The FCA rejects Sony’s commitments in an abuse of dominance case

By Florence Leroux, Eliott Costet

11-2020

2020 proves to be a busy year for the French Competition Authority (FCA) as far as tech giants are concerned.

After Google and Apple, it's now Sony's turn to be under the FCA’s spotlight. While the Japanese company is currently launching pre-orders for its new PlayStation 5, the FCA has just announced that despite several commitments submitted by Sony in November 2019, the FCA’s investigation services will continue investigating a 2016 abuse of dominance case involving Sony's licensing program for third-party PlayStation 4 controllers. The FCA’s board considered that Sony failed to adequately address the competition concerns initially identified by the FCA’s investigation services.

In October 2016, the FCA launched an investigation against Sony following a complaint from an accessory manufacturer alleging that the Japanese tech giant abused its dominant position in the market for next-gen consoles.

As part of its preliminary assessment, the FCA’s investigation services considered that Sony was indeed likely to have exploited its dominant position in the market for eighth-generation static video game consoles by implementing two anticompetitive practices which would have deterred or prevented third-party accessory manufacturers from marketing unofficial game controllers compatible with the PlayStation 4 console:

  • On the one hand, the console manufacturer implemented as from November 2015 a system altering the functioning of unofficial third-party controllers (that Sony presumes to be counterfeit) via updates to the PlayStation 4 operating system. As a result, only controllers with Sony’s proprietary technical components can be used on the PlayStation 4 and third-party manufacturers can only acquire them through a paid license.

  • On the other hand, Sony's policy for granting such a license was not clear enough: third-party manufacturers were not systematically informed of the outcome of their licensing requests and Sony has sometimes refused to grant such license without giving any justification.

In order to address the anticompetitive concerns raised by the competition authority, Sony submitted commitments to the FCA in November 2019 including (i) the implementation of objective criteria and technical standards that third-party manufacturers must comply with, (ii) the application of these criteria and standards on a non-discriminatory basis and (iii) the systematic provision of justifications in the event of a refusal to license a third-party manufacturer.

Following a market consultation that took place in late November 2019 and a subsequent hearing, the FCA considered that Sony’s final commitments “did not adequately address the competition concerns identified by the investigation services”. The latter will now resume their investigation which could result for Sony in the imposition of a significant fine. Should this be the case, it could set a precedent for future console accessories, in particular the ones for PlayStation 5 which is scheduled to go on sale mid-November 2020.

For more information, the FCA’s press release is available here (in English).

For more information contact Florence Leroux or Eliott Costet

 

 
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