European Commission opens investigation into Valve over suspected anti-competitive geo-blocking practices

The European Commission has announced it will be launching an investigation into the bilateral agreements concluded between Valve and five PC game publishers over a suspected breach in EU antitrust rules.

The Commission says it wants to investigate whether these companies are preventing consumers from purchasing digital content due to their location or country of residence and enjoying cross-border choice in how they buy their PC video games, such as cheaper prices in other EU member states.

Commissioner MargretheVestager, who’s in charge of the Commission’s competition policy, said: "E-commerce should give consumers a wider choice of goods and services, as well as the opportunity to make purchases across borders.

"The three investigations we have opened today focus on practices where we suspect companies are trying to deny these benefits for consumers. The cases concern the consumer electronics, video games and hotel accommodation sectors. More specifically, we are looking into whether these companies are breaking EU competition rules by unfairly restricting retail prices or by excluding customers from certain offers because of their nationality or location."

In the Valve investigation, the publishers in question are Bandai Namco, Capcom, Focus Home, Koch Media and ZeniMax, and the Commission says it will be investigating whether the agreements they hold with Valve require or have required the use of activation keys for the purpose of geo-blocking.

"In particular, an ‘activation key’ can grant access to a purchased game only to consumers in a particular EU Member State (for example the Czech Republic or Poland)," the Commission said in a statement.

"This may amount to a breach of EU competition rules by reducing cross-border competition as a result of restricting so-called ‘parallel trade’ within the Single Market and preventing consumers from buying cheaper games that may be available in other Member States. The Commission is carrying out this in-depth investigation on its own initiative."

Let’s take Capcom’s Street Fighter V as an example. Going by the data on Steamdb.info, the base US dollar price is $39.99. In the UK, consumers are paying 44.99, an increase of 42.58 per cent over the base US price. The Euro price, however, is only 7.93 per cent over the base price, as it currently sits at €39.99.

There probably several factors at play here, such as varying levels of sales tax between different countries and local competition in each respective region, but if the Commission rules that Valve and the five publishers are indeed in breach of its anti-competitive practices, then it could mean consumers will be able to buy games from other EU countries at cheaper prices.

Right now, though, there’s no legal deadline for this particular investigation, so it could be quite some time before the Commission comes to a conclusive decision. However, with Brexit looming and the UK’s upcoming departure from the European Single Market all buy guaranteed, it’s unlikely we’ll see any benefit from the decision since we’ll no longer be bound by EU antitrust rules.