EU to investigate 'anticompetitive' e-commerce geoblocking

The executive arm of the European Union will investigate online sales practices that it believes are anticompetitive and restrict free cross-border trade, with a particular focus of the controversial practice of geoblocking.

Margrethe Vestager.

Geoblocking measures restricting which territory consumers can buy digital content could be a breach of EU competition rules, if they prevent people from purchasing cheaper goods in other member states, the European Commission said.

PC video games vendors are now being targeted in EC's antitrust investigation.

Valve, which owns the popular Steam game distribution platform, and five publishers - Bandai Namco, Capcom, Focus Home, Koch Media, and ZeniMax - have bilateral agreements with each other that restrict in which countries consumers can buy digital content.

The geoblocking is enforced with the use of activation keys on Steam. Users have to enter these into the distribution platform before they can play games to confirm that their copy of the software isn't pirated.

Hotel and large tour operators in the EU may likewise have fallen foul of EU competition rules with geoblocking restrictions.

The commission said it welcomed hotels and tour operators introducing innovative pricing mechanisms to maximise room usage, but they discriminate against customers based on their locations - depending on where in the EU they are, customers cannot always see full hotel availability or book hotel rooms at the best price.

Commissioner Margrethe Vestager said the investigation into geoblocking by games publishers and distributors is one of three to scrutinise online sales practices by companies to see if they breach EU antitrust rules.

Consumer electronics makers Asus, Denon/Marantz, Phillips, and Pioneer are also in the commission's sights for denying online retailers the ability to set their own prices on items such as notebooks, household appliances, and audio products.

"E-commerce should give consumers a wider choice of goods and services, as well as the opportunity to make purchases across borders," Vestager said in a statement.

"The three investigations we have opened today focus on practices where we suspect companies are trying to deny these benefits for consumers."

Geoblocking has long raised the ire of consumers and politicians who believe the practice is unfair and encourages piracy. In 2012, a parliamentary inquiry into IT pricing in Australia criticised geoblocking for pushing up costs for consumers and businesses.

The following year, the government was said to mull over a ban on geoblocking as it could be deemed to be anti-competitive. So far, the restrictive online trade practice has been allowed to continue in Australia.