Nintendo Agrees to Settle FTC Charges
The Super Mario Brothers confronted a hurdle Wednesday that they couldn’t bound over.
To settle price-fixing charges by the Federal Trade Commission and 39 states, Nintendo of America--maker of the Mario Brothers and other popular video games--agreed to give up to $25 million in discounts to owners of its products, company and government officials announced.
New York Atty. Gen. Robert Abrams said the company had been accused of coercing retailers into keeping the price of its basic video system at $99.99 or more and threatening to slow supplies to those who reduced prices on its products by as little as 6 cents.
Nintendo of America, the U.S. unit of the Japanese electronics giant, is not obliged under the consent agreement to admit any violation of antitrust laws. It said it accepted the settlement to avoid a costly trial and maintain “good will” with customers.
Under the agreement, Nintendo of America will:
* Mail a $5 “instant redemption certificate” toward purchase of any Nintendo game cartridge to consumers who bought game machines between June 1, 1988, and Dec. 31, 1990.
* Guarantee redemption of at least $5 million of the certificates and agree to issue up to $25 million in coupons if enough qualified consumers apply.
* Pay a total of $4.75 million to the 39 states involved in the dispute to cover administrative and enforcement costs.
* Advise all Nintendo dealers in writing that they are free to sell the game machines, cartridges and accessories at any price they choose.
* Include a disclaimer in promotional material that the “suggested” retail price is not mandatory, assuring dealers that they can set their own prices.
“Nintendo was not satisfied with being the major supplier and seller of the biggest electronics game for kids in the country,” Abrams said at a news conference at FTC headquarters.
The alleged price-fixing scheme affected millions of American consumers, government officials said. By 1989, Abrams said, Nintendo consoles and popular games--such as Super Mario Brothers--had become fixtures in nearly one in four U.S. households.
Sales of Nintendo game machines and software accounted for more than 80% of all home video game products sold during 1989, the FTC said in its complaint, with total sales reaching $2.7 billion.
The FTC said Nintendo reduced supplies of games and hardware to dealers who balked at the company’s recommended retail prices. Recalcitrant dealers faced onerous credit terms, the agency said. Nintendo pressed retailers to inform on other dealers who sold at less than the recommended prices and sought long-term commitments from dealers to maintain specified prices, the FTC alleged.
“Nintendo has cooperated fully with the FTC and the states of New York and Maryland in this matter,” Senior Vice President Howard Lincoln said in a statement. “While we were emphatic during negotiations and continue to insist that Nintendo had done nothing improper or in violation of antitrust laws, we decided to enter into this comprehensive and nationwide settlement to maintain the good will our company enjoys with millions of consumers who play Nintendo games.”
FTC officials said the settlement would not bar them from pursuing further action against the company, but they would not say if more investigations are under way. They also declined to identify the retail stores that allegedly entered into the price-fixing agreements.
Officials said the coupon plan, although cumbersome, is preferable to any attempt to order direct rebates to consumers. They acknowledged that consumers will have to buy yet another Nintendo product to receive the $5 discount.
“When we’ve had broad-based relief and we have given consumers the right to (cash) a check, very, very, very few people responded,” Abrams said,
The FTC said the agreement is subject to a 60-day period of public comment, after which the agency can make it final.
TOP VIDEO GAMES Top 10 video games for February
Title Publisher 1 Teenage Turtles Konami -Arcade Game 2 The Simpsons Acclaim 3 Super Mario Land Nintendo 4 Super Mario Nintendo Brothers 3 5 Tecmo Bowl Tecmo 6 John Madden Electronic Football Arts 7 Double Dragon III Nintendo 8 Tetris Nintendo 9 Mickey Mouse Sega 10 Joe Montana Sega Football
Source: Software Publishers Assn.
