08 February 2017

In late December 2016, the Federal Court gifted Valve Corporation an unwanted Christmas present by imposing a $3 million penalty for misrepresenting consumer refund rights. The order brings an end to the ACCC’s proceedings against the online gaming giant, which began in August 2014.

The litigation related to Valve’s online gaming platform Steam. In March 2016 the Court found that Steam had contravened the Australian Consumer Law (ACL) by misleadingly representing that the company had no obligation to offer a refund for games downloaded through the platform and purporting to exclude statutory guarantees and warranties of acceptable quality.

Several factors were considered in imposing the $3 million penalty sought by the ACCC, notably:

  • the size and revenue of Valve and the need for deterrence;
  • the consumer loss and Valve’s profit arising from the contraventions;
  • Valve’s culture of non-compliance; and
  • Valve’s limited cooperation with the ACCC.

Valve submitted that a penalty of $250,000 was appropriate, which Justice Edelman rejected as ’not even the real cost of doing business’. While he noted a large company should not be made to pay a greater penalty purely because of its size, the need for specific deterrence for Valve had to be considered.

His Honour noted that, while it was impossible to conclude how many consumers suffered loss or the amount of profit involved, the misrepresentations contributed significantly to Valve’s profit making processes. His Honour found the misrepresentations were unlikely to induce purchases but would deter customers from seeking a refund, or deny those who did.

Furthermore, his Honour described Valve’s culture of compliance as very poor. The company had no written compliance policy and had formed its view about the applicability of Australian law without obtaining legal advice.

The decision is a reminder that, in determining penalties, courts will examine the conduct of the respondent throughout ACCC investigation and litigation, with Justice Edelman remarking that Valve was only entitled to a minor discount because it ‘contested liability on almost every imaginable point’, cooperated minimally with the ACCC and remained resolute that it was not liable despite judgment against it.

Alongside the $3 million penalty, Valve was also required to establish and implement an ACL compliance program and publish consumer rights information on its website for twelve months.

 

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