Facebook Inc. was fined 50.5 million British pounds ($69.6 Million) by the UK Competition Regulator, UK's Competition and Markets Authority (CMA), for their failure to report their proposed takeover of the animated images provider, Giphy. The board of UK's Competition and Markets Authority has decided to fine Facebook Inc. because there was a breach of reporting requirements for their proposed acquisition of the company, Giphy.
After the acquisition of the popular GIF provider, Giphy, which was reported to be purchased by Facebook Inc. in the sum of $400 Million, the UK's Competition and Markets Authority (CMA) have ordered to stop any activities concerning the takeover of the company without their approval. UK's Competition and Markets Authority (CMA) wants to further investigate if the said takeover would lessen the competition.
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On the announcement of CMA on the website of the UK Government, Facebook Inc. is required to comply with their regulations and report all the required information to the governing body. This is part of the acquisition process; however, according to CMA, Facebook Inc. has consciously withheld some documents from them and thus breaching the enforcement orders. CMA did not fail to repeatedly warn Facebook Inc. about the process, and the company has lacked cooperation with the CMA. This is the first time that a company has been found breaching protocols by CMA. CMA further added that this should be a set example and as a warning to all the companies that think they are above the law.
The act of penalizing Facebook Inc. shows that CMA is determined to police all the companies that do not follow merger protocols. This is not the first time Facebook Inc was fined; in June of this year, Austria has fined Facebook Inc $9.6 Million for its failure to seek approval in closing a deal. Upon further investigation, the board of CMA has penalized Facebook Inc additional 500,000 pounds for changing their chief compliance officer twice without their approval. CMA is yet to decide on this acquisition and will announce its verdict on Dec 1. They, however, recommended that Facebook Inc just sell Giphy. It was reported that Facebook Inc bought Giphy for $315 Million in August 2020.
The CMA is due to decide on the deal by Dec 1 and has already recommended Facebook sell Giphy. Facebook Inc. paid $315 million for Giphy, the CMA said in August.
In response to the penalty imposed by CMA, Facebook Inc's spokesperson has stated that they do not agree to the decision made by the CMA. They find the punishment unfair and that Facebook Inc. has done everything in its efforts to comply with the regulations. They are yet to review the decision and will examine their options.