A federal judge in Alexandria yesterday issued a temporary restraining order to stop the Atari video game and computer company from trying to force its wholesale distributors to stop selling competing brands of video games and software.
Judge Albert V. Bryan issued the order after attorneys for Parker Brothers, a subsidiary of General Mills, claimed that company has lost orders for $15 million worth of video game cartridges as a result of a change in Atari's wholesale distribution system.
The application for the order filed yesterday by Parker Brothers, the Massachusetts-based board and video games company, charges that Atari has given distributors a March 31 deadline to enter into an exclusive relationship with it.
"If they do not," the application asserts, "Atari will not do business with them."
Parker Brothers contends that because Atari has roughly 40 percent of the home video game software market in the United States, "the wholesale distributors feel compelled to sign the agreement " and stop selling competitive brands.
Parker Brothers entered the video-games market in 1981 and has successfully marketed several game cartridges to be played on Atari game consoles. Parker Brothers makes the Star Wars game, based on the popular movie, and Frogger, based on a popular arcade game. In 1982, Parker Brothers share of the video-games market approached 4 percent, the company said.
Parker Brothers maintains that Atari is seeking exclusive agreements with "40 of the less than 100 effective wholesale distributors available." If the distributors sign up as exclusive Atari dealers, Parker Brothers contends, it will be denied access to certain retailers and thus suffer severe competitive and economic harm.
As a direct result of the Atari offer to its distributors, Parker Brothers claims, it lost $2.2 million in orders in just three days last week and has received over $15 million in sales cancellations in the month since the offer was first made.
Parker Brothers also asked the court to prevent Atari "from fixing the price of video game software . . . upon the condition, agreement or understanding that the wholesale distributors will not use, sell or deal in the goods of any competitor of Atari."
Parker Brothers claimed it stands to lose not only retail outlets, but also its creative staff. "If we are unable to maintain our distribution," said Richard E. Stearns, vice president for consumer electronics, "the game designers and developers will be unwilling to use Parker Brothers to publish their products."
A spokesperson for Parker Brothers declined to comment on the case.
"We have been going over the iteration of going to exclusive relationships," said Emmanuel Gerard, president of Warner Communications, Atari's parent company, "and our legal people have been carefully examining it all the way."