Antitrust subcommittee targets Nintendo

Antitrust Subcommittee Targets Nintendo

WASHINGTON -- Congressional investigators last month charged that the nation's top discount chains and other major toy retailers have buckled to anti-competitive pressure from video game giant Nintendo.

In a letter to Justice Department officials, House Antitrust Subcommittee chairman Dennis Eckart (D-Ohio) accused Nintendo of using its marketplace leverage to prevent retailers from stocking competing video game cartridges.

Eckart requested that the Justice Department conduct a federal antitrust investigation of Nintendo's practices. He charged that the manufacturer, which has cornered some 80 percent of all home computer video sales and almost 100 percent of all Nintendo-compatible game software, has had a virtual monopoly by aggressively exercising its marketpower against retailers.

The "subcommittee staff has encountered a pervasive atmosphere of fear and intimidation among retailers" who "appear to be intimidated by the threat that Nintendo will cut off or limit their allocation" of games, Eckart said.

He added that the subcommittee found evidence that Nintendo was able to intimidate the nation's 10 largest retailers of toys, including K mart and Toys "R" Us.

One manufacturer of Nintendo-compatible software "claimed that he had tried to market its cartridges independently to the top 10 toy retailing chains and had been rejected by all of them," Eckart told justice antitrusters. "The reason: the threat of retaliation by Nintendo."

A similar situation may have occurred with video game pioneer Atari which "lost the large majority of its contracts with major retailing outlets" after attempting to introduce its own line of Nintendo-compatible game cartridges. Although "Nintendo has made a full and complete denial of all these allegations," the "speed and the unanimity with which [Atari's] contracts were unilaterally terminated raises serious questions" of marketplace abuse, he stated.

According to Eckart, Nintendo's executive vp, Howard Lincoln, had urged the subcommittee to postpone release of its investigative findings because the manufacturer "has had inadequate opportunity to be heard" in response to the charges.

At presstime, Nintendo had not responded to DSN's request for comment on the subcommittee's charges.

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