$3 million: that’s how much the Australian competition regulator wants Valve to pay over their lack of an advertised refund policy from 2011 to 2014.
The figure is the latest development in a case that has been ongoing for the last three years. The Australian Competition and Consumer Commission (ACCC) took Valve to court over the company’s lack of an advertised refunds policy on their site and within the Steam Subscriber Agreement, and the case has plodded along through multiple depositions, delays, hearings and even a change of judge.
Steam users, of course, are now entitled to refunds. But when the ACCC originally filed their lawsuit in 2014, that wasn’t officially the case. There were always reports of users getting one-time or goodwill refunds – such as when games were unfinished, or released in a unplayable state or when or when Valve pulled a game from sale – but there were also instances of users being flat-out denied.
But Tuesday’s hearing was not to determine fault or guilt. The Federal Court and Justice Edelman had done that earlier this year. And as a result of that ruling, the ACCC argued that Valve should be fined $3 million dollars “in order to achieve both specific and general deterrents, and also because of the serious nature of the conduct”.
Naomi Sharp, presiding counsel for the ACCC, argued that Valve’s senior management was “involved in the misconduct” and violation of Australian consumer law. Even though users had eventually received refunds, Valve had advertised that Steam had a “standalone policy to not give refunds” in the Steam Subscriber Agreement which was in contravention with the Australian Consumer Law.
Valve’s original defence was based on the company being located and operating out of Seattle. In their eyes, any transactions that took place on Steam marketplace were therefore taking place in the United States, not where the consumer was physically based. “We think of ourselves as an American company doing business in America which has customers all over the world,” Valve’s general counsel, Karl Quackenbush, testified.
Arguing that there was “no finding that Valve’s conduct was intended to mislead or deceive consumers”, Valve’s attorneys argued in favour of a $250,000 fine instead.
“Your proposed penalty of $250,000 isn’t even the price of doing business, it’s next to nothing is it?” Justice Edelman asked. The ACCC also filed for an injunction against Valve to ensure whether its current refund policy was compliant with Australian Consumer Law.
An intriguing point of contention raised was what Valve’s lawyers called the elephant in the room: how an Australian court can enforce a judgement on a foreign corporation. That sparked an intriguing exchange between His Honour Justice Edelman and Valve’s attorneys.
“Lurking behind the remedies hearing is the deeper question of enforcement of penal orders in a foreign jurisdiction. And the rule against enforcement of revenue or penal orders may mean in a foreign jurisdiction is that it wouldn’t be able to be executed,” Justice Edelman remarked.
After being asked directly whether Valve would resist any penal orders or penalties from the court, Valve’s attorney replied that they had “no instructions that Valve at this time will resist the enforcement overseas of any of your Honour’s orders”.
The ACCC later announced it was abandoning one of its original demands that would have seen Valve establish a telephone hotline or 1800 number to help Australians deal with any refund queries. Valve had argued that all inquiries were handled through the Steam ticketing system and it would be impractical and unreasonable for the court to force Valve to establish a second and separate line of communication for any affected Australian consumers seeking refunds.
Valve revealed over the course of the case, through prior testimony and Quackenbush’s appearance, that it employs around 50 support staff. There was also a lengthy and occasionally testy exchange between ACCC’s counsel and Quackenbush over what instructions, documents or training those staff were given about the Australian consumer law.
“Have you given any Valve support staff and instructions or directions in relation to the ACL,” ACCC’s counsel asked.
“That would be incorrect,” Quackenbush replied. When asked whether it was “sloppy” that Valve did not keep anything in writing about what their support staff were told regarding consumer rights under the Australian Consumer Law, he said “it’s completely consistent with how we operate”.
Once submissions were finalised, Justice Edelman informed the court that he would aim to hand down his ruling, which would cover both penalties and any potential injunction, by mid-December or January.