition, which forces innovation and has pressured EA in the past, there is no hope for an NFL videogame of the quality fans deserve. II. BACKGROUND A. Antitrust Law The purpose of antitrust law is to preserve a competitive marketplace to protect consumers from abuses.6 The public is to be protected against wrongful concerted conduct by actors that have economic power.7 Section 2 of the Sherman Antitrust Act8 protects against 3 See Peter Suderman, Red Dead Redemption 2 Is True Art, THE NEW YORK TIMES (Nov. 23, 2018), https://www.nytimes.com/2018/11/23/opinion/sunday/red-dead-redemption-2-fallout-76-video-games.html (“After its October release, Red Dead Redemption 2 earned $725 million in just three days, giving it the highest-grossing opening weekend of any entertainment product — ever.”). See also Ben Gilbert, How big is 'Fortnite'? With nearly 250 million players, it's over two-thirds the size of the US population, BUSINESS INSIDER (Mar. 20, 2019, 1:41 PM), https://www.businessinsider.com/how-many-people- play-fortnite-2018-11. 4 Although “fun” is a subjective description, scholars have tried to quantify what makes videogames fun. However, popularity and sales likely suffice as indicators of how fun a game is. See Rachel Ehrenberg, In figuring out what makes video games fun, the mystery is in the math, SCIENCE NEWS (Feb. 20, 2012, 3:25 PM), Deleted: , https://www.sciencenews.org/article/figuring-out-what-makes-video-games-fun-mystery-math. 5 See Matt Richtel, Relying on Video Game Sequels, THE NEW YORK TIMES (Aug. 8, 2005), https://www.nytimes.com/2005/08/08/technology/relying-on-video-game-sequels.html? 6 "This focus of U.S. competition law, on protection of competition rather than competitors, is not necessarily the only possible focus or purpose of competition law. For example, it has also been said that competition law in the European Union (EU) tends to protect the competitors in the marketplace, even at the expense of market efficiencies and consumers."Cseres, Katalin Judit (2005). Competition law and consumer protection. Kluwer Law International. pp. 291–293. ISBN 9789041123800. Archived from the original on May 12, 2013. Retrieved October 3, 2019. 7 A. NEALE, THE ANTITRUST LAWS OF THE UNITED STATES OF AMERICA (2d ed. 1970). 8 UNITED STATES STATUTES AT LARGE, 51 Cong. Ch. 647, july 2, 1890, 26 Stat. 209. 2 unilateral conduct by combatting monopoly power. The Sherman Antitrust Act9 was proposed in 1890 by Senator John Sherman from Ohio and was passed at the height of the "Gilded Age."10 The Act is an early example of competition law designed to ensure that the economic playing field remained competitive and maintain a functioning capitalistic system.11 Section 1 of the Sherman Act declares illegal "every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States."12 To state a Section 1 claim, a plaintiff must plead facts plausibly suggesting: (1) a contract, combination, or conspiracy (meaning, an agreement); (2) a resulting unreasonable restraint of trade in a relevant market; and (3) an accompanying injury.13 These elements are discussed briefly here and in more depth below. Plausibly pleading the first element, an agreement, requires "enough factual matter (taken as true) to suggest that an agreement was made"—that is, "enough fact to raise a reasonable expectation that discovery will reveal evidence of illegal agreement."14 Plaintiffs can do this in one of two ways, by pleading either direct or circumstantial evidence of an illegal agreement.15 Direct evidence of an agreement "is explicit and requires no inferences to establish the proposition or conclusion being asserted."16 Simply, direct evidence constitutes a "smoking gun."17 Circumstantial evidence, in contrast, is facts "from which the existence of such an agreement can 9 Id. 10 Sherman Anti-Trust Act § 1, 15 U.S.C. § 1 (2004). 11 A. NEALE, THE ANTITRUST LAWS OF THE UNITED STATES OF AMERICA (2d ed. 1970). 12 15 U.S.C. § 1 13 Agnew v. NCAA, 683 F.3d 328, 335 (7th Cir. 2012). 14 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556, 127 S. Ct. 1955, 1965 (2007). 15 In re Text Messaging Antitrust Litig., 630 F.3d 622, 629 (7th Cir. 2010). 16 In re Baby Food Antitrust Litig., 166 F.3d 112, 118 (3d Cir. 1999)). See also In re Dairy Farmers of Am., Inc., Cheese Antitrust Litig., 60 F. Supp. 3d 914, 950 (N.D. Ill. 2014). 17 Omnicare, Inc. v. UnitedHealth Grp., Inc., 629 F.3d 697, 706 (7th Cir. 2011). See also In re High Fructose Corn Syrup Antitrust Litig., 295 F.3d 651, 654 (7th Cir. 2002) ("an admission by the defendants that they agreed to fix their prices is all the proof a plaintiff needs"). 3 be inferred."18 Mere allegations of "parallel conduct," without more, do not "tend to exclude the possibility of independent action," and are therefore insufficient.19 It is likely that EA's contract with the NFL is direct evidence of harm to the competition. They have no competition and through the contract they signed, all competitors were forced to leave the market by 2005.20 EA made this deal to crush the competition and become the sole maker of NFL videogames.21 When faced with competing with a much cheaper yet superior product (NFL 2K5), the NFL made this agreement to solidify their position so that no competitors could undercut them again.22 This constitutes a “smoking gun” because no inferences are required to determine that the agreement closed off the market to others.23 The market here, as explained below, is officially licensed NFL interactive football software.24 Because the NFL made a deal with EA not to license any other developer’s videogames, it became impossible for competitors to stay in the market.25 Thus, this contract forced the competitors out of the market through a total consolidation of the NFL’s videogame license.26 The second element, an unreasonable restraint, hinges on whether the alleged violation is per se unreasonable or is, instead, subject to the rule of reason.27 Per se violations—those with which courts have "considerable experience" and "inevitably result in a finding of 18 High Fructose Corn Syrup, 295 F.3d at 654. 19 Twombly, 550 U.S. at 554. 20 Matt Richtel, Electronic Arts Gets an Exclusive N.F.L. Deal, THE NEW YORK TIMES (Dec. 14, 2004), https://www.nytimes.com/2004/12/14/technology/electronic-arts-gets-an-exclusive-nfl-deal.html 21 Tom Bissell, Kickoff: Madden NFL and the Future of Video Game Sports, GRANTLAND (jan. 26, 2012), http://grantland.com/features/tom-bissell-making-madden-nfl/ 22 Id.