A UK regulator is fining Facebook £50 million ($68 million) for failing to report information concerning its acquisition of Giphy, a GIF publishing site.
On Wednesday, the UK’s Competition and Markets Authority (CMA) issued the fine, claiming Facebook was deliberately withholding the information.
“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,” says Joel Bamford, senior director of mergers at the regulator.
Facebook didn’t immediately respond to a request for comment. But in June, the CMA announced it had “provisionally” found that Facebook’s acquisition of Giphy risks harming competition in the social media and display advertising industries. A final finding is expected later this year.
The CMA originally ordered Facebook to pause its acquisition of Giphy last year so that it could scrutinize the deal. To do so, the UK regulator demanded the social network regularly notify it about “any material developments” relating to Giphy or Facebook’s business, including changes to customer contracts and details of key staff who leave or join the companies.
“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 explained on Wednesday.
However, the UK regulator claims Facebook has “significantly limited the scope” of the updates, despite repeated warnings. “This is the first time a company has been found by the CMA to have breached an IEO (initial enforcement order) by consciously refusing to report all the required information,” the CMA adds. “Given the multiple warnings it gave Facebook, the CMA considers that Facebook’s failure to comply was deliberate.”
The news also implies the CMA suspects Facebook has been integrating with Giphy, despite the call for a pause. Both Facebook and Giphy are based in the US. But under the CMA’s authority, the regulator can investigate a foreign company if the combined merger will have “at least a 25% share of any reasonable market.”
In addition to the £50 million fine, the CMA is also penalizing Facebook £500,000 ($689,000) for changing its chief compliance officer on two separate occasions without seeking consent from the UK regulator first.
