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CMA ends its investigation into online console gaming subscription practices

14 June 2022. Published by Jonathan Greenway, Associate and Joshua Charalambous, Senior Associate

The UK Competition Markets Authority (CMA) has now closed its investigation into subscription practices in the online console gaming sector after key players Sony, Nintendo and Microsoft committed to making improvements to their contract terms with a view to better protecting customers.

The investigation, launched by the CMA in April 2019, considered the supply of online gaming memberships by leading companies in the sector. In particular the CMA examined the use of "auto-renewal" practices, where customers' membership subscriptions would automatically roll-over at the end of each contract term (whether monthly, yearly etc). Under this model customers are automatically charged for the renewal term unless they actively take steps to end their subscription. The CMA considered the transparency of information available to customers regarding auto-renewals and the position on refunds following accidental auto-renewal. The CMA was particularly concerned that a high volume of customers may have been finding themselves locked into paying for services they no longer wanted or used.

Two years on, each of Sony, Nintendo, and Microsoft have agreed to make updates to their business practices regarding auto-renewal. Sony has provided the CMA with an undertaking to improve consumer protection including by putting in place measures to contact its PlayStation Plus customers to remind them how to stop payments, and to stop taking payments from customers who continue paying for their subscription without using their membership. Nintendo also changed the contract terms for its Nintendo Switch Online Service to remove auto-renewal as the default option for customer membership. Their changes follow undertakings (here and here) made by Microsoft in January 2022 to: (i) provide better information to customers to clarify the position on auto-renewal and price increases; (ii) offer pro-rata refunds for customers on 12-month renewal cycles; and (iii) contact Xbox customers paying for unused memberships.

Auto-renewal contracts are not unique to online console gaming - they are common in a variety of sectors. Companies offering auto-renewal subscriptions in other sectors should consider their policies and practices to ensure that they are taking steps to adequately protect consumers and treat them fairly.  Michael Grenfell, the Executive Director of Enforcement at the CMA has noted: "Companies in other sectors which offer subscriptions that auto-renew should review their practices to ensure they comply with consumer protection law". 

In its response to the now-concluded consultation on "Reforming competition and consumer policy", the government confirmed that it will be making changes to subscriptions rules by legislating to: (i) clarify and enhance pre-existing contract information requirements for subscription contracts; (ii) introduce a specific requirement on traders to send reminders to consumers before a contract automatically renews; (iii) create a specific obligation requiring traders to remind consumers that a free trial or introductory offer is coming to an end; and (iv) create a specific requirement for traders to ensure that their consumers are able to exit contracts in a straightforward and timely way. Businesses that take steps now to review their policies and practices ahead of new legal requirements may see benefits by avoiding regulatory attention and bolstering trust in their customer base.  

Sources:

  • CMA closes investigation into online gaming sector: https://uk.practicallaw.thomsonreuters.com/w-035-2362?transitionType=Default&contextData=(sc.Default)&firstPage=true 
  • CMA launches investigation into online gaming companies’ roll-over contracts: https://www.simmons-simmons.com/en/publications/ck0b06xc876pi0b949t5zlb49/090419-cma-launches-investigation-into-online-gaming-companies-roll-over-contracts 
  • Sony and Nintendo update gaming subscription auto-renewals after UK investigation: https://www.theverge.com/2022/4/13/23023955/sony-nintendo-microsoft-updating-subscription-practices-uk-competition-markets-authority-cma 
  • CMA secures changes to Xbox auto-renewal practices: https://www.rpc.co.uk/snapshots/technology-digital/spring-2022/cma-secures-changes-to-xbox-auto-renewal-practices/
  • CMA secures changes to Xbox auto-renewal practices: https://www.gov.uk/cma-cases/online-console-video-gaming
  • CMA secures changes to Xbox subscription practices: https://www.gov.uk/government/news/cma-secures-changes-to-xbox-subscription-practices 
  • CMA welcomes Sony and Nintendo’s gaming subscription: improvementshttps://www.gov.uk/government/news/cma-welcomes-sony-and-nintendo-s-gaming-subscription-improvements