Facebook –- which reportedly may soon be renamed -- made news today for another deliberate misstep. This time it is being fined nearly 70 million dollars for knowingly breaching an order set by the U.K. competition regulator. Facebook was caught “consciously refusing to report all the required information” related to antitrust oversight in its acquisition of Giphy.
Although the penalty was handed out today, the investigation by The Competition and Markets Authority goes back to June 2020. The order is in place so that companies continue to compete as if in the absence of a merger, preventing them from further integrating.
Legally, Facebook is required to show the CMA regular updates that prove it is complying with the order. However, the CMA reported that Facebook “significantly limited the scope of those updates” even after repeated warnings.
Facebook’s withholdings were therefore found to be deliberate. According to the CMA, this is a “major” breach.
“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,” it writes. “Given 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 for this major breach, which fundamentally undermined its ability to prevent, monitor and put right any issues.”
A Facebook spokesperson said the company strongly disagrees with the penalty and called it “unfair,” claiming they had taken a “best effort compliance approach.”
In addition, the CMA has included a separate fine, sticking Facebook with an extra £500,000 for changing its Chief Compliance Officer twice without ever seeking consent from the regulator.
Joel Branford, senior director of mergers at the CMA, commented in a statement: “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.”
If these competition concerns over Facebook are officially confirmed, the CMA stated that it may disassemble the deal -- forcing Facebook to sell off Giphy, which was reportedly worth 400 million dollars.