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Early this morning, the European Commission (EC) issued an official "statements of objections" today towards Valve, Bandai Namco, Capcom, Focus Home, Koch Media, and ZeniMax. The EC claims that all of these companies are involved in anti-trust violations by placing geographic restrictions (geo-blocking/geo-locking) on the games that they sell.
The EC says that these companies have geo-blocked Steam activation keys for games sold throughout Eastern Europe. Some of these places include Czechia, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and some cases in Romania. In short, the EC says that the geo-blocks are in place to prevent people in more wealthy counties from buying games in other EU countries that have cheaper regional pricing.
The EC sees the EU as one market, like the United States. This is in spite of the fact that the EU is made up of different countries with vastly different average levels of income. However, if things escalate from here, the EC could result in fines that total as much as 10% of a company's global annual income.
Shortly after this statements of objections from the EC, Valve issued a response to the claims made.
Earlier today, the European Commission ("EC") sent Statements of Objections ("SO") to Valve and five publishers in an investigation that it started in 2013. The EC alleges that the five publishers entered into agreements with their distributors that included geo-blocking provisions for PC games sold by the distributors, and that separately Valve entered into agreements with the same publishers that prevented consumers in the European Economic Area ("EEA") from purchasing PC games because of their location.
However, the EC's charges do not relate to the sale of PC games on Steam - Valve's PC gaming service. Instead 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.
However, the EC's charges do not relate to the sale of PC games on Steam - Valve's PC gaming service. Instead 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.
