30/7/2021 Common position of national authorities of the CPC

30/7/2021

Common position of national authorities of the CPC Network concerning the commercial

practices of Nintendo of Europe GmbH

Under the Consumer Protection Cooperation (CPC) Regulation (EU) 2017/2394

, Member

State authorities

have the duty to launch coordinated investigations in cases of a reasonable

suspicion of a widespread infringement of Union consumer law.

CPC authorities, with the Greek Ministry of Development and Investments and the German

Federal Office of Justice acting as coordinators, have taken the following common position

regarding the protection of consumers using Nintendo Switch and Nintendo Switch Lite

consoles on the following topics.

This common position is without prejudice to any other legal issues or terms that national

authorities may want to raise or may have raised in national proceedings.

Background

Nintendo Switch is a video game console developed by Nintendo and released in March 2017.

The newer more compact model of the console, the Nintendo Switch Lite, was released in

September 2019. The Nintendo Switch console contains two wireless Joy-Con controllers

(one right and one left), which can either be connected to a screen for portable hand-held play,

connected to a grip accessory to function like a traditional home console, or detached

altogether to function as individual controllers for one or two players. In Nintendo Switch Lite

the two controllers cannot be detached, but extra wireless controllers can be used for games

that require motion controls.

Since 2017, consumers who used Nintendo Switch console have reported to CPC authorities

and consumer associations that they have been dealing with a recurring technical problem

named “Joy-Con drift”. “Joy-Con drift” appears as a loss of control of the game, as controllers

deteriorate and start to register unwanted commands without having been touched by the user.

The “Joy-Con drift” fault appears to both Nintendo Switch and Nintendo Switch Lite

consoles.

1. Misleading information and misleading omission of material information

While marketing its product, Nintendo publicly expressed its intention to support the Switch

by further evolving how it can be used, in view of keeping a growth in the sales of the product

for even more than 6 years

(which was the average for Nintendo consoles)

. These

Regulation (EU) 2017/2394 of the European Parliament and of the Council of 12 December 2017 on

cooperation between national authorities responsible for the enforcement of consu mer protection laws and

repealing Regulation (EC) No 2006/2004, OJ L 345, 27.12.2017, p. 1–26.

The Consumer Protection Cooperation (CPC) network consists of authorities responsible for enforcing EU

consumer protection laws in EU-27 Member States.

https://asia.nikkei.com/Business/Consumer/Nintendo-sees-chance-for-Switch-to-beat-Wii-s ales-record2

statements could reasonably create the impression to the average consumer that since the

Nintendo Switch Console had such a support of the company, it is safe choice with a long

lifespan that would exceed the 6 years (as was also reflected in the relevant articles in the

press

). Nevertheless, according to consumers’ testimonials the consoles develop the “Joy-

Con drift” defect mostly in the first year (or between the first and the second year) after the

purchase of the console.

It is indicative , as to the scale of the problem, the fact that BEUC’s member organisations had

received nearly 25.000 consumer complaints about the Nintendo Switch console by January

2021

CPC authorities consider that the nature of the failure and the frequency of its occurrence,

taking into account a) the fact that many consumers report experiencing “Joy-Con drift” on

multiple Joy-Con controllers, including replacement controllers they purchased separately

from their Switches, and b) the gravity of the reported defect that prevents the Nintendo

Switch and Nintendo Switch Lite consoles in performing its expected function, demonstrate

the limited lifespan of the consoles whose release was, nevertheless, accompanied by

statements of continuous evolving and growth. The Unfair Commercial Practices Directive

(UCPD) (article 6(1) (a) to (g)) prohibits misleading actions which are capable of deceiving

the average consumer on a wide range of elements, including the existence of the product, its

main characteristics (e.g. its composition, method of manufacture, geographical or

commercial origin, the risks and results to be expected from its use), the price or the manner

in which it is calculated or the existence of a specific price advantage, the nature, attributes

and rights of the trader. Article 6 of the UCPD clearly covers any commercial practice which

“contains false information and is therefore untruthful”

Moreover, according to article 7(1) of the UCPD, “a commercial practice shall be regarded

as misleading if, in its factual context, taking account of all its features and circumstances

and the limitations of the communication medium, it omits material information that the

average consumer needs, according to the context, to take an informed transactional decision

and thereby causes or is likely to cause the average consumer to take a transactional decision

that he would not have taken otherwise” and therefore establishes, in very general terms, a

positive obligation on traders to provide all the information which the average consumer

needs to make an informed purchasing decision.

The “Joy-Con Drift” constitutes an important, serious and hidden defect that prevents the

product in performing a function for which it was bought and causes inconvenience to

consumers. More specifically, the defect interferes significantly with the gameplay and since

the entire purpose of the Nintendo Switch and Nintendo Switch Lite consoles is to play video

games and the purpose of the Joy-Con controller specifically is to control the gameplay in

https://nintendosoup.com/nintendo-wants-extend-switchs-lifes pan-6-years/,

https://metro.co.uk/2020/05/08/nintendo-switch-halfway-life-cycle-12673002/

https ://nintendosoup.com/nintendo-wants-ext e n d-switchs-lifespan-6-years/,

https://metro.co.uk/2020/05/08/nintendo-switch-halfway-life-cycle-12673002/

https://www.beuc.eu/publications/beuc-x-2021-002_nintendo_-

_prema ture_obsoles cence_complaint_to_the_ec.pdf

Commission Staff Working Document Guidance on the implementation/application of directive 2005/29/EC

on Unfai r Commercial Practices (UCPD Guidance), p. 53,

https://eur-lex.europa.eu/legal-

content/EN/TXT/PDF/?uri=CELEX:52016SC0163&from=EN

those video games, the defect goes to the device’s central functionality and results in the

device failing of its essential purpose. Moreover, as regards the Nintendo Switch Lite, since

the controller cannot be detached and replaced, when the “Joy-Con Drift” appears the

consumer has to replace the whole console. As result, the problem leads to the early obsolesce

of the controller and -in some cases- of the console itself.

CPC authorities consider that the consumers wouldn’t have bought the Nintendo Switch or

Nintendo Switch Lite gaming systems and the Joy-Con controllers or wouldn’t have paid such

high price, had they known the potential reduced product lifespan because of the “Joy-Con

Drift” defect.

In addition, CPC authorities consider that, even though, Nintendo could easily warn

consumers on the potential appearance of the defect in any number of ways, including on the

product’s packaging, this information is not revealed at the time of the purchase, while the

average consumer is not able to detect the defect through an ordinary examination of the

product.

Taking into account that the Nintendo Switch consoles have been marketed as products that

would continue to grow in sales with the support of the company for more than 6 years, and

therefore presented as a safe and long-lasting choice, even though the manufacturer has the

knowledge of the potential appearance of the defect of the Joy-Con controllers, CPC

authorities share the opinion that this commercial practice falls under the article 6(1) (b) of the

UCPD and could be considered as a misleading commercial practice likely to deceive

consumers on the main characteristics of the product and cause them to take a transactional

decision that they would not have taken otherwise.

Furthermore, CPC authorities consider that the potential appearance of the Joy-Con drift fault

and the potentially limited lifespan and early obsolesce of the controllers and/or the consoles

should be considered as a material information for the purposes of the UCPD. The absence of

such information is likely to mislead consumers, as set out in article 7(1) and (2) of the

UCPD, and to materially distort the economic behaviour of the average consumer with respect

to the purchase of the Nintendo Switch and Nintendo Switch Lite consoles.

Le gal frame work:

• Directive 2005/29/EC on unfair commercial practices

- Article 6(1) (b)

- Article 7(1), (2)

2. Ninte ndo’s failure to act in line with the requirements of profe ssional dilige nce

Pursuant to article 5(2) UCPD, Nintendo should act in line with the requirements of

professional diligence in its commercial practices towards consumers. Based on the available

information and the presentation of Nintendo’s business model on its website

the CPC

network considers that Nintendo is a trader within the meaning of article 2(b) of the UCPD

Commission Staff Working Document Guidance on the implementation/application of directive 2005/29/EC

on Unfair Commercial Practices (UCPD Guidance), p. 75 ,

https://eur-lex.europa.eu/legal-

content/EN/TXT/PDF/?uri=CELEX:52016SC0163&from=EN

https://www.nintendo-europe.com

and that it is engaged in a business-to-consumer commercial practice within the meaning of

article 2(d) of the UCPD.

According to UCPD Guidance, article 5(2) of the UCPD prohibits commercial practices that

are contrary to the requirements of professional diligence if they are likely to materially

distort the economic behavior of the average consumer

. This is a self-standing criterion — it

is not an additional cumulative test that needs to be met for a practice to be found in breach of

any of the specific categories of unfair practices in Articles 6 to 9 or Annex I to the UCPD

The notion of “professional diligence” encompasses principles which were already well

established in the laws of the Member States before the adoption of the UCPD, such as

“honest market practice”, “good faith” and “good market practice”. These principles

emphasize normative values that apply in the specific field of business activity. It follows

from Article 5(2)(b) that in order to be found contrary to the requirements of professional

diligence, a commercial practice must also be considered likely to “materially distort the

economic behavior” of consumers

According to a technical study held by the French Consumer Organization “Que Choisir” the

Joy-Con Drift defect is mentioned as a problem with the joystick on the left hand side of the

controller and, in particular, with moving the joystick up while playing

It would appear that this defect is the result of several malfunctions :

Me chanical malfunction: The signs of wear and tear on the flexible printed circuit board in

the joystick can cause contact problems and thus poor movement detection and the dust in the

joystick indicates that it is not dustproof. This could also cause detection faults on the contact

points of the printed circuit board.

Ele ctronic or coding malfunction: The fact that the fault is only in one direction and that it

occurs quickly could indicate a problem with the electronic card.

CPC authorities believe that Nintendo is a market leading company in a high-tech sector and,

therefore, the standard of skill and care in the specific field of activity is already a high

standard. As such, it was in a position to know the true state of facts about the defect, before

releasing and marketing the product, at the pre-release testing phase of the console. Moreover,

even when alerted (as the problem of “Joy-Con” drift, appeared since the release of the

product in 2017

), Nintendo did not intervene to change the design of its controllers and put

an end to this fragility. On the contrary, in September 2019, Nintendo released the newer

compact version of this console, the Nintendo Switch Lite, which develops the same “Joy-

Con drift” technical problem that leads to the direct obsolescence of the console. It was only

in July 2020 (and following a class-action lawsuit filed against Nintendo in the USA for not

Commission Staff Working Document Guidance on the i mplementation/application of di rective 2005/29/EC

on Unfair Commercial Practices (UCPD Guidance), p.35

Commission Staff Working Document Guidance on the implementation/application of di rective 2005/29/EC

on Unfair Commercial Practices (UCPD Guidance), p.50

Commission Staff Working Document Guidance on the implementation/application of di rective 2005/29/EC

on Unfair Commercial Practices (UCPD Guidance), p.50

https://www.quechoisir.org/nos-combats-switch-nintendo-l-ufc-que-choisir-denonce-l-obsolesc ence-

programmee-des-manettes -joy-cons-n72823/

https ://www.forbes.com/sites /insertcoin/2017/03/11/the-nintendo-switc hs-left-joy-con-issue-has-for ced-

me-to-abandon-my-grip-controller-entirely/?sh=5b7064af3cda

disclosing the defect of Joy-Con controls

) that the CEO of Nintendo Shuntaro Furukawa,

publicly acknowledged the existence of the Joy-Con Drift and apologized to its customers but

again without suggesting any concrete solutions

In addition, the fact that other video game controllers produced by Nintendo present no such

problems, demonstrates that it has the technological capacity and expertise to avoid the

identifie d flaws.

Furthermore, CPC authorities consider that it is crucial that the specificities of the game

consoles market should be taken into account.

In particular, the game console market involves a relatively high entry cost for consumers

(acquisition of console and games) and the fact that the games and accessories can only be

used within the Nintendo ecosystem creates an economic dependence for the consumer, who

cannot easily switch to a different system in case of a defect in an essential element of that

system: the game controller.

Within this context, the Nintendo practices of offering a game console with a potential flawed

game controller can be considered contrary to professional diligence, since consumers were

not correctly informed that the game controllers they acquired were of lesser quality and

likely to be in need of replacement before the end of the lifespan of the console.

Within this context, CPC authorities reiterate that Nintendo is likely to have acted contrary to

professional diligence a) by bringing on the market game consoles with game controllers that

are likely to be fail before the end of the expected or even average lifespan of the game

console, and thus without exercising adequate quality control, b) by keeping the game

consoles on the market without remedying the defect in the game controllers, after these flaws

were known to Nintendo, c) by bringing a new compact version of the game console on the

market (Nintendo Switch Lite) without remedying the defect in the game controllers, after the

flaws were known to Nintendo and d) by not adjusting the product description or the main

characteristics of the product to include information about a known issue related to the

product.

CPC authorities consider that the above-mentioned practices are likely to materially distort

the economic behaviour of the consumers since many consumers were obliged to buy a new

set of controllers within two years of purchase in the case of Nintendo Switch or even a new

console in the case of Nintendo Switch Lite, which is clearly not a transactional decision that

they would have taken, had they known the potential reduced product lifespan.

Le gal frame work:

• Directive 2005/29/EC on unfair commercial practices

- Article 5 (2)

https://chimicles.com/wp-content/uploads/2019/07/Class-Ac tion-Complaint-Nintendo-Joy-Con.pdf

https://kotaku.com/nintendo-pr esident-apologizes-for-joy-con-trouble-1844216184