Antitrust Law Daily Online gaming platform, video game publishers fined by EC for ‘geo-blocking’
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Wednesday, January 20, 2021

Online gaming platform, video game publishers fined by EC for ‘geo-blocking’

By Jody Coultas, J.D.

Online platform Valve and five video game publishers restricted cross-border sales of certain PC video games based of the geographic location of the players.

The European Commission (EC) found that online PC gaming platform owner Valve and five video game publishers bilaterally agreed to geo-block certain PC video games from outside a specific territory in violation of EU antitrust rules. The fines, totaling 7.8 million (approximately U.S. $9.4 million), were reduced due to cooperation from the publishers.

Steam is one of the world's largest online PC video gaming platforms. It allows users to directly download or stream PC video games. It also allows users who buy PC video games in brick-and-mortar shops or digitally from third-party websites, to activate and play video games on Steam. Valve, the owner of the Stream platform, provides video game publishers the technical means to activate and play games on Steam, including games bought outside Steam.

Publishers include "Steam activation keys" in their PC video games for user authentication/activation. The PC video games are then sold by third party distributors across Europe. Valve also offers to the publishers a territory control function, which enables the setting up of geographical restrictions upon activation. The combination of Steam activation keys with the territory control function enables the "geo-blocking" of PC video games based on the geographical location of the user.

According to the EC, the publishers granted Valve a non-exclusive license to exploit specified PC video games on a worldwide basis, including the entirety of the European Economic Area (EEA). In turn, Valve provided the publishers a license for the use of Steam activation keys for distribution of those PC video games outside Steam. The publishers requested Valve to set up geographical restrictions and to provide geo-blocked Steam activation keys. The publishers provided those keys to their distributors for sale and distribution of the PC video games in the Member States concerned.

As a result, users located outside a designated Member State were prevented from activating a given PC video game with Steam activation keys. The geo-blocking practices concerned around 100 PC video games of different genres. Valve and the publishers engaged in the following geo-blocking practices:

  • Bilateral agreements and/or concerted practices between Valve and each of the five PC video game publisher implemented by means of geo-blocked Steam activation keys which prevented the activation of certain of these publishers' PC video games outside Czechia, Poland, Hungary, Romania, Slovakia, Estonia, Latvia and Lithuania, in response to unsolicited consumer requests ("passive sales"). These lasted between one and five years and were implemented, depending on the cases, between September 2010 and October 2015.
  • Geo-blocking practices in the form of licensing and distribution agreements concluded bilaterally by Bandai, Focus Home, Koch Media, and ZeniMax and some of their respective PC video games distributors in the EEA (other than Valve), containing clauses which restricted cross-border (passive) sales of the affected PC video games within the EEA, including the above-mentioned Central and Eastern European countries. These lasted generally longer, i.e. between three and 11 years and were implemented, depending on each bilateral relationship, between March 2007 and November 2018.

The practices at issue prevented consumers from activating and playing PC video games sold by the publishers' distributors either on physical media, such as DVDs, or through downloads. These business practices therefore denied European consumers the benefits of the EU's Digital Single Market to shop around between Member States to find the most suitable offer.

The fines for the publishers were reduced depending on the extent of their cooperation with the EC. The fines for the publishers was as follows: Bandai Namco was fined 340,000 ($411,485); Capcom was fined 396,000 ($479,259); Focus Home was fined 2,888,000 ($3,495,202); Koch Media was fined 977,000 ($1,182,414); and ZeniMax was fined 1,664,000 ($2,013,856). Valve did not cooperate and was fined 1,624,000 ($1,965,446).

Companies: Valve; Bandai Namco; Capcom; Focus Home; Koch Media; ZeniMax

MainStory: TopStory Antitrust GCNNews

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