According to the European Commission, Valve and the game publishers Bandai Namco, Capcom, Focus Home, Koch Media and ZeniMax restricted cross-border sales of about 100 PC video games, thereby violating EU competition law. The agreement was designed to prevent consumers from playing games outside certain Member States. Therefore, the parties partitioned the European market. The practices took place in nine different EU-Member States between March 2007 and November 2018.


Steam is an online platform, accessible worldwide, that offers video games for download or for playing in streaming. Also, games bought via traditional channels or electronically from third parties may be played via Steam. Users obtain specific activation keys enabling them to activate and play games on the platform. Said activation keys are included in the video games sold by the publishers. The platform Steam includes a territory control function: during the activation process the user’s geographic location is recognized. As a result, a “geo-blocking” is possible because of the combination of activation keys and the territory control function.
After almost four years of investigation, the European Commission (“Commission”) has ascertaining, with regard to the relationship between Valve and the five abovementioned publishers: “Bilateral agreements and/or concerted practices … implemented by means of geo-blocked Steam activation keys which prevented the activation of certain of these publishers’ PC video games outside Czechia, Poland, Hungary, Romania, Slovakia, Estonia, Latvia and Lithuania, in response to unsolicited consumer requests (so-called “passive sales”). These lasted between one and five years and were implemented, depending on the cases, between September 2010 and October 2015.”
Furthermore, with regard to the PC video game publishers Bandai, Focus Home, Koch Media and ZeniMax and some of their respective PC video games distributors in the EEA (other than Valve) the Commission ascertained: “Geo-blocking practices in the form of licensing and distribution agreements … containing clauses which restricted cross-border (passive) sales of the affected PC video games within the EEA, including the above-mentioned Central and Eastern European countries. These lasted generally longer, i.e. between three and 11 years and were implemented, depending on each bilateral relationship, between March 2007 and November 2018”.
While the game developers Bandai Namco, Capcom, Focus Home, Koch Media and ZeniMax choose to cooperate, Valve, the owner of the platform Steam, according to the reasoning of the European Commission, did not so.
The violations
The legal background of the decision is reported to be twofold: it both mentions unjustified geo-blocking and vertical sales restrictions. EU – “Geo-blocking” Regulation n. 2018/302 aims at preventing discriminatory trade practices “based on customers’ nationality, place of residence of establishment, including unjustified geo-blocking, in cross-border transactions between a trader and a customer relating to the sales of goods and the provision of services within the Union.” In particular, a trader shall not, through the use of technological measures or otherwise, “block or limit a customer’s access to the trader’s online interface for reasons related to the customer’s nationality, place of residence or place of establishment”. However, the Regulation entered into force on December 3, 2018 only and thus after the end of the ascertained practices.
While the press-release of the European Commission repeatedly mentions the aspect of geo-blocking, the legal reasoning is rather to be found in art. 101 TFEU prohibiting the sharing of markets, being incompatible with the idea of an internal market: agreements between suppliers and distributors that limit the territory in which, or the customers to whom, the goods or services may be sold are not allowed.
The fines
The European Commission has issued reduced fines against the publishers acknowledging the collaboration during the investigations. To the contrary, the fine issued against the platform owner Valve was not reduced: according to the European Commission, Valve did not sufficiently cooperate during the proceedings. Valve is reported to consider appealing the decision. In past, Valve argued that it could not be considered as “games-distributor”. It would only provide a platform as a mediator between game providers and consumers. In any event, the Commission was not convinced: Valve was considered to plays a crucial role in a practices leading to market sharing.

The case exemplifies the close connection between aspects of geo-blocking and market partitioning. According to the regulation on geo – blocking, the EU member States shall ensure “effective, proportionate and dissuasive” measures against geo-blocking. However, as it is shown here, where geo – blocking results in market sharing, also consumers may claim damages. As the European Commission underlines in its press release: “any person or company affected by anti-competitive behaviour as described in this case may bring the matter before the courts of the Member States and seek damages. The case law of the Court and Council Regulation 1/2003 both confirm that in cases before national courts, a Commission decision constitutes binding proof that the behaviour took place and was illegal.”

Tankred Thiem