The European Commission (EC) has accused the world’s largest PC game distributor, Valve Corporation, of breaching antitrust laws by engaging in “geoblocking”.
The EC has also warned major game developers Bandai Namco, Capcom, Focus Home, Koch Media and ZeniMax that they may be in breach of its Digital Single Market rules.
“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’),” the EC said. “This is against EU antitrust rules.”
Valve – via its distribution platform Steam – digitally distributes PC video games from each of the five PC video game publishers concerned by the investigation. It also provides “activation keys” to these publishers; needed to activate and play a number of games that are either downloaded or purchased on physical media.
The EC alleges that the companies geoblocked activation keys: “This may have prevented consumers from buying cheaper games available in other Member States.”
It also claims that 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, that prevented distributors from selling the relevant PC video games outside a given area (like an individual EU member).
Valve Geoblocking Allegations
Competition Commissioner Margrethe Vestager 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.”
A Valve spokesman told Computer Business Review in an emailed statement: “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.”
Today’s announcement is a formal warning from the EU. Now that the parties’ involved have been informed they are invited to examine the documents of the case, after which they then need to reply to the EC. Under the worst case scenario, the EC is able to impose a fine of up to 10 percent of a company’s annual worldwide turnover.