Facebook must face U.K. probe into Giphy merger, court rules

Mark Zuckerberg, chief executive officer and founder of Facebook Inc., arrives for a House Financial Services Committee hearing in Washington, D.C., U.S., on Wednesday, Oct. 23, 2019.Andrew Harrer | Bloomberg | Getty ImagesLONDON — Facebook’s acquisition of animated picture platform Giphy can be probed by the U.K. competition regulator, a tribunal court ruled Friday.The Competition and Markets Authority (CMA) announced in June that it had begun a probe into the deal amid fears that it could reduce competition in the U.K.It issued an “Initial Enforcement Order” (IEO) that prevents the two companies from integrating while the CMA conducts its initial investigation.Following the IEO, Facebook requested a “derogation” and asked for a substantial part of its business to be exempt. But the CMA blocked the request, arguing that it did not have the “necessary information from Facebook to reach a decision.”Facebook applied for a review of the CMA’s position but on Friday the U.K.’s Competition Appeal Tribunal dismissed all of Facebook’s grounds of appeal.CMA Chief Executive Andrea Coscelli said in a statement: “This is an important judgment from the Competition Appeal Tribunal and sends a clear message — initial enforcement orders are an essential part of the CMA’s merger toolkit, enabling it to protect both market competition and consumers as it undertakes merger reviews.”She added: “Companies seeking a reprieve from an IEO must provide sufficient information to the CMA before a decision can be made to release them from parts of it — it is therefore vital that they engage with the CMA as early as possible.”A Facebook spokesperson told CNBC that the company is “cooperating” fully with the CMA and that it will continue to do so. “We are reviewing the Tribunal’s decision and considering our options,” they said. “This merger is in the interests of everyone who uses GIPHY and our apps — from developers to service providers to content creators.”Giphy did not immediately respond to CNBC’s request for comment.Facebook and Giphy are both headquartered in the U.S. but the CMA can investigate mergers when the business being acquired has an annual turnover of at least £70 million ($88 million), or when the combined businesses have at least a 25% share of any “reasonable” market. The regulator is also investigating a $575 million Amazon investment into food delivery app Deliveroo.At the time of the acquisition, Facebook said it plans to further integrate Giphy into the Instagram app “so that people can find just the right way to express themselves.”The deal is also being investigated by the Australian Competition and Consumer Commission.

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