Facebook loses appeal over investigation into Giphy takeover
Facebook has lost an appeal over the regulatory probe into its acquisition of Giphy.
The social media giant announced plans to buy Giphy last May but the Competition and Markets Authority (CMA) then said it was looking into whether it could cause a “substantial lessening of competition in any market or markets in the United Kingdom”.
The watchdog began the initial investigation in January, when Facebook was under intense scrutiny over competition and privacy concerns.
The CMA ordered the two companies to keep their businesses separate, not to integrate their IT systems or customers lists, and not to exchange sensitive information during the probe.
Facebook claimed the order was disproportionate and challenged the CMA’s refusal at the Competition Appeal Tribunal, which was dismissed in November.
The tech firm went to the Court of Appeal last month to again challenge the terms of the orderm arguing it was “excessively broad” and applied “indiscriminately to Facebook’s entire global business”.
The Court today dismissed the appeal and criticised Facebook for failing to “properly engage with the CMA”. Sir Geoffrey Vos said: “The central problem in this case was entirely of Facebook’s own making.”
The judge said Facebook made requests to vary the terms of the IEO “and then sat on its hands, refusing to answer the CMA’s questions”.
Facebook was “entirely the author of its own misfortune” because of its failure to provide information to the CMA, which would then have “dealt with its carve-out requests properly”.
The court said that the tribunal “was right to reject Facebook’s complaint that the CMA had no basis for making an initial enforcement order that affected Facebook’s own business”.
The judge added: “There was, for the same reasons, nothing inappropriate, irrelevant or unlawful about the CMA asking questions that related to Facebook’s business beyond Giphy.”
The CMA has welcomed the judgment and said it “reinforces an important and unequivocal message”.
“Both the Court of Appeal and Competition Appeal Tribunal have now endorsed our approach and our handling of this issue,” the CMA’s chief executive Andrea Coscelli said.
“Our investigation into Facebook’s merger with Giphy is ongoing, and we look forward to working with the companies further as we progress the inquiry.”