Social media giant Facebook has been fined £50.5 million ($69.1 million) for breaching an order imposed by the U.K. Competition and Markets Authority (CMA) during its ongoing investigation into Facebook’s purchase of Giphy.
The previously completed merger of Facebook and Giphy, the largest provider of GIFs and meme sharing services, ran into a potential roadblock from the CMA earlier this year. The CMA provisionally found that the merger would negatively impact competition between social media platforms, something that Facebook disagrees with.
“It is standard practice to issue an initial enforcement order (IEO) at the start of an investigation into a completed acquisition. This ensures that 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,” the CMA said in a statement. “The CMA imposed this type of order on Facebook in June 2020 in relation to its purchase of Giphy.”
Facebook is required, as part of the process, to provide the CMA with regular updates outlining its compliance with the IEO. Facebook “significantly limited the scope of those updates, despite repeated warnings from the CMA,” the authority said.
“This is the first time a company has been found by the CMA to have breached an IEO by consciously refusing to report all the required information,” the CMA said. “Given the multiple warnings it gave Facebook, the CMA considers that Facebook’s failure to comply was deliberate. As a result, the CMA has issued a fine of £50 million for this major breach, which fundamentally undermined its ability to prevent, monitor and put right any issues.”
Separately, the CMA has fined Facebook £500,000 for changing its chief compliance officer on two separate occasions without first seeking the CMA’s consent.
A Facebook company spokesperson told PvNew: “We strongly disagree with the CMA’s unfair decision to punish Facebook for a best effort compliance approach, which the CMA itself ultimately approved. We will review the CMA’s decision and consider our options.”
Joel Bamford, senior director of Mergers at the CMA, said: “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,” Bamford added.
