Zachary Amaranth said:
That assumes balance. That's like assuming I have the same chance of winning in court as Wal-Mart does.
Equally, your implied assumption that Steam/Valve as as EVIL as Wal-Mart.
All I know is that large companies often have shed loads of lawsuits against them. Steam's been raking in the cash for long enough for lawyers to find holes in their EULA, but we've not heard a peep from them.
Tesco, Wal-Mart, Microsoft, Apple, Blizzard, EA have all had numerous suits against them, but Valve? Well, Steam has had criticism for Regional Pricing and Authentication, and an action put against them back in 2007 for Territory Violation.
http://www.shacknews.com/onearticle.x/49656
Now, given that nothing came from that - and it's similarity to the case here - I'd say the balance of probability is that Steam is within their rights due to their own TOS.
Region locking may not be ethical (make up your own mind on that), but as has been said before, all the mobile companies, Microsoft, Apple and a number of other companies use exactly the same rules. Challenge one, you really have to challenge them all.
Oh, and all DVD movies, 18-rated games etc. etc. etc.
Now if Steam were to allow this, then they could be sued for allowing region-locked software into the public domain; so while it may not be ethical (YMMV) it's not just legal, but vital to their on-going actions.
TL;DR: It's legal, it's just the law that's an ass.