Facebook has been fined a total of £50.5 million for breaching the UK’s Competition and Markets Authority’s (CMA) initial enforcement order (IEO) in relation to its acquisition of Giphy. The social media firm was fined because it resisted producing timely reports required by the IEO and it changed its Chief Compliance Officer on two occasions without first seeking consent.
Under the initial enforcement order, both Facebook and Giphy should have continued operating as though they had not merged until the CMA could complete its merger investigation. To prove that the two aren’t operating too closely, Facebook was required to provide reports to the CMA. However, Facebook limited the scope of these updates despite warnings from the CMA and, as a result, has been fined £50 million for this breach.
The firm was fined a further £500,000 for changing its Chief Compliance Officer (CCO) on two occasions without seeking consent from the CMA. By swapping the CCO, the CMA’s investigation could have been set back and therefore it has slapped the company with a fine.
Commenting on the fines, Joel Bamford, Senior Director of Mergers at the CMA, said:
“Initial enforcement orders are a key part of the UK’s voluntary merger control regime. 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.
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.”
Interestingly, Facebook is the very first company that the CMA has found to have breached the IEO by consciously refusing to report all the required information. Despite the fines, the CMA is still investigating Facebook’s merger with Giphy and could still turn around and rule against it.