EU Commission Accuses Valve And Five Other Companies Of Geo-Blocking

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EU Commission Accuses Valve And Five Other Companies Of Geo-Blocking

April 5, 2019

By: Joseph Allen

 
 

The European Union Commission has told Valve and five gaming publishers that they may be in violation of EU competition rules. The other companies receiving official EU Commission Statements of Objections are Bandai Namco, Capcom, Focus Home, Koch Media, and ZeniMax.

The EU Commission's preliminary view is that Valve and the five companies "prevented consumers from purchasing videogames cross-border", which would be a breach of EU competition rules. Margrethe Vestager, the Commissioner in charge of competition policy, said that European consumers living in a Digital Single Market should have the right to buy and play games regardless of the member state in which they live. Specifically, Valve and the others are in violation of Regulation 2018/302, which prevents "unjustified geo-blocking".  She says Valve and the publishers now have the chance to view all the evidence and respond to the EU's concerns.

The crucial complaint here is that Valve and the other companies intentionally used geo-blocked activation keys to prevent consumers from activating games anywhere but in their place of residence. This is in violation of EU antitrust rules and is, in the EU Commission's preliminary view, a denial of European consumers from enjoying the benefits of the Digital Single Market. The Commission says geo-blocking prevents customers from being able to shop around different EU member states to find the most attractive deal. Instead, it forces them to pay a higher price than they should for a game they could find cheaper elsewhere. Antitrust regulations apply to both physical and digital versions of games.

To clarify, the Statement of Objections doesn't guarantee that the companies will be found in breach of regulations. According to the European Union's press release, a Statement of Objections is a formal step in Commission investigations into suspected EU antitrust rule violations. The Commission informs the relevant parties in writing of the objections raised against them. The parties concerned can then examine the Commission's documents, reply in writing, and request an oral hearing to present their response before the relevant national competition authorities and the EU Commission.

 
 

Investigations into Valve and the other five companies named were originally started on February 2nd, 2017. The investigations were part of a wider antitrust investigation into suspected anti-competitive practices in e-commerce. Hotel chains and consumer electronics manufacturers were also accused of breaching EU competition rules in different ways as part of these investigations. If you're interested, you can look into the EU Commission's public case register for the individual cases of each video game company. To search for these cases on the register, just type the 5-digit number into the "case number" field. The case numbers are as follows:

  • 40413 - Focus Home
  • 40414 - Koch Media
  • 40420 - ZeniMax
  • 40422 - Bandai Namco
  • 40424 - Capcom
Valve has responded to the Commission's statement, refuting the allegations. Valve's full response is as follows:
Earlier today, the European Commission ("EC") sent Statements of Objections ("SO") to Valve and five publishers in an investigation that it started in 2013. The EC alleges that the five publishers entered into agreements with their distributors that included geo-blocking provisions for PC games sold by the distributors, and that separately Valve entered into agreements with the same publishers that prevented consumers in the European Economic Area ("EEA") from purchasing PC games because of their location.

However, the EC's charges do not relate to the sale of PC games on Steam - Valve's PC gaming service. Instead the EC alleges that Valve enabled geo-blocking by providing Steam activation keys and - upon the publishers' request - locking those keys to particular territories ("region locks") within the EEA. Such keys allow a customer to activate and play a game on Steam when the user has purchased it from a third-party reseller. Valve provides Steam activation keys free of charge and does not receive any share of the purchase price when a game is sold by third-party resellers (such as a retailer or other online store).

The region locks only applied to a small number of game titles. Approximately just 3% of all games using Steam (and none of Valve's own games) at the time were subject to the contested region locks in the EEA. Valve believes that the EC's extension of liability to a platform provider in these circumstances is not supported by applicable law. Nonetheless, because of the EC's concerns, Valve actually turned off region locks within the EEA starting in 2015, unless those region locks were necessary for local legal requirements (such as German content laws) or geographic limits on where the Steam partner is licensed to distribute a game. The elimination of region locks will also mean that publishers will likely raise prices in less affluent regions to avoid price arbitrage. There are no costs involved in sending activation keys from one country to another and the activation key is all a user needs to activate and play a PC game.

Koch Media has responded publicly to the Commission's Statement of Objections. The response says Koch Media is "fully committed to comply with all rules and regulations". In response to a request for a reply by GamesIndustry.biz, ZeniMax says it's "company policy not to comment on ongoing legal matters". The other companies have not yet publicly responded to the EU Commission. TechRaptor has reached out to all of the other affected companies who have not issued a statement for comment.

If you want to read the European Union Commission's full press release, which contains more detailed information on the Commission's preliminary view, you can do so here. The press release also contains legal information and background on this case. TechRaptor has reached out to the EU Commission for comment on this story.

How do you feel about this issue? Has it affected you directly? Let us know in the comments below!

Joe Allen's profile picture
Staff Writer

Dark Souls changed my life, and I'm here to spread the good news. I like pretty much all sorts of games, but I judge everything by its proximity to our Lord and saviour, Dark Souls.

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