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May 18, 2017

European Commission fines Facebook £94m for ‘misleading’ Whatsapp merger

The European Commission also specified that it would not be reversing its decision to allow the $19 billion merger.

By Joe Clark

The European Commission has fined Facebook £94 million for misleading the European Union during the company’s 2014 merger with Whatsapp.

The ‘misleading’ information refers to Facebook denying that it would be able to match users accounts across the two systems, but has since gone on to do this.

The commission found that Facebook knew of this possibility in 2014 despite the information it presented to the public during the merger.

Commissioner Margrethe Vestager, in charge of competition policy, said: “Today’s decision sends a clear signal to companies that they must comply with all aspects of EU merger rules, including the obligation to provide correct information. And it imposes a proportionate and deterrent fine on Facebook. The Commission must be able to take decisions about mergers’ effects on competition in full knowledge of accurate facts.”European Commission

In statement, Facebook said: “We’ve acted in good faith since our very first interactions with the Commission and we’ve sought to provide accurate information at every turn.

“The errors we made in our 2014 filings were not intentional and the European Commission has confirmed that they did not impact the outcome of the merger review. Today’s announcement brings this matter to a close.”

EU competition authorities are allowed to issue fines in the area of 1% of annual turnover, and as a result the fine could have been over double the £94 million at £211 million.

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The Commission decided against the maximum fine due to the cooperative nature of the company throughout the investigation.

Internet based services are coming under increased scrutiny lately, and several large companies are being investigated for anti-competitive practices. Though the EU said that this instance was unrelated to the other general inquiries going on.

Richard Craig, senior associate in the IT, Telecoms & Competition team at International law firm Taylor Wessing said: “The fine shows the importance of being fully transparent with competition regulators when filing for merger control clearance, although some will no doubt claim that the commission should have gone further and reopened the investigation into the transaction.

“This is in large part as a result of an increasing focus on the relationship between the access that the major tech companies have to large and complex datasets and the potential for this to adversely affect competition. Several transactions in recent years, including Facebook’s acquisition of Whatsapp and Microsoft’s acquisition of LinkedIn have been at least partly motivated by the desire to gain access to valuable data. These transactions are facing increasing scrutiny, in particular by privacy advocates, who fear that these deals will lead to a degradation of privacy protection for consumers.”

The European Commission also specified that it would not be reversing its decision to allow the $19 billion merger.

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