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Judge refuses to dismiss class action antitrust claims against Sony

The class action alleges Sony illegally prevented retailers from selling digital download cards for PlayStation games.

SAN FRANCISCO (CN) — It's not "game over" yet in a class action suit accusing Sony Interactive Entertainment of anticompetitive conduct.

Chief U.S. District Judge Richard Seeborg in the Northern District of California Tuesday denied Sony's request to dismiss a consolidated amended class action complaint alleging the company wiped out retail competition for its massively popular games by preventing retailers from selling digital download codes, giving Sony sole control over the distribution of its PlayStation products.

Sony’s competitors — companies such as Nintendo and Microsoft — allow their customers to purchase download codes for their games from retailers, offering gamers the opportunity to shop around and, potentially, save a few bucks.

The plaintiff PlaySation users' initial complaint was dismissed in July 2022 for failing to explain how Sony "generated a revenue stream from the sale of download codes by third party retailers, but Seeborg ruled Tuesday that the amended ruling adequately describes how Sony previously sold digital game cards to retailers, who when take a commission on each sale and give the remainder of the profit to Sony. The amended complaint also describes how Sony previously sold download codes to the games' publishers and allowed them to deal directely with retailers.

"While Plaintiffs do not identify how lucrative this practice was, the avernments provide enough detail to support the conclusion that Sony's conduct was, in any event, profitable," Seeborg wrote.

Referring to Aspen Skiing Co. v. Aspen Highlands Skiing Corp., the plaintiffs argued that Sony’s decision in 2019 to cut out retailers from download code sales, was a move to sacrifice short-term profits for long-term gain in "order to obtain higher profits in the long run from the exclusion of competition." The plaintiffs say the dip in Sony's fiscal year 2019 sales demonstrate that.

Sony argued the plaintiffs fell short of proving how the company's "'only conceivable rationale or purpose'" of its conduct was to harm competition. Seeborg said that while the plaintiffs are required under FTC v. Qualcomm Inc. to ultimately prove that, the amended complaint alleges facts supporting such an assertion, "if just barely"

By suggesting that Sony’s financial performance with its retailers was not the reason for Sony’s decision to curtail retail sale of download codes, and by denying the idea the video game company hoped to save costs by alleging they continued selling gift cards through those same retailers anyway, plaintiffs stated a claim, Seeborg said.

Plaintiffs' attorney Michael Buchman declined to comment. Attorneys for Sony did not immediately respond to a request for comment.

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