EU is investigating Steam and OEMs for anticompetitive practices in e-commerce

The European Commission has started an investigation into sales practices in e-commerce that are in breach of antitrust rules. The intent is to identify if any companies are preventing consumers from enjoying cross-border choice, and being able to buy consumer electronics as well as video games at competitive prices. The Commission has a digital single market strategy which is not aligned with businesses that might want to fragment the EU market for their own benefit.

Commissioner Margrethe Vestager 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.”

EU is initiating two separate investigations, one on video games, and another one on consumer electronics manufacturers. The investigation will gather information about the practices put in place by the companies in different countries, and assess if these practices are in breach of EU antitrust rules. The investigations aim to address price restrictions, location based discriminatory prices, and geo-blocking. Geo-blocking is a practice where access to digital content is restricted to a particular location. Preliminary inquiries have shown that these practices are widespread.

The EU wants residents in all its member states to have the ability to purchase video games at the prices available in any market in its member states. Steam, the game distribution platform owned by Valve, uses digital measures to ensure that games purchased in a certain market are only available for play in that country. Valve introduced region locking of games in 2014 to prevent people from buying cheap games from Russia. There is no uniform geo-blocking when it comes to titles, it varies for each game. It is possible to contact Steam support to lift geo-blocking restrictions on a case-by-case basis. The agreements between Valve and five game distributors are being probed. The distributors being investigated are Bandai Namco, Capcom, Focus Home, Koch Media and ZeniMax.

The consumer electronics companies being investigated are Asus, Denon & Marantz, Philips and Pioneer. The investigation is looking into whether these manufacturers are restricting digital storefronts from setting their own prices for the products. The effect of pricing restrictions can potentially be aggravated because of algorithms that automatically change the pricing according to the prices of competing e-commerce web sites.

The European Commission is only finding out if there is a breach in regulations, and the initiation of formal proceedings does not pre-judge the outcome of the investigations. The two investigations into video game companies and consumer electronics manufacturers are the first announcements following the European Commission’s competition sector inquiry in the e-commerce sector.