United States v. Activision Blizzard, Inc.; Proposed Final Judgment and Competitive Impact Statement, 25015-25023 [2023-08726]

Agencies

• Antitrust Division
• Department of Justice

[Federal Register Volume 88, Number 79 (Tuesday, April 25, 2023)]
[Notices]
[Pages 25015-25023]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-08726]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Activision Blizzard, Inc.; Proposed Final 
Judgment and Competitive Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment, 
Stipulation, and Competitive Impact Statement have been filed with the 
United States District Court for the District of Columbia in United 
States of America v. Activision Blizzard, Inc., Civil Action No 1:23-
cv-00895. On April 3, 2023, the United States filed a Complaint 
alleging that Activision Blizzard, Inc. (``Activision'') and the teams 
in the Overwatch and Call of Duty Leagues owned by Activision agreed to 
suppress wages for professional esports players through the imposition 
of a ``Competitive Balance Tax,'' which penalized any team that paid 
total annual compensation to its players above a certain threshold set 
by Activision, in violation of section 1 of the Sherman Act, 15 U.S.C. 
1.
    The proposed Final Judgment, filed at the same time as the 
complaint, requires Activision to certify that it has ended all rules 
in the Overwatch and Call of Duty Leagues that impose an upper 
threshold on compensation for any player or players in those leagues; 
prohibits Activision from reinstating or implementing any rule that 
imposes an upper limit on compensation for any player or players in any 
professional esports league owned or controlled by Activision; requires 
Activision to provide notice of the meaning and requirements of the 
Final Judgment to all teams and players in professional esports leagues 
owned or controlled by Activision; requires Activision to implement a 
revised antitrust compliance policy; and imposes cooperation and 
reporting requirements.
    Copies of the complaint, proposed Final Judgment, and Competitive 
Impact Statement are available for inspection on the Antitrust 
Division's website at https://www.justice.gov/atr and at the Office of 
the Clerk of the United States District Court for the District of 
Columbia. Copies of these materials may be obtained from the Antitrust 
Division upon request and payment of the copying fee set by Department 
of Justice regulations.
    Public comment is invited within 60 days of the date of this 
notice. Such comments, including the name of the submitter, and 
responses thereto, will be posted on the Antitrust Division's website, 
filed with the Court, and, under certain circumstances, published in 
the Federal Register. Comments should be submitted in English and 
directed to Chief, Civil Conduct Task Force, Antitrust Division, 
Department of Justice, 450 Fifth Street NW, Suite 8600, Washington, DC 
20530 (email address: [email protected]).

Suzanne Morris,
Deputy Director Civil Enforcement Operations, Antitrust Division.

United States District Court for the District of Columbia

    United States of America, Department of Justice, Antitrust 
Division, 450 Fifth Street NW, Washington, DC 20530, Plaintiff, v. 
Activision Blizzard, Inc., 3100 Ocean Park Blvd., Santa Monica, 
California 90405, Defendant.

Civil Action No.: 1:23-cv-00895 (Cobb, J.)

Complaint

    The United States of America brings this civil antitrust action 
against Activision Blizzard, Inc. (``Activision''). Activision, a 
leading video game developer, owns and operates professional esports 
leagues built around two of its most popular team-based games, 
Overwatch and Call of Duty. For years, Activision and the independently 
owned teams in each league agreed to impose a ``Competitive Balance 
Tax.'' The Tax, which effectively operated as a salary cap, penalized 
teams for paying esports players above a certain threshold and limited 
player compensation in these leagues. This conduct had the purpose and 
effect of limiting competition between the teams in each league for 
esports players and suppressed esports players' wages. This conduct 
violates section 1 of the Sherman Act, 15 U.S.C. 1, and should be 
enjoined.

I. Industry Background

    1. Today, few pastimes in the United States match the popularity 
and cultural impact of video games. An estimated 60 percent of 
Americans report they play video games on a weekly basis, and total 
consumer spending on video games in the United States reportedly topped 
$56 billion in 2022. Today's video game fans are not just interested in 
playing, but watching others play their favorite games on streaming 
sites such as Twitch and YouTube.
    2. Two of Activision's most popular multiplayer video games are 
Overwatch and Call of Duty. Overwatch became one of the best-selling 
video games in 2016, its first year of release, and has since attracted 
millions of players. Since the release of the original Call of Duty 
game in 2003, Activision has published 18 additional titles in the 
series and reportedly has sold more than 400 million units, making it 
one of the best-selling video game franchises in history.
    3. To capitalize on the success of Overwatch and Call of Duty, 
Activision created two professional esports leagues that feature teams 
comprising the very best Overwatch and Call of Duty players in the 
world. Launched in 2018, Activision's Overwatch League currently has 20 
city-based teams located across North America, Europe, and Asia. The 
popularity of Activision's Overwatch League has been a leading 
contributor to the growth of esports in the United States. Soon after, 
in 2020, Activision launched its Call of Duty League with twelve teams 
using the same city-based model as the Overwatch League.
    4. The Overwatch and Call of Duty 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). Millions of viewers around the world have tuned in to 
watch professional Overwatch and Call of Duty players compete in league 
matches. In the inaugural season of the Overwatch League, 107 million 
viewers streamed matches over Twitch. By the next year, it was the most 
watched esports league in the world with more than 75.9 million hours 
watched. The Call of Duty League's official streaming channels attract 
more than 15 million views per month, and more than 300,000 viewers 
tuned in to the inaugural league championship in 2020.

[[Page 25016]]

    5. The Overwatch and Call of Duty Leagues, like other sports 
leagues, feature independently owned teams that not only compete to win 
matches, but also compete to hire and retain the best players. Because 
Overwatch and Call of Duty are both multiplayer, team-based games, 
teams in the Overwatch and Call of Duty Leagues must recruit and sign a 
roster of players who fill different roles within the game and can work 
with and complement their teammates' skills. Esports pros spend 
thousands of hours practicing and honing their skills for a chance to 
make a professional roster; once they sign with a team, many players 
train at least eight hours every day and up to 70 hours each week.
    6. Esports athletes often have short careers as a result of the 
intense physical and mental toll of elite competition, and thus have 
limited time to maximize their earnings.

II. The Competitive Balance Tax Suppressed Competition Between the 
Teams for Esports Players and Suppressed Wages

    7. 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. 
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. For example, if Activision set a Competitive Balance Tax 
threshold of $1 million, a team that spent $1.2 million on player 
compensation in a season would pay a $200,000 fine, which would be 
distributed to the other teams.
    8. Teams recognized that their spending on player compensation 
would have been higher absent the Competitive Balance Tax. The Tax 
minimized the risk that one team would substantially outbid another for 
a player. The Tax not only harmed the highest-paid players, but also 
depressed wages for all players on a team. For example, if a team 
wanted to pay a large salary to one player, the team would have to pay 
less to the other players on the team to avoid the Tax. Teams also 
understood that the Tax incentivized their competitors to limit player 
compensation in the same way, further exacerbating the Tax's 
anticompetitive effects.
    9. While players in other professional sports leagues have agreed 
to salary restrictions as part of collective bargaining agreements, the 
players in Activision's esports leagues are not members of a union and 
never negotiated or bargained for these rules.
    10. In October 2021, as a result of the Department of Justice's 
investigation into the Competitive Balance Tax, Activision issued 
memoranda to all teams in the Overwatch and Call of Duty Leagues 
announcing that it would no longer implement or enforce a Competitive 
Balance Tax in either league.
    11. The agreements between Activision and the teams in the 
Overwatch and Call of Duty Leagues to impose the Competitive Balance 
Tax constituted an unreasonable restraint of trade in violation of 
section 1 of the Sherman Act, 15 U.S.C. 1. Activision should be 
enjoined from implementing the Competitive Balance Tax or any similar 
rule or restraint that, directly or indirectly, imposes an upper limit 
on compensation for any player or players in any professional esports 
league that Activision owns or controls.

III. Jurisdiction and Venue

    12. Activision is engaged in interstate commerce and in activities 
substantially affecting interstate commerce. Activision transacts 
business throughout the United States. Overwatch League and Call of 
Duty League are international professional esports leagues owned by 
Activision, and each league consists of independently owned city-based 
teams located across the United States and other parts of the world, 
including an Overwatch League team located in Washington, DC.
    13. This Court has subject matter jurisdiction under 28 U.S.C. 
1331, 28 U.S.C. 1337, and section 4 of the Sherman Act, 15 U.S.C. 4, to 
prevent and restrain Activision from violating section 1 of the Sherman 
Act, 15 U.S.C. 1.
    14. Activision has consented to venue and personal jurisdiction in 
the District of Columbia. Venue is also proper in this judicial 
district under section 12 of the Clayton Act, 15 U.S.C. 22, and 28 
U.S.C. 1391.

IV. Defendant Activision Blizzard

    15. Defendant Activision is a Delaware corporation headquartered in 
Santa Monica, California. Activision is a video game developer and 
publisher whose business includes the video game franchises Overwatch 
and Call of Duty, and the respective esports leagues for both 
franchises.

V. Violation Alleged (Violation of Section 1 of the Sherman Act)

    16. The United States repeats and realleges paragraphs 1 through 15 
as if fully set forth herein.
    17. Activision's agreements with teams in the Overwatch and Call of 
Duty Leagues to impose the Competitive Balance Tax violated section 1 
of the Sherman Act, 15 U.S.C. 1. The Competitive Balance Tax 
substantially lessened competition between teams in the Overwatch and 
Call of Duty Leagues for esports players and limited the players' 
compensation.
    18. There is a reasonable expectation that the offense will recur 
unless the requested relief is granted.

VI. Requested Relief

    19. The United States requests that this Court:
    a. adjudge that Activision's agreements with teams in the Overwatch 
and Call of Duty Leagues to implement the Competitive Balance Tax rules 
are unlawful under section 1 of the Sherman Act, 15 U.S.C. 1;
    b. permanently enjoin and restrain Activision from agreeing to or 
enforcing any rule that would, directly or indirectly, impose an upper 
limit on compensation for any player or players in any professional 
esports league that Activision owns or controls, including any rule 
that requires or incentivizes any team to impose an upper limit on its 
players' compensation or imposes a tax, fine, or other penalty on any 
team as a result of exceeding a certain amount of compensation for its 
players, and requiring Activision to take such internal measures as are 
necessary to ensure compliance with that injunction; and
    c. award the United States such other relief as the Court may deem 
just and proper to redress and prevent recurrence of the alleged 
violations and to remedy the anticompetitive effects of the illegal 
agreements entered into by Activision.

Dated: April 3, 2023

Respectfully submitted,

FOR PLAINTIFF UNITED STATES OF AMERICA,

JONATHAN S. KANTER (D.C. Bar #473286),
Assistant Attorney General for Antitrust.

DOHA MEKKI,
Principal Deputy Assistant Attorney General for Antitrust.

MICHAEL B. KADES,
Deputy Assistant Attorney General for Antitrust.

RYAN DANKS,
Director of Civil Enforcement.

MIRIAM R. VISHIO (D.C. Bar #482282),
Deputy Director of Civil Enforcement.


[[Page 25017]]


ERIC D. DUNN,
Counsel to the Assistant Attorney General.

DANIEL S. GUARNERA (D.C. Bar #1034844),
Acting Chief, Civil Conduct Task Force.

LARA TRAGER,
Acting Assistant Chief, Civil Conduct Task Force.

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MICAH D. STEIN (D.C. Bar #177063) *
PETER NELSON
KATHLEEN KIERNAN (D.C. Bar #1003748)
VICTOR LIU (D.C. Bar #1766138)
Trial Attorneys
United States Department of Justice, Antitrust Division, 450 Fifth 
Street NW, Washington, DC 20530, Telephone: (202) 705-2503, 
Facsimile: (202) 307-5802, Email: [email protected].

* LEAD ATTORNEY TO BE NOTICED

United States District Court for the District of Columbia

    United States of America, Plaintiff, v. Activision Blizzard, Inc., 
Defendant.

Case No.: 1:23-cv-00895 (Cobb, J.)

[Proposed] Final Judgment

    Whereas, Plaintiff, the United States of America, filed its 
Complaint on April 3, 2023, alleging that Defendant Activision 
Blizzard, Inc. violated section 1 of the Sherman Act, 15 U.S.C. 1;
    And whereas, the United States and Defendant have consented to the 
entry of this Final Judgment (``Final Judgment'') without the taking of 
testimony, without trial or adjudication of any issue of fact or law, 
without the Final Judgment constituting any evidence against or 
admission by any party relating to any issue of fact or law, and 
without Defendant admitting liability, wrongdoing, or the truth of any 
allegations in the Complaint;
    And whereas, Defendant represents that it ceased enforcement of the 
``Competitive Balance Tax,'' a rule in the Call of Duty League and 
Overwatch League that required any Team that exceeded an upper 
threshold of Compensation to pay a tax to be distributed to all other 
Teams not exceeding that threshold, and agrees to undertake certain 
additional actions and refrain from certain conduct for the purpose of 
remedying the anticompetitive effects alleged in the Complaint;
    And whereas, Defendant represents that the relief required by the 
Final Judgment can and will be made and that Defendant will not later 
raise a claim of hardship or difficulty as grounds for asking the Court 
to modify any provision of the Final Judgment;
    Now therefore, it is ordered, adjudged, and decreed:

I. Jurisdiction

    This Court has jurisdiction over the subject matter of this action 
and each of the parties to this action. The Complaint states a claim 
upon which relief may be granted against Defendant under section 1 of 
the Sherman Act, 15 U.S.C. 1.

II. Definitions

    As used in the Final Judgment:
    A. ``Activision'' and ``Defendant'' mean Activision Blizzard, Inc., 
a Delaware corporation with its headquarters in Santa Monica, 
California, its successors and assigns, and its subsidiaries (including 
The Overwatch League, LLC and The Call of Duty League, LLC), divisions, 
groups, affiliates, partnerships, and joint ventures, and their 
owner(s) and operator(s), directors, officers, managers, agents, 
representatives, and employees.
    B. ``Agreement'' means any contract, arrangement, or understanding, 
formal or informal, oral or written, between two or more persons.
    C. ``Compensation'' means all forms of wages, bonuses, and other 
payment for work rendered, and benefits, including housing and meal 
payments, insurance coverage, paid time off, vacation or personal 
leave, and annual or sick leave, but not including any (i) prize pool 
to be awarded by Defendant or Defendant's licensee to any Teams or 
players in any Professional Esports League, or (ii) marketing or 
promotional funding to be provided by Defendant or Defendant's licensee 
to any Teams or players in any Professional Esports League.
    D. ``Esports Personnel'' means all officers of Defendant, and 
anyone employed by Defendant who is involved in the business or 
operations of any Professional Esports League.
    E. ``Including'' means including, but not limited to.
    F. ``Non-statutory Labor Exemption'' means the common law exemption 
from scrutiny under the antitrust laws that applies to concerted action 
or agreements imposed through the collective bargaining process between 
unions and nonlabor parties, as set forth in Brown v. Pro Football, 
Inc., 518 U.S. 231 (1996), and related decisional law.
    G. ``Person'' means any natural person, corporation, firm, company, 
sole proprietorship, partnership, joint venture, association, 
institute, governmental unit, or other legal entity.
    H. ``Professional Esports League'' means any league in which video 
game players receive Compensation to compete for teams against other 
teams in a league format, where such league (i) is owned or controlled 
by Defendant, including the Call of Duty League and the Overwatch 
League; or (ii) features any video game owned or controlled by 
Defendant and as to which Defendant determines the rules regarding 
player Compensation, but excluding any amateur tournament or any league 
that operates entirely outside the United States.
    I. ``Team'' means any team in any Professional Esports League, 
including its owner(s) and operator(s), directors, officers, managers, 
agents, representatives, and employees.
    J. The ``Call of Duty League'' means the Professional Esports 
League featuring the video game Call of Duty (including all versions, 
sequels, and offshoots of the game), its owner(s) and operator(s), 
directors, officers, managers, agents, representatives, and employees.
    K. The ``Overwatch League'' means the Professional Esports League 
featuring the video game Overwatch (including all versions, sequels, 
and offshoots of the game), its owner(s) and operator(s), directors, 
officers, managers, agents, representatives, and employees.

III. Applicability

    The Final Judgment applies to Defendant and all other Persons in 
active concert or participation with Defendant who receive actual 
notice of the Final Judgment.

IV. Prohibited Conduct

    A. Defendant must not impose any rule that would, directly or 
indirectly, impose an upper limit on Compensation for any player or 
players in any Professional Esports League, including any rule that 
requires or incentivizes any Team to impose an upper limit on its 
players' Compensation or imposes a tax, fine, or other penalty on any 
Team as a result of exceeding a certain amount of Compensation for its 
players.

V. Conduct Not Prohibited

    A. Nothing in section IV prohibits Defendant from implementing any 
rule or engaging in any conduct covered by any applicable labor 
exemption (e.g., the Non-statutory Labor Exemption).
    B. Nothing in section IV prohibits Defendant from determining the 
Compensation to be paid to its own employees, including player 
employees of Teams in any Professional Esports League in which 
Defendant owns all of the Teams.

VI. Required Conduct

    A. Within 20 days of entry of the Final Judgment, Defendant must 
certify in an affidavit from a senior legal officer that it has ended 
and will not implement or reinstate any rule that, directly or 
indirectly, imposes an upper

[[Page 25018]]

limit on Compensation for any player or players in any Professional 
Esports League, including any rule that requires or incentivizes any 
Team to impose an upper limit on its players' Compensation or imposes a 
tax, fine, or other penalty on any Team as a result of exceeding a 
certain amount of Compensation for its players.
    B. Within 20 days of entry of the Final Judgment, Defendant must 
(i) identify or appoint a senior legal officer responsible for the 
supervision of Defendant's compliance with the terms and conditions of 
the Final Judgment and communicate to the United States all 
certifications and reports required by the Final Judgment, and (ii) 
provide to the United States the officer's name, business address, 
telephone number, and email address. Within 30 days of the departure of 
the designated senior legal officer or within 30 days of a decision by 
Defendant to identify or appoint a replacement, Defendant must provide 
to the United States the replacement officer's name, business address, 
telephone number, and email address. Defendant's initial identification 
or appointment of a senior legal officer, and identification or 
appointment of any replacement senior legal officer, are subject to the 
approval of the United States, in its sole discretion.
    C. Any senior legal officer identified or appointed in accordance 
with this section VI must be an active member in good standing of the 
bar in any U.S. jurisdiction and must have, or must retain outside 
counsel who has, at least five years of legal experience, including 
experience with antitrust matters.
    D. The Defendant and senior legal officer must:
    1. within 30 days of entry of the Final Judgment, provide to all 
Esports Personnel, a director, officer, or manager of each Team, and, 
to the extent roster and contact information is known to Defendant, all 
players in all Professional Esports Leagues (i) a copy of the Final 
Judgment and the Competitive Impact Statement filed in this action, and 
(ii) in a manner to be devised by Defendant and approved by the United 
States, in its sole discretion, notice of the meaning and requirements 
of the Final Judgment;
    2. within 30 days of entry of the Final Judgment, implement (i) a 
revised antitrust compliance policy, which must be approved by the 
United States, in its sole discretion, and (ii) a whistleblower 
protection policy, which must be approved by the United States, in its 
sole discretion, and which provides that any Person may disclose 
information concerning any violation or potential violation of the 
Final Judgment or the antitrust laws to the senior legal officer 
identified or appointed under this section VI, without reprisal for 
such disclosure;
    3. annually provide to all Esports Personnel notice of the meaning 
and requirements of the Final Judgment, in a manner to be devised by 
Defendant and approved by the United States, in its sole discretion, 
and the antitrust compliance and whistleblower protection policies 
implemented pursuant to Paragraph VI(D)(2);
    4. provide any Person who becomes an Esports Personnel, within 30 
days of their assuming such role, (i) a copy of the Final Judgment and 
the Competitive Impact Statement filed in this action, (ii) notice of 
the meaning and requirements of the Final Judgment, in a manner to be 
devised by Defendant and approved by the United States, in its sole 
discretion, and (iii) the antitrust compliance and whistleblower 
protection policies implemented pursuant to Paragraph VI(D)(2);
    5. obtain from all Esports Personnel, within 30 days of each such 
Person's receipt of the Final Judgment, a written certification that 
each such Person (i) has read and understands and agrees to abide by 
the terms of the Final Judgment, (ii) is not aware of any violation of 
the Final Judgment that has not been reported to Defendant, and (iii) 
understands that any failure to comply with the Final Judgment may 
result in an enforcement action for civil or criminal contempt of court 
against Defendant or any Person who violates the Final Judgment;
    6. annually provide to a director, officer, or manager of each Team 
(i) a copy of the Final Judgment and the Competitive Impact Statement 
filed in this action, and (ii) notice of the meaning and requirements 
of the Final Judgment, in a manner to be devised by Defendant and 
approved by the United States, in its sole discretion;
    7. in the event of a change of control of any Team, provide to a 
director, officer, or manager of that Team, within 30 days of any such 
change of control, (i) a copy of the Final Judgment and the Competitive 
Impact Statement filed in this action, and (ii) notice of the meaning 
and requirements of the Final Judgment, in a manner to be devised by 
Defendant and approved by the United States, in its sole discretion; 
and
    8. certify in writing to the United States annually 30 days after 
the anniversary date of the entry of the Final Judgment that Defendant 
has complied with the provisions of the Final Judgment, with such 
writing including: (i) a list identifying all Esports Personnel and 
other Persons who received the materials required by Paragraphs 
VI(D)(3)-(7); and (ii) copies of all certifications obtained under 
Paragraph VI(D)(5).
    E. Upon learning of any violation or potential violation of any of 
the terms and conditions contained in the Final Judgment, Defendant 
must:
    1. promptly take appropriate action to terminate or modify the 
activity so as to comply with the Final Judgment;
    2. maintain all documents related to any violation or potential 
violation of the Final Judgment for the duration of the Final Judgment;
    3. within 30 days of learning of any violation or potential 
violation of any of the terms and conditions contained in the Final 
Judgment, file with the United States a statement describing the 
violation or potential violation and any steps Defendant has taken to 
address the violation or potential violation; and
    4. at the United States' request, furnish to the United States a 
log of all documents maintained under Paragraph VI(F)(2), including 
identifying any such documents for which Defendant claims protection 
under the attorney-client privilege or the attorney work product 
doctrine.

VII. Compliance Inspection

    A. For the purposes of determining or securing compliance with the 
Final Judgment or of determining whether the Final Judgment should be 
modified or vacated, upon written request of an authorized 
representative of the Assistant Attorney General for the Antitrust 
Division, and reasonable notice to Defendant, Defendant must permit, 
from time to time and subject to legally recognized privileges, 
authorized representatives, including agents retained by the United 
States:
    1. to have access during Defendant's office hours to inspect and 
copy, or at the option of the United States, to require Defendant to 
provide electronic copies of all books, ledgers, accounts, records, 
data, and documents in the possession, custody, or control of Defendant 
relating to any matters contained in the Final Judgment; and
    2. to interview, either informally or on the record, Defendant's 
officers, employees, or agents, who may have their individual counsel 
present, relating to any matters contained in the Final Judgment. The 
interviews must be subject to the reasonable convenience of the 
interviewee and without restraint or interference by Defendant.
    B. For the purposes of determining or securing compliance with the 
Final Judgment or of determining whether the Final Judgment should be 
modified or vacated, upon the written request of an

[[Page 25019]]

authorized representative of the Assistant Attorney General for the 
Antitrust Division, Defendant must submit written reports or respond to 
written interrogatories, under oath if requested, relating to any 
matters contained in the Final Judgment.

VIII. Public Disclosure

    A. No information or documents obtained pursuant to any provision 
the Final Judgment may be divulged by the United States to any person 
other than an authorized representative of the executive branch of the 
United States, except in the course of legal proceedings to which the 
United States is a party, including grand-jury proceedings, for the 
purpose of securing compliance with the Final Judgment, or as otherwise 
required by law.
    B. In the event of a request by a third party, pursuant to the 
Freedom of Information Act, 5 U.S.C. 552, for disclosure of information 
obtained pursuant to any provision of the Final Judgment, the Antitrust 
Division will act in accordance with that statute, and the Department 
of Justice regulations at 28 CFR part 16, including the provision on 
confidential commercial information, at 28 CFR 16.7. When submitting 
information to the Antitrust Division, Defendant should designate the 
confidential commercial information portions of all applicable 
documents and information under 28 CFR 16.7. Designations of 
confidentiality expire 10 years after submission, ``unless the 
submitter requests and provides justification for a longer designation 
period.'' See 28 CFR 16.7(b).
    C. If at the time that Defendant furnishes information or documents 
to the United States pursuant to any provision of the Final Judgment, 
Defendant represents and identifies in writing information or documents 
for which a claim of protection may be asserted under Rule 26(c)(1)(G) 
of the Federal Rules of Civil Procedure, and Defendant marks each 
pertinent page of such material, ``Subject to claim of protection under 
Rule 26(c)(1)(G) of the Federal Rules of Civil Procedure,'' the United 
States must give Defendant 10 calendar days' notice before divulging 
the material in any legal proceeding (other than a grand jury 
proceeding).

IX. Retention of Jurisdiction

    This Court retains jurisdiction to enable any party to the Final 
Judgment to apply to this Court at any time for further orders and 
directions as may be necessary or appropriate to carry out or construe 
the Final Judgment, to modify any of its provisions, to enforce 
compliance, and to punish violations of its provisions.

X. Enforcement of Final Judgment

    A. The United States retains and reserves all rights to enforce the 
provisions of the Final Judgment, including the right to seek an order 
of contempt from the Court. Defendant agrees that in a civil contempt 
action, a motion to show cause, or a similar action brought by the 
United States relating to an alleged violation of the Final Judgment, 
the United States may establish a violation of the Final Judgment and 
the appropriateness of a remedy therefor by a preponderance of the 
evidence, and Defendant waives any argument that a different standard 
of proof should apply.
    B. The Final Judgment should be interpreted to give full effect to 
the procompetitive purposes of the antitrust laws and to restore the 
competition the United States alleges was harmed by the challenged 
conduct. Defendant agrees that it may be held in contempt of, and that 
the Court may enforce, any provision of the Final Judgment that, as 
interpreted by the Court in light of these procompetitive principles 
and applying ordinary tools of interpretation, is stated specifically 
and in reasonable detail, whether or not it is clear and unambiguous on 
its face. In any such interpretation, the terms of the Final Judgment 
should not be construed against either party as the drafter.
    C. In an enforcement proceeding in which the Court finds that 
Defendant has violated the Final Judgment, the United States may apply 
to the Court for an extension of the Final Judgment, together with 
other relief that may be appropriate. In connection with a successful 
effort by the United States to enforce the Final Judgment against 
Defendant, whether litigated or resolved before litigation, Defendant 
agrees to reimburse the United States for the fees and expenses of its 
attorneys, as well as all other costs including experts' fees, incurred 
in connection with that effort to enforce the Final Judgment, including 
in the investigation of the potential violation.
    D. For a period of four years following the expiration of the Final 
Judgment, if the United States has evidence that Defendant violated the 
Final Judgment before it expired, the United States may file an action 
against Defendant in this Court requesting that the Court order: (1) 
Defendant to comply with the terms of the Final Judgment for an 
additional term of at least four years following the filing of the 
enforcement action; (2) all appropriate contempt remedies; (3) 
additional relief needed to ensure Defendant complies with the terms of 
the Final Judgment; and (4) fees or expenses as called for by this 
section X.

XI. Expiration of Final Judgment

    Unless this Court grants an extension, the Final Judgment will 
expire five years from the date of its entry, except that the Final 
Judgment may be terminated earlier upon notice by the United States to 
the Court and Defendant that continuation of the Final Judgment is no 
longer necessary or in the public interest. All requirements, including 
all notice, certification, and reporting requirements imposed by 
section VI.D, shall terminate automatically upon the expiration of this 
Final Judgment.

XII. Reservation of Rights

    The Final Judgment terminates only the claims expressly stated in 
the Complaint. The Final Judgment does not in any way affect any other 
charges or claims filed by the United States subsequent to the 
commencement of this action.

XIII. Notice

    For purposes of the Final Judgment, any notice or other 
communication required to be filed with or provided to the United 
States must be sent to the address set forth below (or such other 
address as the United States may specify in writing to Defendant): 
Chief, Civil Conduct Task Force, U.S. Department of Justice, Antitrust 
Division, 450 Fifth Street, Washington, DC 20530, 
[email protected].

XIV. Public Interest Determination

    Entry of the Final Judgment is in the public interest. The parties 
have complied with the requirements of the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16, including by making available to the 
public copies of the Final Judgment and the Competitive Impact 
Statement, public comments thereon, and any response to comments by the 
United States. Based upon the record before the Court, which includes 
the Competitive Impact Statement and, if applicable, any comments and 
response to comments filed with the Court, entry of the Final Judgment 
is in the public interest.

Date: __, 2023

[Court approval subject to procedures of Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16]

-----------------------------------------------------------------------
United States District Judge.

[[Page 25020]]

United States District Court for the District of Columbia

    United States of America, Plaintiff, v. Activision Blizzard, Inc., 
Defendant.

Civil Action No.: 1:23-cv-00895 (Cobb, J.)

Competitive Impact Statement

    In accordance with the Antitrust Procedures and Penalties Act, 15 
U.S.C. 16(b)-(h) (the ``APPA'' or ``Tunney Act''), the United States of 
America files this Competitive Impact Statement related to the proposed 
Final Judgment filed in this civil antitrust proceeding.

I. Nature and Purpose of the Proceeding

    On April 3, 2023, the United States filed a civil antitrust 
Complaint against Activision Blizzard, Inc. (``Activision'' or 
``Defendant''), which owns the Overwatch and Call of Duty professional 
esports leagues. The United States alleged that Activision and the 
independently owned teams in these leagues agreed to impose a 
``Competitive Balance Tax,'' (or the ``Tax'') which substantially 
lessened competition between the teams for esports players. The Tax, 
which effectively operated as a salary cap, imposed a fine on any team 
whose total annual player compensation exceeded a threshold set by 
Activision. Activision would then distribute the collected sum of such 
fines to the other teams in the league that had not exceeded the 
threshold. The Complaint alleges that the Tax had the purpose and 
effect of limiting competition between the teams in each league for 
esports players and suppressed esports players' wages, in violation of 
section 1 of the Sherman Act, 15 U.S.C. 1.
    The Complaint seeks injunctive relief to prevent Activision from 
agreeing to or enforcing any rule that would, directly or indirectly, 
impose an upper limit on compensation for any player or players in any 
professional esports leagues that Activision owns or controls.
    At the same time the Complaint was filed, the United States filed a 
proposed Final Judgment and Stipulation and Order, which are designed 
to remedy the anticompetitive effects alleged in the Complaint.
    The proposed Final Judgment, which is explained more fully below, 
imposes the following obligations on Activision:
     Activision must certify that it has ended all rules in the 
Overwatch and Call of Duty Leagues that impose an upper limit on player 
compensation;
     Activision is prohibited from reinstating or implementing 
any rule that imposes an upper limit on player compensation in any 
professional esports leagues it owns or controls;
     Activision must provide notice of the meaning and 
requirements of the Final Judgment to all teams and players in 
professional esports leagues it owns or controls;
     Activision must implement a revised antitrust compliance 
policy and a whistleblower protection policy; and
     Activision must remedy and report to the United States any 
violation or potential violation of the Final Judgment and cooperate 
with the United States for the purposes of determining or securing 
compliance with the Final Judgment.
    Under the terms of the Stipulation and Order, Activision must abide 
by and comply with the provisions of the proposed Final Judgment until 
it is entered by the Court or until expiration of the time for all 
appeals of any Court ruling declining entry of the proposed Final 
Judgment.
    The United States and Activision have stipulated that the proposed 
Final Judgment may be entered after compliance with the APPA, unless 
the United States withdraws its consent. Entry of the proposed Final 
Judgment will terminate this action, except that the Court will retain 
jurisdiction to construe, modify, or enforce the provisions of the 
proposed Final Judgment and to punish violations thereof.

II. Description of Events Giving Rise to the Alleged Violation

A. Activision's Professional Esports Leagues

    Activision is a leading video game developer and publisher, which 
owns and operates professional esports leagues built around two of its 
most popular multiplayer video game franchises, Overwatch and Call of 
Duty. Activision is incorporated in Delaware and headquartered in Santa 
Monica, California.
    Overwatch became one of the best-selling video games in 2016, its 
first year of release, and has since attracted millions of players. 
Since the release of the original Call of Duty game in 2003, Activision 
has published 18 additional titles in the series and reportedly has 
sold more than 400 million units, making it one of the best-selling 
video game franchises in history.
    To capitalize on the success of Overwatch and Call of Duty, 
Activision created two professional esports leagues that feature teams 
comprising the very best Overwatch and Call of Duty players in the 
world. Launched in 2018, Activision's Overwatch League currently has 20 
city-based teams located across North America, Europe, and Asia. The 
popularity of Activision's Overwatch League has been a leading 
contributor to the growth of esports in the United States. Soon after, 
in 2020, Activision launched its Call of Duty League with 12 teams 
using the same city-based model as the Overwatch League.
    The Overwatch and Call of Duty 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). Millions of viewers around the world have tuned in to 
watch professional Overwatch and Call of Duty players compete in league 
matches. In the inaugural season of the Overwatch League, 107 million 
viewers streamed matches over Twitch. By the next year, it was the most 
watched esports league in the world with more than 75.9 million hours 
watched. The Call of Duty League's official streaming channels attract 
more than 15 million views per month, and more than 300,000 viewers 
tuned in to the inaugural league championship in 2020.
    The Overwatch and Call of Duty Leagues, like other sports leagues, 
feature independently owned teams that not only compete to win matches, 
but also compete to hire and retain the best players. Because Overwatch 
and Call of Duty are both multiplayer, team-based games, teams in the 
Overwatch and Call of Duty Leagues must recruit and sign a roster of 
players who fill different roles within the game and can work with and 
complement their teammates' skills. Esports athletes spend thousands of 
hours practicing and honing their skills for a chance to make a 
professional roster; once they sign with a team, many players train at 
least eight hours every day and up to 70 hours each week.
    Esports athletes often have short careers as a result of the 
intense physical and mental toll of elite competition, and thus have 
limited time to maximize their earnings.

B. The Unlawful Agreements

    The Complaint alleges that Activision and the teams in the 
Overwatch and Call of Duty Leagues engaged in unlawful conduct that 
suppressed compensation for professional esports players in those 
leagues. 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. 
Under these rules, which Activision called the ``Competitive Balance 
Tax,'' teams were

[[Page 25021]]

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. For 
example, if Activision set a Competitive Balance Tax threshold of $1 
million, a team that spent $1.2 million on player compensation in a 
season would pay a $200,000 fine, which Activision would then 
distribute to the other teams.
    The Complaint alleges that teams recognized that their spending on 
player compensation would have been higher absent the Competitive 
Balance Tax. The Tax minimized the risk that one team would 
substantially outbid another for a player. The Tax not only harmed the 
highest-paid players, but also depressed wages for all players on a 
team. For example, if a team wanted to pay a large salary to one 
player, the team would have to pay less to the other players on the 
team to avoid the Tax. Teams also understood that the Tax incentivized 
their competitors to limit player compensation in the same way, further 
exacerbating the Tax's anticompetitive effects. While players in other 
professional sports leagues have agreed to salary restrictions as part 
of collective bargaining agreements, the players in Activision's 
esports leagues are not members of a union and never negotiated or 
bargained for these rules.
    The Complaint further alleges that, in October 2021, as a result of 
the Department of Justice's investigation into the Competitive Balance 
Tax, Activision issued memoranda to all teams in the Overwatch and Call 
of Duty Leagues announcing that it would no longer implement or enforce 
a Competitive Balance Tax in either league.

III. Explanation of the Proposed Final Judgment

    The provisions of the proposed Final Judgment closely track the 
relief sought in the Complaint and are intended to provide prompt, 
certain, and effective remedies that will ensure that Activision will 
not agree to or enforce any rule that would, directly or indirectly, 
impose an upper limit on compensation for any player or players in any 
professional esports league that Activision owns or controls. The 
requirements and prohibitions in the proposed Final Judgment will 
ensure that Activision has terminated its illegal conduct and prevent 
recurrence of the same or similar conduct. The proposed Final Judgment 
protects competition and workers by putting a stop to the 
anticompetitive esports player compensation restrictions alleged in the 
Complaint.

A. Prohibited Conduct

    The proposed Final Judgment broadly prohibits Activision from 
imposing a ``Competitive Balance Tax'' rule or any similar rule or 
restraint in professional esports leagues that it owns or controls. 
Specifically, section IV of the proposed Final Judgment ensures that 
Activision will not impose any rule that would, directly or indirectly, 
impose an upper limit on compensation for any player or players in any 
professional esports league owned or operated by Activision, including 
any rule that requires or incentivizes any professional esports team to 
impose an upper limit on its players' compensation or imposes a tax, 
fine, or other penalty on any professional esports team as a result of 
exceeding a certain amount of compensation for its players. Paragraph 
II(A) of the proposed Final Judgment provides that these prohibitions 
will continue to apply to Activision's ``successors and assigns.''

B. Conduct Not Prohibited

    Section V clarifies that the proposed Final Judgment does not 
prohibit Activision from imposing compensation restrictions in certain 
limited and specified circumstances. Paragraph V(A) states that the 
proposed Final Judgment does not prohibit Activision from engaging in 
conduct protected by any applicable labor exemption to the antitrust 
laws. Paragraph V(B) states that the proposed Final Judgment does not 
prohibit Activision from determining the compensation to be paid to its 
own employees.

C. Required Conduct

    Sections VI and VII of the proposed Final Judgment impose 
requirements on Activision to prevent recurrence of the anticompetitive 
conduct and to ensure compliance with the terms of the Final Judgment. 
Under Paragraph VI(A) of the proposed Final Judgment, Activision must 
certify in an affidavit from a senior legal officer that (1) it has 
ended all rules that impose an upper threshold on compensation for any 
player or players in any professional esports leagues that Activision 
owns or controls, and (2) it will not implement or reinstate any such 
rules in any professional esports leagues that it owns or controls.
    Under section VI of the proposed Final Judgment, Activision must 
designate a senior legal officer who is responsible for supervising 
Activision's compliance with the Final Judgment. Among the duties 
required by Paragraph VI(D) of the proposed Final Judgment, the senior 
legal officer will be required to distribute copies of the Final 
Judgment, this Competitive Impact Statement, and notice of the meaning 
and requirements of the Final Judgment to (1) Activision's officers and 
any employees involved with Activision's esports business, (2) a 
director, officer, or manager of each team in Activision's professional 
esports leagues, and (3) all players in Activision's professional 
esports leagues. The senior legal officer must also implement a revised 
antitrust compliance policy and whistleblower protection policy at 
Activision.
    Under Paragraph VI(D)(8), Activision must annually certify 
compliance with the Final Judgment. Paragraph VI(E) requires Activision 
to remedy and report to the United States any violation or potential 
violation of the Final Judgment.
    Finally, section VII requires Activision to provide the United 
States with information and access to company records and employees for 
the purpose of determining or securing compliance with the Final 
Judgment.

D. Enforcement of Final Judgment

    The proposed Final Judgment also contains provisions designed to 
promote compliance with and make enforcement of the Final Judgment as 
effective as possible. Paragraph X(A) provides that the United States 
retains and reserves all rights to enforce the Final Judgment, 
including the right to seek an order of contempt from the Court. Under 
the terms of this paragraph, Defendant has agreed that in any civil 
contempt action, any motion to show cause, or any similar action 
brought by the United States regarding an alleged violation of the 
Final Judgment, the United States may establish the violation and the 
appropriateness of any remedy by a preponderance of the evidence and 
that Defendant has waived any argument that a different standard of 
proof should apply. This provision aligns the standard for compliance 
with the Final Judgment with the standard of proof that applies to the 
underlying offense that the Final Judgment addresses.
    Paragraph X(B) provides additional clarification regarding the 
interpretation of the provisions of the proposed Final Judgment. The 
proposed Final Judgment is intended to remedy the loss of competition 
the United States alleges would otherwise be caused by the challenged 
conduct. Defendant agrees that it will abide by the proposed Final 
Judgment and that it may be held in contempt of the Court for failing 
to comply with any provision of the proposed Final Judgment that is 
stated specifically and in reasonable detail, as

[[Page 25022]]

interpreted in light of this procompetitive purpose.
    Paragraph X(C) provides that if the Court finds in an enforcement 
proceeding that Defendant has violated the Final Judgment, the United 
States may apply to the Court for an extension of the Final Judgment, 
together with such other relief as may be appropriate. In addition, to 
compensate American taxpayers for any costs associated with 
investigating and enforcing violations of the Final Judgment, Paragraph 
X(C) provides that, in any successful effort by the United States to 
enforce the Final Judgment against Defendant, whether litigated or 
resolved before litigation, Defendant must reimburse the United States 
for attorneys' fees, experts' fees, and other costs incurred in 
connection with that effort to enforce this Final Judgment, including 
the investigation of the potential violation.
    Paragraph X(D) states that the United States may file an action 
against Defendant for violating the Final Judgment for up to four years 
after the Final Judgment has expired or been terminated. This provision 
is meant to address circumstances such as when evidence that a 
violation of the Final Judgment occurred during the term of the Final 
Judgment is not discovered until after the Final Judgment has expired 
or been terminated or when there is not sufficient time for the United 
States to complete an investigation of an alleged violation until after 
the Final Judgment has expired or been terminated. This provision, 
therefore, makes clear that, for four years after the Final Judgment 
has expired or been terminated, the United States may still challenge a 
violation that occurred during the term of the Final Judgment.
    Finally, section XI of the proposed Final Judgment provides that 
the Final Judgment will expire five years from the date of its entry, 
except that the Final Judgment may be terminated earlier upon notice by 
the United States to the Court and Defendant that continuation of the 
Final Judgment is no longer necessary or in the public interest.

IV. Remedies Available to Potential Private Plaintiffs

    Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any 
person who has been injured as a result of conduct prohibited by the 
antitrust laws may bring suit in federal court to recover three times 
the damages the person has suffered, as well as costs and reasonable 
attorneys' fees. Entry of the proposed Final Judgment neither impairs 
nor assists the bringing of any private antitrust damage action. Under 
the provisions of section 5(a) of the Clayton Act, 15 U.S.C. 16(a), the 
proposed Final Judgment has no prima facie effect in any subsequent 
private lawsuit that may be brought against Defendant.

V. Procedures Available for Modification of the Proposed Final Judgment

    The United States and Defendant have stipulated that the proposed 
Final Judgment may be entered by the Court after compliance with the 
provisions of the APPA, provided that the United States has not 
withdrawn its consent. The APPA conditions entry upon the Court's 
determination that the proposed Final Judgment is in the public 
interest.
    The APPA provides a period of at least 60 days preceding the 
effective date of the proposed Final Judgment within which any person 
may submit to the United States written comments regarding the proposed 
Final Judgment. Any person who wishes to comment should do so within 60 
days of the date of publication of this Competitive Impact Statement in 
the Federal Register, or the last date of publication in a newspaper of 
the summary of this Competitive Impact Statement, whichever is later. 
All comments received during this period will be considered by the U.S. 
Department of Justice, which remains free to withdraw its consent to 
the proposed Final Judgment at any time before the Court's entry of the 
Final Judgment. The comments and the response of the United States will 
be filed with the Court. In addition, the comments and the United 
States' responses will be published in the Federal Register unless the 
Court agrees that the United States instead may publish them on the 
U.S. Department of Justice, Antitrust Division's internet website.
    Written comments should be submitted in English to: Chief, Civil 
Conduct Task Force, Antitrust Division, United States Department of 
Justice, 450 Fifth St. NW, Suite 8600, Washington, DC 20530.
    The proposed Final Judgment provides that the Court retains 
jurisdiction over this action, and the parties may apply to the Court 
for any order necessary or appropriate for the modification, 
interpretation, or enforcement of the Final Judgment.

VI. Alternatives to the Proposed Final Judgment

    As an alternative to the proposed Final Judgment, the United States 
considered a full trial on the merits against Activision. The United 
States is satisfied, however, that the relief required by the proposed 
Final Judgment will ensure that the anticompetitive conduct alleged in 
the Complaint is terminated and not reinstated by Activision and will 
restore the benefits of competition to players in professional esports 
leagues owned or operated by Activision. Thus, the proposed Final 
Judgment achieves all or substantially all of the relief the United 
States would have obtained through litigation, but avoids the time, 
expense, and uncertainty of a full trial on the merits.

VII. Standard of Review Under the APPA for the Proposed Final Judgment

    Under the Clayton Act and APPA, proposed Final Judgments, or 
``consent decrees,'' in antitrust cases brought by the United States 
are subject to a 60-day comment period, after which the Court shall 
determine whether entry of the proposed Final Judgment ``is in the 
public interest.'' 15 U.S.C. 16(e)(1). In making that determination, 
the Court, in accordance with the statute as amended in 2004, is 
required to consider:

    (A) the competitive impact of such judgment, including 
termination of alleged violations, provisions for enforcement and 
modification, duration of relief sought, anticipated effects of 
alternative remedies actually considered, whether its terms are 
ambiguous, and any other competitive considerations bearing upon the 
adequacy of such judgment that the court deems necessary to a 
determination of whether the consent judgment is in the public 
interest; and
    (B) the impact of entry of such judgment upon competition in the 
relevant market or markets, upon the public generally and 
individuals alleging specific injury from the violations set forth 
in the complaint including consideration of the public benefit, if 
any, to be derived from a determination of the issues at trial.

15 U.S.C. 16(e)(1)(A) & (B). In considering these statutory factors, 
the Court's inquiry is necessarily a limited one as the government is 
entitled to ``broad discretion to settle with the defendant within the 
reaches of the public interest.'' United States v. Microsoft Corp., 56 
F.3d 1448, 1461 (D.C. Cir. 1995); United States v. U.S. Airways Grp., 
Inc., 38 F. Supp. 3d 69, 75 (D.D.C. 2014) (explaining that the 
``court's inquiry is limited'' in Tunney Act settlements); United 
States v. InBev N.V./S.A., No. 08-1965 (JR), 2009 U.S. Dist. LEXIS 
84787, at *3 (D.D.C. Aug. 11, 2009) (noting that a court's review of a 
proposed Final Judgment is limited and only inquires ``into whether the 
government's determination that the proposed remedies will cure the 
antitrust violations alleged in the complaint was reasonable, and 
whether

[[Page 25023]]

the mechanisms to enforce the final judgment are clear and 
manageable'').
    As the U.S. Court of Appeals for the District of Columbia Circuit 
has held, under the APPA a court considers, among other things, the 
relationship between the remedy secured and the specific allegations in 
the government's Complaint, whether the proposed Final Judgment is 
sufficiently clear, whether its enforcement mechanisms are sufficient, 
and whether it may positively harm third parties. See Microsoft, 56 
F.3d at 1458-62. With respect to the adequacy of the relief secured by 
the proposed Final Judgment, a court may not ``make de novo 
determination of facts and issues.'' United States v. W. Elec. Co., 993 
F.2d 1572, 1577 (D.C. Cir. 1993) (quotation marks omitted); see also 
Microsoft, 56 F.3d at 1460-62; United States v. Alcoa, Inc., 152 F. 
Supp. 2d 37, 40 (D.D.C. 2001); United States v. Enova Corp., 107 F. 
Supp. 2d 10, 16 (D.D.C. 2000); InBev, 2009 U.S. Dist. LEXIS 84787, at 
*3. Instead, ``[t]he balancing of competing social and political 
interests affected by a proposed antitrust decree must be left, in the 
first instance, to the discretion of the Attorney General.'' W. Elec. 
Co., 993 F.2d at 1577 (quotation marks omitted). ``The court should 
also bear in mind the flexibility of the public interest inquiry: the 
court's function is not to determine whether the resulting array of 
rights and liabilities is the one that will best serve society, but 
only to confirm that the resulting settlement is within the reaches of 
the public interest.'' Microsoft, 56 F.3d at 1460 (quotation marks 
omitted); see also United States v. Deutsche Telekom AG, No. 19-2232 
(TJK), 2020 WL 1873555, at *7 (D.D.C. Apr. 14, 2020). More demanding 
requirements would ``have enormous practical consequences for the 
government's ability to negotiate future settlements,'' contrary to 
congressional intent. Microsoft, 56 F.3d at 1456. ``The Tunney Act was 
not intended to create a disincentive to the use of the consent 
decree.'' Id.
    The United States' predictions about the efficacy of the remedy are 
to be afforded deference by the Court. See, e.g., Microsoft, 56 F.3d at 
1461 (recognizing courts should give ``due respect to the Justice 
Department's . . . view of the nature of its case''); United States v. 
Iron Mountain, Inc., 217 F. Supp. 3d 146, 152-53 (D.D.C. 2016) (``In 
evaluating objections to settlement agreements under the Tunney Act, a 
court must be mindful that [t]he government need not prove that the 
settlements will perfectly remedy the alleged antitrust harms[;] it 
need only provide a factual basis for concluding that the settlements 
are reasonably adequate remedies for the alleged harms.'' (internal 
citations omitted)); United States v. Republic Servs., Inc., 723 F. 
Supp. 2d 157, 160 (D.D.C. 2010) (noting ``the deferential review to 
which the government's proposed remedy is accorded''); United States v. 
Archer-Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) (``A 
district court must accord due respect to the government's prediction 
as to the effect of proposed remedies, its perception of the market 
structure, and its view of the nature of the case.''). The ultimate 
question is whether ``the remedies [obtained by the Final Judgment are] 
so inconsonant with the allegations charged as to fall outside of the 
`reaches of the public interest.' '' Microsoft, 56 F.3d at 1461 
(quoting W. Elec. Co., 900 F.2d at 309).
    Moreover, the Court's role under the APPA is limited to reviewing 
the remedy in relationship to the violations that the United States has 
alleged in its Complaint, and does not authorize the Court to 
``construct [its] own hypothetical case and then evaluate the decree 
against that case.'' Microsoft, 56 F.3d at 1459; see also U.S. Airways, 
38 F. Supp. 3d at 75 (noting that the court must simply determine 
whether there is a factual foundation for the government's decisions 
such that its conclusions regarding the proposed settlements are 
reasonable); InBev, 2009 U.S. Dist. LEXIS 84787, at *20 (``[T]he 
`public interest' is not to be measured by comparing the violations 
alleged in the complaint against those the court believes could have, 
or even should have, been alleged''). Because the ``court's authority 
to review the decree depends entirely on the government's exercising 
its prosecutorial discretion by bringing a case in the first place,'' 
it follows that ``the court is only authorized to review the decree 
itself,'' and not to ``effectively redraft the complaint'' to inquire 
into other matters that the United States did not pursue. Microsoft, 56 
F.3d at 1459-60.
    In its 2004 amendments to the APPA, Congress made clear its intent 
to preserve the practical benefits of using judgments proposed by the 
United States in antitrust enforcement, Public Law 108-237 Sec.  221, 
and added the unambiguous instruction that ``[n]othing in this section 
shall be construed to require the court to conduct an evidentiary 
hearing or to require the court to permit anyone to intervene.'' 15 
U.S.C. 16(e)(2); see also U.S. Airways, 38 F. Supp. 3d at 76 
(indicating that a court is not required to hold an evidentiary hearing 
or to permit intervenors as part of its review under the Tunney Act). 
This language explicitly wrote into the statute what Congress intended 
when it first enacted the Tunney Act in 1974. As Senator Tunney 
explained: ``[t]he court is nowhere compelled to go to trial or to 
engage in extended proceedings which might have the effect of vitiating 
the benefits of prompt and less costly settlement through the consent 
decree process.'' 119 Cong. Rec. 24,598 (1973) (statement of Sen. 
Tunney). ``A court can make its public interest determination based on 
the competitive impact statement and response to public comments 
alone.'' U.S. Airways, 38 F. Supp. 3d at 76 (citing Enova Corp., 107 F. 
Supp. 2d at 17).

VIII. Determinative Documents

    There are no determinative materials or documents within the 
meaning of the APPA that were considered by the United States in 
formulating the proposed Final Judgment.

Dated: April 17, 2023.

Respectfully submitted,

FOR PLAINTIFF
UNITED STATES OF AMERICA:

-----------------------------------------------------------------------
Micah D. Stein (D.C. Bar #177063), U.S. Department of Justice, 
Antitrust Division, Civil Conduct Task Force, 450 Fifth Street NW, 
Suite 8600, Washington, DC 20530, Tel: 202-705-2503, Fax: 202-616-
2441, Email: [email protected]

[FR Doc. 2023-08726 Filed 4-24-23; 8:45 am]
BILLING CODE 4410-11-P