Steam Game Pricing Australia

[nikolai]

G'day all,
I am putting together an FOI request to the ACCC regarding Steam's pricing agreements with it's publishing partners in Australia. I have been in contact with Valve Corporation & Steam Support. They've both been helpful, in that they vaguely allude to them having pricing agreements with some game publishers, but none of their staff (understandably) will comment on specific cases.

While I can use the email correspondence so I have so far, it would be greatly appreciated if you could reply with links to any official publications Valve Corporation has posted in the last few years regarding their pricing policies outside the US. More Specifically their pricing policies/agreements for Australia, but documentation relating to U.K. pricing would be helpful too.

Thanks in advance,
Nik

[TailSwallower]

Whilst I don't have any links to offer, you could try getting in touch with Kotaku Australia (which is far less trashy and far better written than its American cousin). They've posted some great articles about retail pricing in Australia, so they might be keen to help you with your FOI request as they could certainly get an article out of it too.

You could also poke around in their archives for any useful articles - I don't remember coming across any, but I was primarily a 360 gamer until earlier this year, so I wouldn't have necessarily paid much attention to any posts about Steam.

[soldant]

I highly doubt you're going to get anywhere with it. The differences in price is fairly well known compared to buying a boxed copy from an overseas retailer but this doesn't necessarily mean that what Steam/Valve/publishers are doing is wrong. I hate the ridiculous region pricing which means a digital copy costs the same as a boxed copy (at least while our dollar holds out) but I don't know what you expect them to do?

[nikolai]

Thanks TailSwallower. While I have not contacted Kotaku directly, I have referenced a number of their articles (and excerpts thereof) in my request to the ACCC. While the content in articles from websites like Kotaku may be spot-on, as far as providing evidence to the ACCC goes, it really amounts to nothing more than speculation. Which is why I'm seeking official publications from Steam (And other online distributors.) I have also written to a number of publishers who may be perceived as having pricing agreements with distributors, but haven't received a reply from any.

I will give you a little background on what I'm doing, because I'm sure most people read the title and just rolled their eyes. For about 6 months now I've been collecting pricing data, articles and information on major titles from a few major publishers. Clearly the public perception is there is price fixing happening, even distributors such as Steam and GoG have alluded to this in non-specific ways.

To quote an email from Steam Support "We are always working with publishers to adjust prices to be in line with what can be found at local retailers and online shops."
This in itself constitutes anti-competitive behavior according to Australian law (technically it would also constitute cartel behavior which can carry a $10m fine and upto 10 years jail,) unless the publishers and Steam have a recognised agreement which is known to the ACCC. There are certain circumstances where pricing agreements are allowed, hence my FOI request to the ACCC, to determine if such an agreement is known.

In the case an agreement is known, there may not be much anybody can do, because it would mean the government has already deemed the pricing agreement is in the public good. I don't think this is likely.

In the case an agreement is not known, I begin the process of a formal complaint about anti-competitive behavior between Steam, other distributors and their publishers.

Soldant, there has been a lot of miss-information going around, specifically about the motivating market factors behind the prices. Some folks don't recognise that those factors and the prices themselves are completely irrelevant. The issue is anti-competitive behavior, publishers are not allowed to fix prices in order to placate the other distributors.

When the publishers threaten to stop selling their titles through Steam unless they comply with the pricing arrangement - that is called Market Sharing under the cartel provisions. - Very illegal.

Anyway, if anyone's interested I'll keep you updated.

[Lukasz]

This in itself constitutes anti-competitive behavior according to Australian law (technically it would also constitute cartel behavior which can carry a $10m fine and upto 10 years jail,) unless the publishers and Steam have a recognised agreement which is known to the ACCC. There are certain circumstances where pricing agreements are allowed, hence my FOI request to the ACCC, to determine if such an agreement is known.

no no no.

its perfectly fine what steam is doing. steam is a shop. a shop can charge any price they want. they can sell something for 10 dollars and for 100 dollars (same product) and no one can really stop them. They can charge australians more than anyone else. they can charge australians 100000 times the price in every other market.
the agreement with publisher is nothing more than what cut publisher get. cause stuff is sold on percentage of sale. I think it was 30% for valve and 70% for other party. Yet publsher wants a proper cut. so they can claim that they want min 50 bucks for any copy of COD sold on steam. therefore a customer pays 75 bucks.
Furthermore publisher do not want cut too much of their retail sales by selling at lower prices than game, or ebgames, or jbhifi

and steam is not anticomptetive. you have retail. you have d2d, gamersgate, impulse, if you don't like their prices.

[nikolai]

Lukasz, thanks for the reply but I'm not here to debate that topic. I am NOT talking about the agreement Steam has with it's publishers in regards to their cut. I am referring to the price equivalency agreement between distributors and the publishing companies.

Sorry for any confusion.

You do sort of touch on my point, though I don't believe you meant to. "Steam can charge whatever they want" - No, I don't believe they can. If you would like to do more reading on this I can refer you to GoG's handling of a certain publishers heavy handed tactics when they aimed to sell a title lower than the publisher was happy with.

[Lukasz]

Lukasz, thanks for the reply but I'm not here to debate that topic. I am NOT talking about the agreement Steam has with it's publishers in regards to their cut. I am referring to the price equivalency agreement between distributors and the publishing companies.

Sorry for any confusion.

You do sort of touch on my point, though I don't believe you meant to. "Steam can charge whatever they want" - No, I don't believe they can. If you would like to do more reading on this I can refer you to GoG's handling of a certain publishers heavy handed tactics when they aimed to sell a title lower than the publisher was happy with.

steam... or any shop can charge any price they want. that's mate is a fact. situation might have been different if steam was the only available source of games.
it is not. you have at least three major retailers and bunch of online only. you have d2d and gamersgate and impusle and greenman. you have options. therefore steam can charge what they want.

i sold christmas decorations. i sold them at double the price i paid (minus gst) but it was my choice to do that. i could sell them at 10 times my cost.

and gog's handling is because publishers want a proper cut. selling lower means less money to publisher per each copy. reason is why vampire bloodlines is not on gog i believe. game costs 20 bucks everywhere else. so activsion wants a cut for the game higher than gog maximum price. their product, they also can charge whatever they wish.

[deano2099]

When the publishers threaten to stop selling their titles through Steam unless they comply with the pricing arrangement - that is called Market Sharing under the cartel provisions. - Very illegal.

The problem I think you might hit is that Steam aren't selling a product. If they were buying serial keys from the publisher for X amount, then selling them for X + Y they would be. But instead Steam act as an agent for the publisher as far as I can tell. Same thing happens with eBooks.

And yeah, you can't charge more than what it says on the label, though that's not entirely related, just UK law on labelling more than anything else. It's a way the suppliers have of forcing the shops to sell at that price I guess. Though in most cases (newspapers, magazines) those items are on a sale-or-return basis - shop can't slash the price to sell them off but gets a refund if they're not sold.

[nikolai]

Like I said, I'm not here to argue with you. You apparently still don't understand what I'm saying.

Steam cannot charge whatever they want, the price is dictated by the publisher. Is that plain enough English for you?

[Lukasz]

Like I said, I'm not here to argue with you. You apparently still don't understand what I'm saying.

Steam cannot charge whatever they want, the price is dictated by the publisher. Is that plain enough English for you?

eh. mate. listen again. and do not throw away my argument about cuts because it is vital part.

Publishers are not allowed to dictate what is the final price of their product. that is illegal. you see the price on newspapers, magazines? it is just a suggestion. shops do not need to sell Times at price it is on cover. they can sell it at double the price.
Publishers tough want a proper cut from each sale. they want min. price of for example 10 dollars. steam HAS to give them 10 dollars for each game sold. it then can set the price at 11 dollars (so steam gets only one buck) or 1000 dollars (so steam get 990)

[nikolai]

Publishers are not allowed to dictate what is the final price of their product. that is illegal.

YOU GOT THERE EVENTUALLY! Congrats!

Seriously though, we're way OT, so I've sent you a PM if you'd like to discuss further, which I am happy to do.

[Lukasz]

YOU GOT THERE EVENTUALLY! Congrats!

they dont do that. what is your problem mate because you really don't make much sense.
its universal for everyone what percentage steam gets and what publisher get. i think gmod was the only one being different as the guy used source and valves assets (so they split it fifty fifty)
so publisher can then dictate the maximum price by just dictating the min price valve pays them. but steam does not have to abide by that.
there is nothing illegal happening here and you really have no case at all.

[nikolai]

they dont do that.

I believe they are.

there is nothing illegal happening here

Are you sure? Are you a lawyer? Ask me the same question and my answer will be the opposite of yours.

[Althea]

there is nothing illegal happening here and you really have no case at all.

He's never said he has a case, he said he's using his country's laws to find out if there is a case. He's got a noble goal, and I don't think it's fair of you to dissuade him from that. Australia has had a bum deal with games for years, and if that can be changed then that is a good thing.

Anyway, shops can't sell things with a value attached to them for more than that price, at least in some countries. I could be wrong, but I believe that in England if an item has a price on it (say, 30p on a bag of crisps) a shop cannot charge more than that.

Either way, these things need to be tested in court to see if they stand up or not, just as EULAs and other agreements need to be.

[Nalano]

In New York City (I was going to say "in America," but I think an even tighter geographical area would drive the point home) a 20oz bottle of Dr. Pepper can go for anything from $1 to $3.25. The former tends to be seen in bodegas in poorer neighborhoods, and the latter is the sort of price-gouging you see in airports and convention centers, what with captive audiences and physical distance from competitors. There are no price controls for individual retailers, with the assumption that competition will drive the price down to its lowest possible profit-making ratio. (Or even lower, as Chinatown shops inside the city and Walmart outside the city have been known to run at a loss for years in order to undercut their neighbors)

That being said, if all retailers got together and decided that "we're all going to charge $3.25 for this Dr. Pepper," that's a cartel, and that's illegal under the anti-trust laws we've had on the books for over a century. Now, such is nigh impossible for soft drinks because of the sheer number and type of retailers that sell them, but when you have only half a dozen national chains selling computer games, such is not outside the realm of possibility.

As such, when Steam say that they're matching the prices of local retailers, that does indeed smack of price-fixing, and as it is an explicit agreement (as they've admitted it themselves) limiting their competition (as Steam would, being an online retailer, always get games before brick & mortars and always be able to sell them cheaper, but is choosing not to), it can technically be defined as a cartel. With that in mind, finding ways to combat it legally are well within his rights and probably the duty outright of the Australian government.

[Lukasz]

That being said, if all retailers got together and decided that "we're all going to charge $3.25 for this Dr. Pepper," that's a cartel, and that's illegal under the anti-trust laws we've had on the books for over a century. Now, such is nigh impossible for soft drinks because of the sheer number and type of retailers that sell them, but when you have only half a dozen national chains selling computer games, such is not outside the realm of possibility.

As such, when Steam say that they're matching the prices of local retailers, that does indeed smack of price-fixing, and as it is an explicit agreement (as they've admitted it themselves) limiting their competition (as Steam would, being an online retailer, always get games before brick & mortars and always be able to sell them cheaper, but is choosing not to), it can technically be defined as a cartel. With that in mind, finding ways to combat it legally are well within his rights and probably the duty outright of the Australian government.

the thing is...
the laws says it must be anti-competitive. what steam does is NOT as it does not harm the market. quite opposite as it prevents steam from destroying retailers who could not lower their prices to steam level (there are a lot of reasons why a boxed game costs up to 110 american dollars in a shop)

and what deano said is incorrect: you can charge what you want for whatever you sell as long as you don't control the market.
http://en.wikipedia.org/wiki/Resale_price_maintenance
sellers forcing resallers to sell at set price is illegal.
And i bought quite few times a magazine, or newspaper at lower price. sometimes it was damaged, sometimes it was a bit old and sometimes they were running a promotion (get a coffee and a paper is 50% off)

[Nalano]

the thing is...
the laws says it must be anti-competitive. what steam does is NOT as it does not harm the market. quite opposite as it prevents steam from destroying retailers who could not lower their prices to steam level (there are a lot of reasons why a boxed game costs up to 110 american dollars in a shop)

Anti-trust laws defend the consumer, not the company. There is and should be no government guarantee that an obsolete company should yet remain. Tower and Virgin Records are dead in America, after all.

There is no law that requires that Valve has to allow GAME to remain in existence, any more than electric trolleys had to limit themselves as to be on equal terms with horse-drawn trolleys.

The reason games are so expensive in Australia is because it's expensive to ship to Australia. Online there are no oceans. That's a competitive advantage. Anti-trust laws were not meant to undermine that.

[Lukasz]

Anti-trust laws defend the consumer, not the company. There is and should be no government guarantee that an obsolete company should yet remain. Tower and Virgin Records are dead in America, after all.

There is no law that requires that Valve has to allow GAME to remain in existence, any more than electric trolleys had to limit themselves as to be on equal terms with horse-drawn trolleys.

The reason games are so expensive in Australia is because it's expensive to ship to Australia. Online there are no oceans. That's a competitive advantage. Anti-trust laws were not meant to undermine that.

the thing is. Customers do not deserve lower prices. They deserve competitive market where companies can sale without obstruction from other companies (whether main sellers or competitors) which could prevent lower prices and customers deserve that they are protected from companies working together to squeeze as much money from customers as it is possible (aka control the market).
Steam does not work with other game sellers, therefore they really can charge what they want. They really do not need to make themselves more competitive.
So if publishers make steam games so expensive by demanding high cuts from each game sold, then the only entity which can complain is steam.
Customers are not hurt as they have many other independent game salers to choose from.

unless of course steam does cooperate with jbhifi, game and ebgames (three major game retailers in Australia) then we have a problem.

[Nalano]

Steam does not work with other game sellers, therefore they really can charge what they want. They really do not need to make themselves more competitive.

Valve has made deals with brick & mortar retailers before (most notably GAME in the UK), and ultimately the legal argument for this case, if it were held in America, hinges on whether this collusion (since they basically admitted to fixing the prices) is explicit - ie: whether they contacted the local retailers to hammer out this deal where they wouldn't undercut them and steal the market - and as such it depends on the wording of Australia's 2010 Act.

Again, anti-trust laws are put in place so consumers won't get gouged. Consumers are currently getting gouged.

[deano2099]

and what deano said is incorrect: you can charge what you want for whatever you sell as long as you don't control the market.
http://en.wikipedia.org/wiki/Resale_price_maintenance
sellers forcing resallers to sell at set price is illegal.
And i bought quite few times a magazine, or newspaper at lower price. sometimes it was damaged, sometimes it was a bit old and sometimes they were running a promotion (get a coffee and a paper is 50% off)

I wiki your wiki - http://en.wikipedia.org/wiki/Price_fixing - in the UK it's legal for newspapers and magazines. Guess not for sweets, technically you could sticker over the price with your own price, but that leaves your customer pissed off and you will a big job for not much gain I guess.