European Commission issues Statement of Objections over geoblocking of video games

The European Commission has issued a Statement of Objections to six video game companies, including Valve, owner of the Steam video game distribution platform.

The European Commission has informed Valve, owner of the “Steam” video game distribution platform, and five video game publishers, about its preliminary view that the companies prevented consumers from purchasing video games cross-border from other Member States, in breach of EU competition rules.

Valve, via Steam, digitally distributes PC video games from each of the five PC video game publishers involved in the investigation. Valve provides activation keys to these publishers.

The activation keys are required for consumers to play a number of PC video games bought on channels other than Steam, that is, downloaded or purchased on physical media, such as a DVD. After the purchase of certain PC video games, users need to confirm their activation key on Steam to authenticate the game and be able to play it. This system is used for a wide range of games, including sports, simulation and action games.

The European Commission's preliminary view is that Valve and the five PC video game publishers entered into bilateral agreements to prevent consumers from purchasing and using PC video games acquired elsewhere than in their country of residence (geo-blocking). This is against EU antitrust rules (and now, the Geo-blocking Regulation).

In particular, the European Commission is concerned that Valve and the five PC video game publishers agreed, in breach of EU antitrust rules, to use geo-blocked activation keys to prevent cross-border sales, including in response to unsolicited consumer requests (passive sales) of PC video games from several Member States (including the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and in some cases Romania). This may have prevented consumers from buying cheaper games available in other EU member states.

Further, the European Commission said that EU antitrust rules were broken by the inclusion of contractual export restrictions in agreements with a number of distributors other than Valve. These distributors were prevented from selling the relevant PC video games outside the allocated territories, which could cover one or more EU member states. These practices may have prevented consumers from purchasing and playing PC video games sold by these distributors either on physical media, such as DVDs or through downloads.

The European Commission's preliminary view, outlined in its Statements of Objections, is that these business practices partitioned markets according to national borders and restricted passive sales to consumers. These business practices ultimately denied European consumers the benefits of the EU's Digital Single Market to shop around for the most attractive offer.

If confirmed, this would infringe Article 101 of the Treaty on the Functioning of the European Union, which prohibits anti-competitive agreements. The sending of a Statement of Objections does not prejudge the outcome of the investigation.

A Statement of Objections is a formal step in European Commission investigations into suspected violations of EU antitrust rules. The European Commission informs the parties concerned in writing of the objections raised against them. The parties can then examine the documents in the European Commission's investigation file, reply in writing and request an oral hearing to present their comments on the case before representatives of the European Commission and national competition authorities.

If, after the parties have exercised their rights of defence, the European Commission concludes that there is sufficient evidence of an infringement, it can adopt a decision prohibiting the conduct and imposing a fine of up to 10% of a company's annual worldwide turnover.

There is no legal deadline for the European Commission to complete antitrust inquiries into anti-competitive conduct. The duration of an antitrust investigation depends on a number of factors, including the complexity of the case, the extent to which the organisation concerned co-operates with the European Commission and the exercise of the rights of defence.

Published: 2019-04-09T15:00:00

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