Ius Omnibus v Sony
Ius Omnibus filed on 3 August 2023 before the Portuguese Competition, Regulation and Supervision Court a popular action that aims to defend all consumers living in Portugal who have been harmed by Sony’s anti-competitive practices relating to the PlayStation. Since 29 November 2013, Sony has engaged in practices with the effect of controlling and drastically restraining the production and distribution of digital and physical video games, add-on content, game library services and online multiplayer services. It created an artificial monopoly for the distribution of PlayStation digital content and services. It prohibits the resale of video games in digital or physical format. It enforces restrictions on cross-commerce between platforms of game contents. This popular action aims to put an end to Sony’s anti-competitive practices which significantly limited, and in some cases completely excluded, competition in several markets. These practices prevented the supply of new and better products and services and reduced competitive constraints, leading to higher prices being paid by consumers. Ius intends to change this situation and to ensure that consumers are compensated.
Ius Omnibus is represented in this case by law firms Sousa Ferro & Associados and Ferreira Pinto Cardigos Advogados.
What is the object of this action?
It is a popular action for the defense of diffuse and/or collective interests and of homogeneous individual interests of the represented consumers, filed by Ius Omnibus.
It is a claim to defend consumer rights and competition on the market, brought under the Popular Action Act (Law No. 83/95) and Article 19 of the Private Enforcement of Competition Act (Law No. 23/2018), for agreements restricting competition prohibited by Article 101 TFEU and Article 9 of the Competition Act, and for abuse of a dominant position, prohibited by Article 102 TFEU and Article 11 of the Competition Act.
What were the unlawful behaviors of Sony?
This is a stand-alone private enforcement action under competition law, focused on anticompetitive practices not yet declared in the context of investigations and proceedings previously initiated by public regulatory authorities. The case concerns anticompetitive practices by Sony aimed at limiting and controlling the production and distribution of PlayStation games in physical and digital format, as well as add-on content, game library services and online multiplayer services, all for PlayStation 4 and 5, in addition to practices leading to the fixing or coordination of prices and of the conditions applicable to the sales and placement of games on the markets, and to market sharing. Taken together, these practices have the effect of restricting competition in the relevant markets and have increased the prices paid by the consumers, limiting the supply of new and better products and services and harming consumers in terms of price, products’ variety and quality.
Sony has created a system around the PlayStation that places it in a position of total control. For example, as far as Ius has been able to determine, thanks to Sony’s agreements with publishers, Sony sets the wholesale and retail prices of all digital PlayStation games, be they Sony’s or of its competitors. Sony decides the price of these games for consumers and gives publishers that price minus 30%. It decides how many units of physical games can be produced and supplied by its competitors, and who they can hire to manufacture them. It has implemented a range of measures aimed at directing consumers to purchase ever more only from the digital channel, in which Sony has a monopoly and greater profit margins.
Other consumer protection actions have been filed against Sony in other countries (for example, in the United Kingdom), centered around some of these same practices.
Who is represented in this action?
All consumers living in Portugal who have purchased physical or digital games and/or paid for in-game content for PlayStation 4 or PlayStation 5 and/or subscribed to the PlayStation Plus Essential service from 29 November 2013 to the present will be represented in this popular action, unless they expressly exercise their right to opt-out and state they do not wish to be represented.
Consumers do not have to do anything to be represented and to be entitled to compensation if the action is successful.
Any consumer who does not wish to be represented in this action may exercise the right to opt-out, communicating this intention to the Court. Consumers may also decide to intervene in the process in support of Ius Omnibus.
How were the consumers harmed by Sony’s unlawful practices?
The anti-competitive practices in question caused harm to the consumers in the following way:
i) compromising healthy competition and consumer protection in the Portuguese market, with multiple consequences on the quality, variety and innovation of products and services in these markets, and
ii) causing damage to consumers and causing an unjust enrichment at the expense of the unjustified impoverishment of the represented consumers.
As an example, consumers paid more for the PlayStation 4 and 5 games and add-on content they purchased. They were prevented from contracting only the online multiplayer service, which would have cost less if it had been sold autonomously and in a competitive environment. They were prevented from reselling games they no longer wanted to play. Etc.
Ius Omnibus estimates that Sony’s unlawful practices caused a surcharge which translates, strictly in what concerns digital and physical video games and PlayStation add-on content, to an overall compensation due to Portuguese consumers, until June 2023, amounting to more than EUR 235 million.
What is being asked in this action?
Ius is asking the Court to:
a) declare Sony’s infringement of the above-mentioned rules, harmful to the diffuse/collective interests in question and to consumer rights (including publications in the national media);
b) order Sony to cease the anticompetitive practices in question;
c) order Sony to pay compensation to all affected consumers living in Portugal who have suffered damages, in accordance with the law.
How does the popular action and consumers compensation work?
The mass consumer compensation mechanism used here, provided for in the Portuguese rules of class action, has never been tested in practice until the very last step. However, according to the law, the following will happen if the court finds in favor of Ius Omnibus:
1) the Court will set the overall amount of damages to be paid by Sony to consumers, to be deposited in a compensation fund;
2) the Court will designate an entity responsible for managing the compensation fund, including the receipt, management and payment of compensation to injured consumers;
3) the Court will set a deadline for consumers to claim their share of the compensation and this information will be publicized in various ways;
4) consumers will have to contact the entity that manages the compensation fund, as well as submit the court-decided evidence and the respective payment instructions, in order to receive their share of the compensation;
5) at the end of the legally established period, if a part remains of the global compensation that was not requested by consumers:
i) that amount will be used to pay the expenses incurred by Ius Omnibus as a result of the action; and
ii) what is left will be handed over to the Ministry of Justice, to be used to support access to law and justice, including the promotion of popular actions.
Do consumers need to contact the Court or Ius Omnibus?
Consumers do not have to contact the Court or Ius Omnibus, nonetheless it may be in their interest to do so.
All consumers living in Portugal, who, since 29 November 2013, have purchased physical or digital games and/or additional in-game content for PlayStation 4 or PlayStation 5, and/or who have subscribed the PlayStation Plus Essential service are automatically represented in this popular action.
If they do not wish to be represented, they must exercise their right to opt-out.
If they want to be represented, they do not need to do anything else for now to be entitled to compensation if Ius Omnibus wins this claim.
At the end of the case, if successful, they will have to contact the entity appointed by the Court to request compensation. However, if they wish to intervene in the action in support of Ius Omnibus they may do so, within the time limit established by the Court.
All consumers represented in this action are invited to contact Ius Omnibus at once (by registering on this page), so that their data be registered and they be informed by Ius of all developments in this case, guaranteeing that they don’t miss the deadline to claim compensation, when that moment arrives.
How is this case funded?
Consumers will never be asked to pay anything, to take on any cost or to give up any part of the compensation they are entitled to. Ius does not ask consumers to pay membership fees or any other charges, nor that they purchase products or services.
This case is funded by an entity specializing in funding litigation, the Augusta group. The funding agreement is presented to the Court so that it may be controlled. The funder cannot interfere and does not have the power to decide the management of the case by Ius. The funder takes on all the risk and costs. If Ius loses the case, the funder is not entitled to receive anything. If Ius wins the case, the funder will receive the amount that the Court decides is adequate and fair.
The funder will only receive this amount if a part is left of the global compensation paid by Sony, after the deadline has elapsed for consumers to ask for their individual compensation. The amount remaining is then surrendered to the State to support access to Justice.
Do you think you’ve been affected by the events in this case? Please contact us using the form below and we’ll help.