A University of Michigan economics professor estimates that Electronic Arts collectively overcharged Madden buyers between $701 million and $926 million during the years 2006 through 2009.
Dr. Jeffrey MacKie-Mason made his claim in a document filed last week with the U.S. District Court in San Francisco. Mackie-Mason was brought into the case as an expert witness by attorneys representing Geoffrey Pecover and Jeffrey Lawrence. The pair of gamers are named plaintiffs in a class-action suit alleging that EA used its exclusive licensing deal with the NFL to eliminate Take Two Interactive’s competing NFL 2K series. The suit charges that EA then exploited the resulting competitive vacuum to dramatically raise the retail price of Madden.
While MacKie-Mason acknowledges that his estimates are based on incomplete data, he writes:
I provide this information for the limited purpose of allowing the Court to assess in rough terms the burden on Electronic Arts in relation to the magnitude of potential damages… Under California’s antitrust statute, it is my understanding that these damages would be trebled.
MacKie-Mason arrived at the eye-popping figures using an estimated overcharge percentage that ranged from 50% to 66% for the 30.04 million units of Madden sold during the 2006-2009. He writes:
When Take-Two was able to compete unhindered, Madden NFL’s competitive price was in the range of $19.95 to $29.95. I assume for this exercise that these would have been Madden’s prices but for the alleged [monopolistic] acts.
Based on Mackie-Mason’s estimate, attorneys for the plaintiffs have requested additional data for Madden sales going back to 2001. In a response, attorneys for EA agreed to supply as many of the requested documents as they could locate, but were unsparing in their assessment of Mackie-Mason’s analysis:
EA respectfully submits that Dr. MacKie-Mason’s analysis is fundamentally flawed on multiple levels. Indeed, Dr. MacKie-Mason’s estimated magnitude of damages is nothing more than pure fiction – it has no basis in fact or law…
As GamePolitics reported last month, U.S. District Court Judge Vaughn Walker ruled that the plaintiffs’ monopoly suit could go forward, but limited the scope of the case to claims arising in California and Washington, D.C. where Pecover and Lawrence reside.