Anime News Network reports that ADV filed both a counterclaim and a third-party claim in their ongoing lawsuit against FUNimation and other partners. The third party claim includes the following parties:
- FUNimation Productions, LTD.
- FUNimation Productions, LTD.
- AnimeOnline Ltd.
- Funimation GP LLC
- Anime LP Holdings LLC
- Funimation LP LLC
- Gen Fukunaga, FUNimation CEO
In both of ADV’s most recent claims, the company alleges that “the culmination of Funimation’s illicit scheme designed to obliterate competition in the market for Japanese anime,” and that “Funimation is, or is dangerously close to becoming, a monopolist.” ADV asserts that FUNimation violated the Sherman Antitrust Act, as well as Texas’s Free Enterprise Act, since FUNimation is “a monopolist in the various downstream [and upstream] markets for Japanese anime” that is “attempting to achieve a monopoly… [and] is dangerously close to doing so.”
ADV alleges that FUNimation “willfully and intntionally” interfered between it and ARM Corporation’s agreement, and that several companies conspired to defraud ADV as a whole. The named companies in this matter include:
- Gen Fukunaga
- Japan Contents Investments LPS (JCI)
In addition to monetary damages, ADV seeks a court order that FUNimation not attempt to exercise any rights “it claims to have secured from ARM and from obtaining any assets owned by the defendants,” The case was removed to Federal Court on June 8, and the Harris County Courthouse lists the case as disposed.
At a glance, this sounds like a piece out of a courtroom drama. The little, seemingly oppressed ADV is fighting back with its last bit of spirit against the big, bad FUNimation. They’re conspiring! They’re plotting! It’s illegal! It’s illicit! FUNimation is KILLING THE MARKET!
…Except we don’t really know that.
In reality, we’re seeing some major accusations arising from ADV, mainly in response to FUNimation’s case against the company in November. Basically, through this case, FUNimation sought damages of $8 million from John Ledford, A.D. Vision, AEsir Holdings, Sxion 23 (A.K.A. Section23 Films), Valkyrie Media Partners, Seraphim Studios, Sentai Filmworks, Sentai Holdings, and Unio Mystica Holdings. The company cited breach of contract, though ADV quickly filed a countersuit alleging that most of the companies involved in the case didn’t even exist at the time, and thus were immune to FUNimation’s claims.
When I first commented on this matter, I stated that it was too early to jump to conclusions. I argued that the case, at the current point, was little more than “a mish mash of heated arguments and angry accusations from both sides.” And I still stand by that.
However, this latest development begins to throw some color on ADV’s side of the picture. It’s clear that the company is trying to position itself as a noble endeavor, a well-meaning group that was given a bad reputation. For most anime customers, though, they are quickly looking like The Thing That Couldn’t Die: a monstrosity that rises from the grave every few months, in order to sling more mud in an attempt to remain relevant. Is this the actual case? Well, that’s difficult to say. At this point, a judge hasn’t ruled on the matter one way or another. No settlements have been made, and no admittance of guilt was made on either side.
The fact that a the case was allowed to escalate to a federal court does give some heft to ADV’s case, though. Were this a bluster or an attempt to buy time, it would have been summarily tossed, especially given the terms cited for the counter-claim. Invoking the Sherman Act is quite onerous, as it implies that one organization (or a cartel of organizations) are trying to create a monopoly through unjust means. Or, in plain English, they’re trying to manipulate the market to a point where no other competitors can enter. If FUNimation were found guilty of such allegations, it would mean massive changes to the anime market. The company as we know it would be broken apart, and the organization would essentially be forced to compete with itself (as well as the current competition) in the open market.
At this point, though, it’s a huge if. Proving such an allegation falls upon ADV at this point, which means that the company must successfully argue that FUNimation’s activities have fallen into Section 1 or Section 2 of the Antitrust Act. For reference, a Secton 1 case consists of three elements:
- An agreement
- Unreasonable restraint of competition
- Impact on interstate commerce.
A section 2 case consists of two elements:
- Possession of monopoly power in a relevant market
- Willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident
Basically, it has to be proven that FUNimation partnered with other companies to stifle competition, or that they used their leverage to shut out competition, even though product quality or successful business moves didn’t exist in the business environment. To prove such allegations will take concrete evidence.
It will be interesting to watch this as it progresses. As court actions move forward, we’re certain to hear more on both sides of the aisle through paperwork and other documents presented in the case. Until that information arises, though, it is simply far too early to call the case either way.