Facebook fined £50m by UK watchdog

Facebook was hit with a £50.5 million fine this week after it breached an order imposed by the Competition and Markets Authority (CMA) during its investigation into the company’s purchase of Giphy.

Under CMA rules, it is standard practice to issue an initial enforcement order (IEO) at the start of an investigation into a completed acquisition. This procedure is designed to make sure companies continue to compete with each other as they would have without the merger and prevents the companies involved from integrating further while a merger investigation is ongoing.

In June, the authority imposed this type of order on Facebook in relation to its purchase of Giphy.

Facebook was required to provide the CMA with regular updates outlining its compliance with the IEO, but the UK watchdog said that the social media platform “significantly limited” the scope of these updates, despite repeated warnings.

This is the first time a business has been found by the CMA to have breached the order by consciously refusing to report all the required information.

A £50 million penalty was issued for the breach, while the company was fined an additional £500,000 for changing its chief compliance officer twice without seeking consent.

The company was also criticised last year by the Competition Appeal Tribunal and Court of Appeal for its lack of cooperation with the CMA and “what might be regarded as a high-risk strategy” in relation to not complying with the IEO and not keeping the CMA updated as the IEO required.

“Companies are not required to seek CMA approval before they complete an acquisition but, if they decide to go ahead with a merger, we can stop the companies from integrating further if we think consumers might be affected and an investigation is needed,” said Joel Bamford, senior director of mergers at the CMA. “We warned Facebook that its refusal to provide us with important information was a breach of the order but, even after losing its appeal in two separate courts, Facebook continued to disregard its legal obligations.

“This should serve as a warning to any company that thinks it is above the law.”

The authority has not yet made a decision about the merger with Giphy and the investigation into the acquisition is still ongoing.

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