Facebook fined over £50 million by UK watchdog for information breach, told it is not above law

Facebook has been fined over £50 million by UK's Competition & Markets Authority (CMA) and told that it is not “above the law”.

The fine is at least 150 times bigger than the previous fine for a similar offence. The fine has been imposed in relation to its acquisition of GIF website Giphy in May 2020. 

Competition & Markets Authority tweeted, "We’ve fined Facebook £50.5m for breaching an order we imposed during our investigation into their purchase of Giphy."

"This is the first time a company has breached an IEO by refusing to report information required after multiple warnings," the authority added. 

We’ve fined Facebook £50.5m for breaching an order we imposed during our investigation into their purchase of Giphy.

This is the first time a company has breached an IEO by refusing to report information required after multiple warnings.

Read more: https://t.co/64SVu0zXsA pic.twitter.com/LOfbtUs6fS

— Competition & Markets Authority (@CMAgovUK) October 20, 2021

What exactly happened?

The Competition and Markets Authority (CMA) had launched a probe into Facebook's acquisition of Giphy in June 2020, shortly after the deal was announced, over concerns regarding “substantial lessening of competition”.

As per CMA, it is a standard practice to issue an initial enforcement order (IEO) at the beginning of an investigation into a completed merger to ensure that companies continue to compete with each other as they did before the merger. This also aims to prevent firms involved in the merger from integrating further while a merger investigation is ongoing. 

As a part of the process, CMA said that Facebook was required to provide the CMA with regular updates outlining its compliance with the IEO but the watchdog said that the social media giant significantly limited the scope of those updates, despite repeated warnings.

Facebook was also criticised by the Competition Appeal Tribunal and Court of Appeal last year for lack of cooperation with the CMA.

Senior Director of Mergers at the CMA, Joel Bamford explained that the "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."

He said that they had warned Facebook that its refusal to provide them with the required information was a breach of the order but, even after losing its appeal in two separate courts, Facebook continued to disregard its legal obligations.

He stated that "this should serve as a warning to any company that thinks it is above the law."

The CMA’s investigation into Facebook’s merger with Giphy is still ongoing and no decision has been reached yet in relation to the merger.