Nintendo is a monopoly with respect to Nintendo games (but not Nintendo devices, since you can buy those all over).
Monopolies aren't inherently illegal. See e.g., patents and copyrights, which are legally granted or protected monopolies.
What is illegal is anti-competitive practices. This doesn't require a dominant or even majority market position--authorities in the US and EU have gone after companies with relatively small market shares that engaged in anti competitive actions (though they haven't done so in many years).
