On 5 April 2019, the European Commission charged Valve, the owner of the "Steam" video game distribution platform, and five PC video game publishers with breaching the new EU Geo-Blocking Regulation which came into force on 3 December 2018.
What is the Geo-Blocking Regulation (the ‘Regulation’)?
As we reported shortly after the Regulation came into force , the Regulation prohibits organisations from discriminating against consumers by screening their location within the internal market and restricting their purchase options to their locality, so that consumers can ‘shop around’ the internal market to find the best price for goods and services.
Why has the European Commission investigated these organisations?
Through its “Steam” platform, Valve digitally distributes PC video games from publishers (including Bandai Namco, Capcom, Focus Home, Koch Media and ZeniMax) and simultaneously provides "activation keys" to such publishers.
The activation keys are required for consumers to play a number of PC video games bought through other channels, such as by purchasing the physical copy. 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. However, the activation keys were geo-blocked meaning consumers who purchased the games from Czechia, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Romania, but lived elsewhere in the EU could not authenticate them.
The European Commission also assert that the five PC video game publishers prohibited a number of other distributors from selling the relevant PC video games outside the allocated territories in an attempt to partition markets according to national borders and restrict passive (unsolicited) sales outside of allocated territories.
The European Commission has therefore formed the preliminary view 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” in contravention of the Regulation and competition law generally.
Valve and the five PC video game publishers now have the chance to respond to the European Commission’s concerns and we will of course report on any new developments.
The European Commission is intent on ensuring that the EU's single market is fit for the digital age. Breaking down online barriers that prevent people from enjoying full access to all goods and services being offered by businesses in the EU through the Regulation, is clearly part of this vision.
Interestingly, Valve and the five PC video game publishers do not appear to have prevented consumers from purchasing the games outside of their locality. Rather, they introduced technical measures to obstruct their use in order to limit the games’ functionalities and thus discourage users from ‘shopping around’ the EU to find the best price.
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