Facebook has been fined £50.5 million after it was found to have breached an order imposed by the Competition and Markets Authority (CMA) during its investigation into the Giphy acquisition.
In June last year, the CMA issued Facebook with an initial enforcement order (IEO) as the regulator began its investigation into the Giphy purchase.
IEOs are issued at the beginning of an investigation to ensure that firms involved in any prospective merger continue to operate as though they were still separate entities. This enables the regulator to examine whether a deal will negatively impact market competition.
Under CMA rules, Facebook was required to provide the authority with regular updates showing it remained compliant with the order. However, the CMA stated today that the social media firm “significantly limited the scope” of its updates despite repeated warnings to comply.
Facebook’s refusal to provide adequate updates “fundamentally undermined” the CMA’s ability to carry out its investigation, which prompted the £50 million fine.
The fine marks the first time a company has been found to have breached an IEO, according to the CMA.
A separate fine of £500,000 was also imposed by the CMA after Facebook changed its Chief Compliance Officer on two separate occasions without first seeking consent from the regulator.
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“Initial enforcement orders are a key part of the UK’s voluntary merger control regime,” said Joel Bamford, senior director of mergers at the CMA.
“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,” he added.
Bamford said that the fine should “serve as a warning to any company that thinks it is above the law”.
The CMA said its investigation into Facebook’s merger with Giphy is still ongoing, and it intends to “work constructively the companies as things progress further”.
In August, the CMA warned Facebook could be made to sell Giphy over concerns that the takeover could negatively impact competition between social media platforms.
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