By Michael Elkins
The U.S. Justice Department has agreed to a settlement with Activision Blizzard (NASDAQ:ATVI) to resolve the department's lawsuit filed on Monday over salary limits in professional esports leagues.
The department said in its lawsuit that Activision Blizzard, Inc., which owns leagues built around its "Overwatch" and "Call of Duty" video games, and the independently owned teams imposed a tax that "effectively operated as a salary cap, penalized teams for paying esports players above a certain threshold and limited player compensation in these leagues."
The Justice Department complaint said Activision dropped plans for salary limits in October 2021.
Activision said in a statement, "The tax was never levied, and the leagues voluntarily dropped it from our rules in 2021.”
"We have always believed, and still believe, that the Competitive Balance Tax was lawful, and it did not have an adverse impact on player salaries," it added.
According to the settlement, Activision agreed to refrain from putting any caps or limits on salaries of esports players or teams, the department said.
The agreement awaits approved by a federal judge.
Shares of ATVI are down 0.36% near end of trading on Monday.