US DOJ investigating Overwatch League in antitrust inquiry over salary cap

Andrew Amos

The US Department of Justice (DOJ) has reportedly opened an antitrust inquiry into Activision Blizzard’s handling of the Overwatch League. The DOJ is investigating the league’s soft salary cap policy and “competitive balance tax”.

The inquiry, uncovered in a Dot Esports report, is being headed up by trial attorney Kathleen Simpson Kiernan, who works in the Washington-based antitrust division of the DOJ.

Multiple Overwatch League employees past and present have been interviewed by the federal investigators over the league’s soft salary cap.

A Dexerto report in 2019 revealed the first details of a ‘luxury tax’, named the “competitive balance tax”, which placed a soft salary cap on teams.

Any teams that spent above the salary cap would be taxed for it, with funds being equally distributed among non-violating teams.

Overwatch League event
The Overwatch League has a soft salary cap, reportedly valued at $1.6 million in 2020. The DOJ is investigating whether that’s anti-competitive.

The reported salary cap for the 2020 season was $1.6 million. It’s understood few teams could ever clear this threshold without offering massive salaries to multiple key players.

The Department of Justice is also interested in the lack of a players union in the Overwatch League.

Without a union, the league cannot apply for a “nonstatutory labor exemption”, unlike other American sporting leagues like the NFL and the NBA. This exemption gives leagues the chance to avoid antitrust inquiries as the DOJ doesn’t have oversight over “union-employer agreements”.

In a statement, Blizzard confirmed the Department of Justice had been in contact with league officials and they are “cooperating accordingly”.

“We deliver epic entertainment to our fans and support our players and teams in producing the most competitive and enjoyable esports leagues in the world.”