European Commission: Explicit warning to Steam to end geographical ban on games

Valve said just one-third of Steam games have been under geographical restrictions since the EU. launched an investigation into the matter in 2013.

ΤOn Friday, 5 April 2019, the European Commission informed Valve, the owner of the Steam video game distribution platform, as well as five video game publishers, of its preliminary view that these companies had placed cross-border barriers to other Member States, thus violating EU competition rules.

The Commission communicated the objections to Valve, the owner of the largest online video game distribution platform in the world, called "Steam", as well as five video game publishers, their Bandai Namco, Capcom, Focus Home, Koch Media and ZeniMax.

Valve - via Steam - distributes digital electronic video games supplied by the five electronic video game publishers involved in the investigation. At the same time, Valve supplies these publishers with "activation keys".

These "activation keys" are necessary for consumers to be able to play a number of online video games purchased on channels other than Steam, e.g. obtained or obtained from natural media, such as DVD. After acquiring some online video games, users must confirm their "activation key" on Steam in order to secure the game and thus be able to play it. This system applies to a wide range of games, including sports electronic video games, simulation games and action games.

The Commission's preliminary view is that Valve and the five electronic video game publishers have entered into bilateral agreements to prevent consumers from buying and using electronic video games acquired in a country other than their home (the so-called geo-blockade or "geo -blocking ”). This is contrary to EU rules on fair competition.

In particular, the Commission is concerned that:

• Valve and the five video game publishers have reached an agreement, violating EU rules on fair competition, implement activation keys geographically blocked in order to prevent cross-border sales, including unsolicited orders (so-called "passive sales") of electronic video games from certain Member States (eg the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and in some cases Romania). This may have prevented consumers from buying cheaper toys that were available in other Member States.
• Bandai Namco, Focus Home, Koch Media and ZeniMax have violated EU rules on fair competition by including them in their agreements conventional export restrictions with some distributors other than Valve. These distributors were prevented from selling the relevant electronic video games outside the allotted areas, which could cover one or more Member States. These practices may have hindered consumers in purchasing and using the electronic video games available from these distributors, either on physical media such as DVDs or through downloads.

According to the Commission 's preliminary view, which refers to its statement of objections, those business practices consisted of sharing markets across national borders and restricting passive sales to consumers. These business practices have finally deprived European consumers of the benefits of the EU Digital Single Market, which is to conduct market research in order to find the most attractive offer.

If this view is confirmed, then there will be a case of violation of Article 101 of the Treaty on the Functioning of the European Union (TFEU), which prohibits unfair agreements. The statement of objections does not prejudge the outcome of the investigation.

Statement

The Commissioner for Competition Policy, Margrethe Vestager, "In a real Digital Single Market, European consumers should have the right to buy and play video games of their choice regardless of where they live in the EU. Consumers should not be prevented from doing market research between different Member States in order to arrive at the best available price. "Valve and the five video game publishers will now have the opportunity to respond to our concerns."

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The regulation on geographical exclusion

Research on the geographical exclusion of electronic video games complements Regulation (EU) 2018/302 on unjustified geographical exclusion, which applies throughout the EU from 3 December 2018.

The regulation prohibits geographical exclusion and other geographical restrictions that undermine e-commerce and cross-border sales by limiting the ability of consumers and businesses to take advantage of e-commerce. The regulation currently applies to electronic video games distributed on CDs and DVDs, but not through downloads.

The Commission will make a first assessment of the Regulation by 23 March 2020. In particular, the Commission will assess the scope of the Regulation, including its possible application to certain electronic services that offer copyrighted content such as music. , e-books, software and online games, as well as services in areas such as transportation and audiovisual media.

Procedural background

The committee launched on February 2, 2017 a formal investigation into a possible breach of competition rules regarding the bilateral agreements between Valve Corporation and five publishers of electronic video games.

This research is an independent process, but it is a follow-up to the findings of the final sectoral research report on e-commerce of the Commission.

The statement of objections is a standard step in the Commission 's investigation into any breach of EU competition rules. The Commission shall inform the parties concerned in writing of any objections raised against them. The parties may then examine the documents in the file collected by the Commission's inquiry, reply in writing and request an oral hearing to present their observations on the case before representatives of the Commission and national competition authorities.

In the event that, after the parties have exercised their rights of defense, the Commission concludes that there are nuanced indications of a breach, it may issue a decision prohibiting the continuation of the unlawful conduct and impose a fine of up to 10% of the company's global annual turnover.

The current legal framework does not oblige the Commission to complete investigations into possible breaches of EU competition rules within specific deadlines. The duration of such an investigation depends on a number of factors, including the complexity of the case, the degree of cooperation of the undertaking involved with the Commission and the exercise of the rights of the defense.

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