The French Competition Authority ("FCA") has investigated the video games industry on several occasions in the past. More recently, the FCA focused its attention on accessories and, in particular, video game controllers for consoles owned by dominant players (such as Sony's PlayStation).

Video game controllers under recent scrutiny by the FCA

The FCA’s interest for the video game sector is not new (see below). Interestingly, the FCA now seems to be focusing its attention on video game console accessories, and more specifically video game controllers.

In a recent decision of 20 December 2023, following a complaint by Subsonic, a French manufacturer of video game controllers, the FCA fined Sony (four companies in the group, including the Japanese parent company) for abusing its dominant position on the market for the supply of video game controllers for PlayStation 4 (PS4) consoles (Decision 23-D-14 of 20 December 2023 concerning practices implemented in the eighth-generation static video game consoles and control accessories compatible with the PlayStation 4 console sectors). 

Two practices were sanctioned by the FCA:

1.Sony's use of technical countermeasures, allegedly implemented to combat counterfeiting, which affected the proper functioning of third-party video game controllers (produced by manufacturers other than Sony and without an official Sony licence).

First, controllers produced by Sony or by Sony-certified manufacturers – thus holding an official Sony licence - were equipped with a chip containing a unique identification number enabling Sony to identify them. The FCA found that during certain updates of the PS4 console, Sony caused controllers without such identification numbers (or with numbers that had been widely duplicated) to be disconnected. As a result, all controllers manufactured by third parties outside Sony’s certification program were affected.

While the FCA emphasises the legitimacy of the objective of combating counterfeiting, it points out that such measures were disproportionate, since they affected all unlicensed controllers indifferently.

2. Sony’s opaque licensing policy that in several cases prevented competing companies wishing to market PS4-compatible controllers from joining the OLP programme (Sony’s certification program), the only way for third parties to obtain an official licence and unique identification numbers. The FCA found that by refusing to disclose the OLP access criteria to manufacturers who requested them, Sony applied such criteria in a discretionary manner, even though access to the programme was the only way to avoid disconnection.

In the future, the FCA could also be closely monitoring practices of other players in the industry restraining the use of certain third-party accessories on their gaming interface.  

More generally, it seems that similar investigations are being conducted by competition authorities in other European countries, such as (i) in Poland were the Polish Competition Authority ("PCA") has opened a preliminary investigation into suspected anti-competitive conduct in the video games industry, including PlayStation Store and Steam, (ii) in Romania were Sony is the target of an antitrust probe by the Romanian competition authority, over concerns it is abusing its dominant position in the console gaming market through PlayStation, and (iii) at the European level with the Valve case.

The video game industry in France, a constant subject of scrutiny by the FCA 

For more than 20 years, the FCA has been keen on scrutinizing the video games industry and did so on several occasions, including in relation to Sony’s practices. In particular, it has sanctioned cartel practices (mainly price fixing) and, more rarely, abuse of a dominant position, against the main suppliers and distributors of video game consoles.

• In 1993, the Conseil de la Concurrence (the former FCA), investigated certain practices of Bandaï (whose business consisted of importing and distributing Nintendo branded products) and sanctioned several practices facilitated by Bandaï's dominant position in the video game console and software markets: (i) the allocation of invoice and end-of-year discounts granted by Bandaï to its distributors had used criteria that varied according to the contract. Such sales conditions, which tended to favour mail order, multi-specialists and retailers over department stores and supermarkets by using different criteria depending on the contract, put some of its partners at a competitive disadvantage. (ii) In addition, Bandai had generally applied a policy of fixed prices for Nintendo products to its distributors (Decision 93-D-56 of 7 December 1993 on the state of competition in the electronic video game consoles and software sector). 

In 1995, the Conseil de la Concurrence also sanctioned customer-sharing and price-fixing practices from distributors of Sega products. The Council found that Virgin Loisirs (Séga France), the exclusive importer of Sega electronic game consoles and software, had colluded with its two wholesalers on the resale prices to be charged to retailers for various products. (Decision 95-D-62 of 26 September 1995 on competition in the electronic game consoles and software sector). However, this decision was annulled on appeal (on procedural grounds). 

• In 2007, the FCA fined Sony €800,000 for agreeing with all its distributors to publish a single resale price during the launch campaign for the Playstation 2 video game console. (Decision 07-D-06 of 28 February 2007 concerning practices implemented in the game consoles and video games sector).

It should also be noted that in 2015, in a widely publicized case, the FCA dismissed a case in favour of Nintendo France and its Japanese parent company, Nintendo Co. Ltd, which were accused on price-fixing practices for the Wii console and its games. 

The FCA dismissed the case, based on Nintendo’s arguments that there was no evidence of any price monitoring (“police des prix”) by Nintendo, which is one of the three cumulative criteria for resale price maintenance (as a reminder, these criteria are (i) public selling prices or maximum discounts have been announced by the supplier, (ii) price monitoring mechanisms have been put in place and (iii) recommended prices have been applied to a significant extent). In doing so, the FCA did not seem to consider it useful to analyse the two other elements of its usual set of evidence test. (Decision No 15-D-18 of 1 December 2015 on practices in the video games sector).

If you need more information or further guidance in this area, please contact Thomas Oster and Matthieu de Calbiac.

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