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Activision settles US Justice Department lawsuit over esports salary caps

"We have always believed [it] was lawful."

Activision Blizzard has settled a lawsuit lodged by the US Justice Department regarding a controversial tax planned for the wages of esports players.

Overwatch and Call of Duty esports teams were set to be given an effective salary cap, dubbed the Competitive Balance Tax, which was designed to kick in after teams earned over a certain threshold.

This tax "effectively operated as a salary cap, penalised teams for paying esports players above a certain threshold and limited player compensation in these leagues", the US Justice Department alleged.

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Activision said it had dropped its plans for this tax in 2021, and it had never actually been put into action.

"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 said in a statement to Bloomberg.

"We remain committed to a player ecosystem with fair pay and healthcare and continue to have the least restrictive player mobility compensation system across all of the major sports leagues."

Activision has now settled the matter, and the Department of Justice has asked the company not to apply any form of esports player payment cap or limit in future.

Activision Blizzard remains under the beady eye of US lawmakers, as the company's impending $68.7bn takeover by Microsoft is still set for scrutiny by the Federal Trade Commission.

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