Steam key geo-blocking infringed EU competition law, court finds

Valve has failed to convince the European Union’s Court of Justice that it did not infringe EU law by geo-blocking activation keys on Steam.

Five other video game publishers were also found to have breached anti-competitive practices: Bandai Namco, Capcom, Focus Home, Koch Media and ZeniMax.

As a reminder, the European Commission announced plans back in 2017 to investigate Valve and the aforementioned PC game publishers over suspected anti-competitive practices.

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As we previously reported, the Commission had suspicions that agreements between Valve and the publishers broke EU competition rules by restricting retail prices or excluding customers from certain offers because of their nationality or location.

The Commission aimed to find out whether the agreements between Valve and the publishers required the use of activation keys for the purpose of geo-blocking – preventing consumers from using digital content because of a their location or country of residence.

Now, a new ruling from has concluded Valve and the five publishers had indeed infringed EU law, after Valve tried to convince it otherwise.

Valve tried to state it had not infringed the law by arguing that publishers had the right to charge different prices for their games in different countries. However, the court has dismissed this.

“In agreeing bilaterally to that geo-blocking, the operator of the Steam platform, Valve and five PC video games publishers unlawfully restricted cross-border sales of certain PC video games that are compatible with that platform,” the court said. This instance of geo-blocking was then “used to eliminate parallel imports of those video games and protect the high royalty amounts collected by the publishers, or the margins earned by Valve”.

Here’s the court’s decision in more detail:

“The General Court finds that the Commission established to the requisite legal standard the existence of an agreement or concerted practice between Valve and each of the five publishers having as its object the restriction of parallel imports through geo-blocking of keys enabling activation and, in certain cases, use of the video games at issue on the Steam platform,” it stated.

“That geo-blocking sought to prevent the video games, distributed in certain countries at low prices, from being purchased by distributors or users located in other countries where prices are much higher. Thus, the geo-blocking at issue did not pursue an objective of protecting the copyright of the publishers of the PC video games, but was used to eliminate parallel imports of those video games and protect the high royalty amounts collected by the publishers, or the margins earned by Valve.

“In response to a number of arguments put forward by Valve, the General Court also rules on the relationship between EU competition law and copyright. In particular, it observes that copyright is intended only to ensure for the right holders concerned protection of the right to exploit commercially the marketing or the making available of the protected subject matter, by the grant of licences in return for payment of remuneration. However, it does not guarantee them the opportunity to demand the highest possible remuneration or to engage in conduct such as to lead to artificial price differences between the partitioned national markets.

“Such partitioning and such an artificial price difference to which it gives rise are irreconcilable with the completion of the internal market. Nor has Valve managed to cast doubt on the overall categorisation of the collusive conduct at issue as being sufficiently harmful to competition and as a restriction by object by referring to the alleged pro-competitive effects of the geo-blocking at issue.”

Eurogamer has asked Valve for further comment.

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