The CMA has fined Facebook £50.5 million for breaching an order imposed by the CMA during its investigation into Facebook’s purchase of Giphy.
It is standard practice to issue an initial enforcement order (IEO) at the start of a CMA investigation into a completed acquisition. This aims to ensure that companies continue to compete with each other as they would have without the merger, and prevents the companies involved from integrating further while the merger investigation is underway. The CMA imposed an IEO 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. It 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.
The CMA says that the compliance reports are crucial to ensure that the CMA has oversight of the companies’ behaviour, including whether Facebook has been taking any action which might prejudice the outcome of its investigation.
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. Due to 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 under section 72 of the Enterprise Act 2002 for what it calls a major breach, and which it says 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 seeking consent first.
The CMA’s investigation into Facebook’s merger with Giphy is ongoing. In August 2021, the CMA provisionally found Facebook’s merger with Giphy will harm competition between social media platforms and remove a potential challenger in the display advertising market.
