Activision settles esports salary cap lawsuit with Department of Justice

pcgamer.com:

The US Department of Justice has filed a lawsuit over Activision Blizzard's «Competitive Balance Tax» in the Overwatch and Call of Duty leagues that it says «penalized teams for paying esports players above a certain threshold and limited player compensation in these leagues.» At the same time, the DOJ also submitted a proposed settlement that, if approved by the court, will end the matter as long as Activision promises not to do it again.

The lawsuit(opens in new tab) notes that both Overwatch and Call of Duty are massively successful games, and that their respective pro leagues «have generated hundreds of millions of dollars for Activision from franchise fees, sponsorship revenues, exclusive streaming deals with YouTube, and the Overwatch League’s television broadcast deal with Disney (including subsidiaries ESPN and ABC).» Like most other sports leagues, the Overwatch and Call of Duty leagues are made up of independently owned teams, who are in constant competition to sign and retain the best players.

«From the inception of each league, Activision and the teams agreed to impose rules that had the purpose and effect of substantially lessening competition for players by suppressing player compensation,» the lawsuit states. «Under these rules, which Activision called the 'Competitive Balance Tax,' teams were fined if their total player compensation exceeded a threshold set by Activision each year. For every dollar a team spent over that threshold, Activision would fine the team one dollar and distribute the collected sum pro rata to all non-offending teams in the league.»

This agreement had a few effects, according to the DOJ. It reduced the likelihood of expensive bidding wars for players, and for teams that did spend