On April 5th, 2019, the EU Commission sent Valve and five PC video game publishers (Bandai Namco, Capcom, Focus Home, Koch Media and ZeniMax) statements of objections in which it alleged that the companies breached EU competition rules by preventing consumers from purchasing videogames cross-border from other EU Member States.
Valve is the owner of the world’s largest PC video game distribution platform called “Steam”, which is it used to digitally distribute PC video games from each of the five PC video game publishers subject to the investigation. At the same time, Valve provides activation keys to these publishers, which are required for consumers to play a number of PC video games bought on channels other than Steam. 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.
According to the Commission, 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”). In particular:
- Valve and the five PC video game publishers agreed to use geo-blocked activation keys to prevent cross-border sales, including in response to unsolicited consumer requests of PC video games from several Member States. This may have prevented consumers from buying cheaper games available in other Member States;
- Bandai Namco, Focus Home, Koch Media and ZeniMax included contractual export restrictions in their agreements with a number of distributors other than Valve, who were prevented from selling the relevant PC video games outside the allocated territories, which could cover one or more Member States. This 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.
These business practices infringed Article 101 TFEU since they partitioned markets according to national borders and restricted passive sales to consumers, with the consequence of denying European consumers the benefits of the EU’s Digital Single Market to shop around for the most attractive offer.