Gaming Antitrust: Commission sends Statements of Objections to Valve and five videogame publishers

[Alexander1970]

Antitrust: Commission sends Statements of Objections to Valve and five videogame publishers on “geo-blocking” of PC video games


Brussels, 5 April 2019

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

Commissioner Margrethe Vestager, in charge of competition policy, said: "In a true 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 shopping around between Member States to find the best available deal. Valve and the five PC video game publishers now have the chance to respond to our concerns."

The Commission has addressed Statements of Objections to Valve, owner of the world's largest PC video game distribution platform called “Steam”, and five PC video game publishers, Bandai Namco, Capcom, Focus Home, Koch Media and ZeniMax.

Valve – via Steam – digitally distributes PC video games from each of the five PC video game publishers concerned by the investigation. At the same time, Valve provides "activation keys" to these publishers.

These “activation keys” are required for consumers to play a number of PC video games bought on channels other than Steam, i.e. 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 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 (so-called “geo-blocking”). This is against EU antitrust rules.

In particular, the 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 (so-called “passive sales”) of PC video games from several Member States (i.e. Czechia, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and in some cases Romania). This may have prevented consumers from buying cheaper games available in other Member States.
• Bandai Namco, Focus Home, Koch Media and ZeniMax, broke EU antitrust rules by including contractual export restrictions in their 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 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 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.



Background

The geo-blocking Regulation

The investigations into geo-blocking of PC video games complement Regulation 2018/302 on unjustified geo-blocking, which is applicable throughout the EU since 3 December 2018.

The Regulation prohibits geo-blocking and other geographically-based restrictions which undermine online shopping and cross-border sales by limiting the possibility for consumers and businesses to benefit from the advantages of online commerce. Currently, the Regulation applies to PC video games distributed on CDs, DVDs but not to downloads.

The Commission will carry out a first evaluation of the Regulation by 23 March 2020. In particular, the Commission will assess the scope of the Regulation, including its possible application to certain electronically supplied services which offer copyright-protected content such as music, e-books, software and online games, as well as of services in sectors such as transport and audio-visual.

Procedural background

The Commission opened formal antitrust proceedings into the bilateral agreements concluded between Valve Corporation and the five PC video game publishers on 2 February 2017.

This investigation is a stand-along procedure, independent of but following up on some of the issues identified in the Commission's competition sector inquiry on e-commerce.

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

If, after the parties have exercised their rights of defence, the 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 Commission to complete antitrust inquiries into anticompetitive conduct. The duration of an antitrust investigation depends on a number of factors, including the complexity of the case, the extent to which the undertaking concerned cooperates with the Commission and the exercise of the rights of defence.

More information on the investigation will be available under the case numbers AT.40413 (Focus Home), AT.40414 (Koch Media), AT.40420 (ZeniMax), AT.40422 (Bandai Namco), and AT.40424 (Capcom) in the public case register on the Commission's competition website.



http://europa.eu/rapid/press-release_IP-19-2010_en.htm

 

[FAST6191]

In before language locked versions of said games are made available to comply with the rules.

Actually split bet between that and them stopping them entirely -- I don't know that I would blow off Hungary and Poland that readily right now.

 

[Kioku]

I was wondering when this would happen.

 

[Xzi]

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

If this is against regulations, I wonder how they're gonna deal with the Epic Games Store not even allowing third-party key redemption. Does not including that feature get them off the hook?

 

[FAST6191]

If this is against regulations, I wonder how they're gonna deal with the Epic Games Store not even allowing third-party key redemption. Does not including that feature get them off the hook?

This is to do with cross border trade within an area (granted WTO also opposes such things on a global level but they are fairly toothless here). I can't see why you would be under any obligation to allow outside services to use your nice luxury, not a monopoly and optional service.

 

[Xzi]

This is to do with cross border trade within an area (granted WTO also opposes such things on a global level but they are fairly toothless here). I can't see why you would be under any obligation to allow outside services to use your nice luxury, not a monopoly and optional service.

Oh I get that, but it says:

This may have prevented consumers from buying cheaper games available in other Member States.

Isn't Epic doing the same by disallowing third-party keys altogether? You just have to accept whatever price the games are listed at for your country, despite the fact that they're likely listed as cheaper in other EU countries.

 

[FAST6191]

Isn't Epic doing the same by disallowing third-party keys altogether? You just have to accept whatever price the games are listed at for your country, despite the fact that they're likely listed as cheaper in other EU countries.

I don't see the two being connected. If the are doing the latter then they are presumably doing the same thing as this ruling is concerned with. Outside keys is almost incidental in this.

 

[Taleweaver]

I don't see the two being connected. If the are doing the latter then they are presumably doing the same thing as this ruling is concerned with. Outside keys is almost incidental in this.

I'm with you on this. The way I see it, the EU's problem here is about the same good being prevented from being bought in another EU country.

So unless epic has regulations that basically say "oh, you're from [country]? Then you're prevented from this game" then I don't think they're anywhere near the same situation.

 

[unlink2]

I have actually run into this in the past. A friend of mine gifted me a game that had regional differences and I was unable to accept the gift without a VPN. This stuff can be infuriating.

 

[J-Machine]

I'm with you on this. The way I see it, the EU's problem here is about the same good being prevented from being bought in another EU country.

So unless epic has regulations that basically say "oh, you're from [country]? Then you're prevented from this game" then I don't think they're anywhere near the same situation.

if the game is a different price in a different EU country then epic is indeed breaking that law because it's using an i.p check to force you into your countries store front and price despite them having store front's in other countries in the EU. the only way around this is if every country sold the same game for the same price in each country or allow vpn's to be enter another countries store front.

but in a weird way that also makes a lot of digital storefront's guilty of this too, including those that sell physical items

 

[Searinox]

This means what you can now buy Quake III in Germany from Steam?

 

[FAST6191]

That is some good necroposting there. I thought we were going to get an update on it. I did a token search and it seems Valve is going to fight it where others were all nah we agree. https://www.pcgamer.com/valve-will-fight-european-commissions-anti-competition-ruling-against-steam/
Still waiting on said court case.

As I see it.
If you are from the countries formerly known as western Europe you are probably in what is considered a rich country (give or take Portugal). If you are in what was once the USSR then not so much.
https://jobzey.com/average-wage-in-europe-in-2020/

Seeing this various game devs thought rather than have everything pirated as anything (60 Euros for a game might as well be 6000 for all they are likely to see purchases when that is a good chunk of your rent for the month rather than a basic night out -- https://wizmo.ro/en/real-estate/sibiu/apartment-for-rent/KM7WXHF?sortType=price&sortDirection=asc https://www.romaniaexperience.com/what-is-the-minimum-and-average-salary-in-romania-in-2017/ ) they would kick out some cheapy copies. This is perfectly legal at this point.

The trouble comes in that unlike milk wherein I would have to drag my arse there and back, or have it shipped, then a game is a download which can be done from anywhere. Seeing this and knowing gaming types to be a tech savvy bunch (especially when money is on the line) the devs blocked sales from outside those countries (or maybe collection thereof) rather than lose out from the more profitable "home country" sales. The game is still a game ( https://www.speedtest.net/global-index ) and most likely would still have been in English (or the usual multi5 languages) anyway -- very little extra money made by translating a game to Lithuanian (for that matter the Dutch and most of the Nordic countries don't usually get a translation and they are rich full price game buying countries with similar populations), maybe not even enough to offset the cost (not to mention someone would probably just hack it back anyway).
This would run contrary to the EU rules wherein trade between member states and citizens thereof is not to be restricted (facilitating trade is kind of the whole point of the EU) and it appears they had Steam et all dead to rights on that one.

The Epic third party keys stuff is a different matter entirely. You can run your own private shop all you want and are under no obligation to allow others a chance to sell on it. That is what such key sellers would in essence be doing.
Now there are rulings that say people must be allowed key resale/second hand downloadable games ( https://www.eurogamer.net/articles/...nnot-stop-you-reselling-your-downloaded-games ) but that is a different matter, and rather tepidly enforced, not to mention if you don't allow third parties in the first place you don't care as you still get your cut.

 

[Taleweaver]

if the game is a different price in a different EU country then epic is indeed breaking that law because it's using an i.p check to force you into your countries store front and price despite them having store front's in other countries in the EU. the only way around this is if every country sold the same game for the same price in each country or allow vpn's to be enter another countries store front.

but in a weird way that also makes a lot of digital storefront's guilty of this too, including those that sell physical items

(... I had to really look up what this was all about again)
Checking for location in itself isn't an issue, exactly because it is legal to have different prices (perhaps I should mention that in the EU, a price to a customer always includes all taxes, which might vary the price in itself) . Heck, in some cases it's even needed as a country can decide to block or censor a game.

The dispute is that these companies are (or were? It's a year ago) blocking you from using a vpn to take advantage of cheaper prices elsewhere. Having to allow this isn't really good for business (it forces devs to either use a fixed price, despite economical differences, or hope that people from rich countries won't massively use vpn's to get the best deal that way), but the EU has a point that it is indeed not abiding a singular market.

To give a non - video game example : coke. In Belgium, coke cola is more expensive than in Germany (and the Netherlands, if I'm correct). It's the company's prerogative to slap a different price on the same product in different countries... But it's been for several years that they can't prevent people crossing the border to benefit from the cheaper prices from the other country.

(fuck... For our baby shower, my parents in law went to Luxemburg to buy 24 bottles of cava... All perfectly legal)