ACCC files Cross-appeal against Valve over Court Findings
Tuesday 11 April 2017 @ 10.40 a.m. | IP & Media | Legal Research | Trade & Commerce
The Australian Competition and Consumer Commission (ACCC) has filed a cross-appeal in relation to two findings in a Federal Court decision on false or misleading representations made by Valve to Australian consumers about consumer guarantees via its online gaming platform Steam, which is allegedly in breach of the Australian Consumer Law (the ACL) [Sch 2 to the Competition and Consumer Act 2010 (Cth)].
The representations were along the lines of statements made in the terms and conditions like:
“ALL STEAM FEES ARE PAYABLE IN ADVANCE AND ARE NOT REFUNDABLE IN WHOLE OR IN PART”.
Background to the Case
In March 2016, the Federal Court found certain terms and conditions in the Steam Subscriber Agreements and refund policies were false or misleading about consumers’ rights to obtain a refund for games if they were not of acceptable quality.
On 23 December 2016, the Court fined Valve $3 million for its breaches - $2.2 million for the contraventions involving the Steam Subscriber Agreement and $800,000 for the contraventions involving the Steam Refund Policy.
The March 2016 Decision
In his March 2016 decision, Justice Edelman also ruled that some statements made by Valve in online chats to individual consumers were not misleading, in part because the consumers correctly asserted their rights under the ACL to Valve.
In ACCC v Valve Corporation (No 3) [2016] FCA 196 (24 March 2016), his Honour said at para 322:
“Although I have proceeded on the basis that it is possible that a consumer can be likely to be misled even if the consumer was not misled, it is apparent from the conversations as a whole that none of the three consumers was misled or likely to be misled by any of the alleged representations even if they had been made."
About Valve and Consumer Protection Guarantees
Valve is based in Washington State, USA and argued that its arrangements with Australia were not subject to the ACL. Valve put forward three reasons:
- Valve’s conduct did not occur in Australia and it did not carry on business in Australia;
- The Steam Subscriber Agreement was governed by the law of Washington State in the USA and so the ACL did not apply; and
- The software games were not “goods”.
Even though Justice Edelman found that the proper law of the contract was Washington State in the USA, His Honour nonetheless found in ACCC v Valve Corporation (No 3) [2016] FCA 196 (24 March 2016), that Valve both engaged in conduct in Australia and was carrying on business in Australia and so subject to the ACL [at para 4]:
“… There are some difficult issues involved in determining whether ‘conduct’ is in Australia, but even if Valve’s conduct was not conduct in Australia, the Australian Consumer Law would apply if Valve carried on business in Australia. Valve said that it does not carry on business in Australia despite Valve (i) having more than 2 million user accounts in Australia, (ii) generating potentially millions of dollars in revenue from Australia, (iii) owning, and using, servers in Australia, with original retail value of US $1.2 million, (iv) having relationships with businesses in Australia, and (v) paying tens of thousands of dollars monthly to Australian companies in expenses for running its business in Australia.”
In broad terms, s 67 of the ACL says that the consumer guarantee provisions of the ACL continue to apply where the proper law of the contract would be Australia (but for the terms of the contract which provide otherwise) or the terms of the contract provide that the laws of some other country govern the contract.
Reaction and action from the ACCC
The ACCC has filed a cross-appeal in relation to two of these findings that statements made by Valve to individual consumers were not misleading. The ACCC Chairman Rod Sims said in a recent ACCC Media Release:
“If a consumer knows their rights and asserts them in making a complaint, the Australian Consumer Law should not allow a business to make misleading claims in the hope of deterring the consumer from claiming a remedy. All goods supplied to consumers come with automatic consumer guarantees that they are of acceptable quality and fit for the purpose for which they were sold, even if the business is based overseas.”
The appeal and cross-appeal will be heard on a date to be fixed by the Full Federal Court.
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Sources:
Article from IPwars.com
The Consumer Guarantees in the ACL apply to computer games downloaded from overseas’ vendors – Ipwars.com
Valve And The ACCC Are Still Going At It – kotaku.com.au
ACCC cross-appeals Valve Federal Court judgment – ACCC MR 24/17
ACCC v Valve Corporation (No 3) [2016] FCA 196(24 March 2016)
