Competition
CJEU rules Steam’s geo-blocking violates EU competition law; Valve fined EUR 1.6M.
In a judgement dated 27 September 2023, the General Court of the Court of Justice of the European Union (“CJEU”) has upheld the European Commission’s decision concluding that Valve, the operator of the Steam platform, along with five PC video game publishers infringed European Union competition law by engaging in unlawful geo-blocking practices.
Background
In 2013, acting on information received from market participants, the European Commission initiated an ex officio investigation into the geographical blocking of certain PC video games on the basis of the geographical location of the user.
On 2 February 2017, the Commission initiated proceedings against Valve and five publishers, namely Bandai, Capcom, Focus Home, Koch Media and ZeniMax.
On 20 January 2021, the Commission found that Valve and the five above-mentioned publishers participated in five single and continuous infringements of Article 101 Treaty on the Functioning of the European Union (“TFEU”) and Article 53 of the European Economic Area (“EEA”) Agreement. In particular, the Commission found that Valve and the five publishers had participated in a group of anti-competitive agreements or concerted practices which were intended to restrict cross-border sales of certain PC video games that were compatible with the Steam platform, by putting in place territorial control functionalities during different periods between 2010 and 2015, in particular the Baltic countries and certain countries in central and Eastern Europe.
Key Findings
- Objective of Geo-Blocking: The General Court found that the geo-blocking measures were not aimed at protecting copyright but rather at eliminating parallel imports of PC video games. This served to safeguard the high royalty amounts collected by publishers and the profit margins of Valve. In essence, it prevented games, available at lower prices in some countries, from being purchased in regions where prices were significantly higher.
- EU Competition Law and Copyright: The General Court addressed the relationship between EU competition law and copyright, emphasizing that copyright protection primarily aims to ensure the right holders’ commercial exploitation of their content through licensing and remuneration. It does not grant them the right to demand the highest possible remuneration or create artificial price differences between national markets. Such partitioning and the resulting artificial price differences are incompatible with the completion of the internal market.
- Harmful to Competition: The General Court rejected Valve’s attempts to challenge the characterization of the collusive conduct as harmful to competition. Valve’s claims of pro-competitive effects of the geo-blocking measures were dismissed.
In the end, the General Court dismissed Valve’s action and confirmed the EU Commission decision to fine Valve.
Conclusion
This case serves as a significant precedent in addressing anti-competitive behaviour in the digital entertainment industry and underscores the EU’s commitment to fostering a competitive and unified market for consumers and businesses alike. The CJEU’s decision to uphold the Commission’s findings against Valve and the five video game publishers highlights the importance of fair competition and access to digital content within the European Union.
Full judgement (Case T-172/21) here : https://curia.europa.eu/juris/document/document.jsf;jsessionid=93B210A75D93737B6CDD01D294183133?text=&docid=277867&pageIndex=0&doclang=en&mode=req&dir=&occ=first&part=1&cid=1885424
Photo:
Pixabay via Picryl.com, Public Domain Dedication (CC0)
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