Settlement talks between Activision Blizzard and the US Department of Justice have fallen apart in recent weeks in an antitrust case centered on the publisher’s Overwatch League and Call of Duty League, according to The Jacob Wolf Report.
The Department of Justice opened its probe into the esports leagues last year to determine whether their “competitive balance tax” violated antitrust rules by keeping player salaries down.
The competitive balance tax works much like a luxury tax in traditional sports leagues. Total team salaries have an upper limit that can be exceeded, but every dollar spent above that limit requires the team to also put another dollar into a pool that would be split and given to teams that spent below the limit.
The difference between Activision Blizzard’s luxury tax and those of Major League Baseball or the National Basketball Association is that the traditional sports leagues have player unions that agree to such limits in collective bargaining agreements.
Activision Blizzard reportedly dropped its competitive balance tax and maximum player salary cap for its leagues last year.
The Jacob Wolf Report’s sources say the settlement talks fell apart because Activision Blizzard refused to terms involving rule changes that would persist after the proposed acquisition of Activision Blizzard by Microsoft, and public statements about the rule.
An Activision Blizzard representative did not immediately respond to a request for comment.