An opinion issued late last week by a Northern California federal court rejected claims against Sony Interactive Entertainment LLC over its purported monopolistic and anticompetitive conduct in the sale of digital games in its PlayStation Store. Judge Richard Seeborg said that the plaintiffs failed to allege critical aspects of their Sherman Antitrust Act claims and other derivative ones.
In the trio of consolidated cases, the plaintiffs alleged that Sony dominated the single brand market for “downloadable, digitally-delivered video game content that is compatible with a PlayStation console,” and secondarily, a separate aftermarket for games that can be played on it. Until April 2019, digital games were sold by both the PlayStation Store and game developers, who could sell download codes for digital PlayStation games through the same online and brick-and-mortar retailers of the physical games, the opinion said.
Reportedly, when this practice was active, the prices for download codes could vary from the prices in the PlayStation Store. However, when Sony eliminated the download code option, the PlayStation Store became the only place for obtaining a digital copy of a PlayStation-compatible game and set the only price available.
Sony’s decision is the lynchpin of the plaintiffs’ case, yet according to the company, its “everyday distribution[] decision” in no way supports antitrust liability. Sony’s motion to dismiss said that the operative complaint suffers from a litany of defects including implausible market definitions and failure to allege anticompetitive conduct and antitrust injury. Sony also balked at the possibility that a court remedy might restructure its business model, arguing that the extreme measure is unwarranted.
In this week’s opinion, Judge Seeborg partly agreed. The decision opened by noting that single-brand market definitions are disfavored, but did not grant the motion on that basis as to either the proffered market or aftermarket. Instead, Judge Seeborg faulted the plaintiffs for failure to plead the anticompetitive conduct necessary for their Sherman Act claims. The analysis said that the complaint provided “conclusory statements that Sony voluntarily terminated a profitable practice” not backed by sufficient factual detail.
The ruling deemed the plaintiffs’ antitrust injury allegations, increased prices for digitally-delivered games, sufficient. “Although as Defendant points out there may be other reasons for the increased prices, and physical versions of the game may not be the appropriate benchmark, Plaintiffs have at this stage pled increased prices,” the court said.
Though Judge Seeborg commented that it is unclear whether the deficiencies may be cured, he granted the plaintiffs 30 days to file an amended pleading.
Sony is represented by Shearman & Sterling LLP and the plaintiffs by interim lead counsel Motley Rice LLC. Westerman Law Corp., Milberg Coleman Bryson Phillips Grossman PLLC, and Joseph Saveri Law Firm LLP are also counsel for the plaintiffs.
