New Commission interventions target geo-blocking via technical measures and blocking of innovation

Within the past week, the European Commission has issued two new statements of objections on topics of interest for this blog.

The first concerns geo-blocking by computer games companies, including Valve, which operates the ‘Steam’ platform for video game distribution, as well as 5 games publishers.  This case focuses on geo-blocking – bilateral contractual agreements which aimed at, or had the effect of, preventing consumers from making cross-border purchases.  According to the Commission’s press release, two forms of restriction are under consideration:

  • Explicit contractual prohibitions on selling cross-border;
  • Use of activation keys that operate only in a given country – i.e., a technical measure of preventing both active and passive sales in different countries.
This case is in line with the renewed focus on vertical agreements which has been evident in particular since the conclusion of the E-commerce sector inquiry, and follows other recent decisions in relation to Nike, Guess and others.  This is the first case to focus on geo-blocking achieved through technical measures, something that is likely to feature in discussions around reform of the Vertical Agreements block exemption (consultation page here).

The other case is in some ways a more traditional allegation of collusion between competitors.  However, as we discussed in our earlier post on ‘the cartelization of innovation’, the investigation into VW, Audi and BMW has some very unusual characteristics.  Since our last article, the Commission has focussed its case on alleged collusion in relation the development of fuel cleaning technologies: the allegation is that the companies colluded “to limit the development and roll-out of emission cleaning technology for new diesel and petrol passenger cars sold in the EEA” (see Commission press release dated 5 April 2019).  

The Commission points to two particular developments which it claims were delayed: (i) selective catalytic reduction systems for diesel cars and (ii) ‘OTTO’ particle filters for petrol cars.  The exact scope of the conduct under consideration remains somewhat unclear, but it appears that it was addressed at preventing or delaying the new technology from being brought to market.  As we speculated in our earlier article, this may have arisen in the context of exchanges around best practices and agreements approving informal technical or emissions standards for earlier technology.  What is fairly clear is that this case is likely to involve close consideration of the line between acceptable coordination for competitive ends and anti-competitive limitation of innovation.

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