competition appeals tribunal blocks forced sale on disclosure grounds – TechCrunch

Facebook’s parent company Meta fought an uphill battle to appeal the UK antitrust ruling investigating and ultimately ordering Meta to sell Giphy, the GIF marketplace it acquired in May 2020 for around $315 million; and now he’s gotten a small stay of execution: the UK’s Competition Appeal Tribunal has sent the case back to the antitrust regulator, the Markets and Markets Authority, for reassessment, after finding that the CMA had failed to provide complete and unredacted information. disclosure to Meta’s representatives of documents related to its decision.

Notably, the appeals tribunal upheld all other aspects of the AMC’s decision, namely that the AMC acted within its powers and did not make an unreasonable assessment and subsequent remedy. in this case, where it felt that competition in social media would be detrimentally reduced. due to acquisition.

But despite this, it is yet another win for Meta’s legal team.

The ruling effectively means that the AMC ruling it issued in November 2021, ordering Facebook (now rebranded Meta) to sell Giphy, is on hold, with the order now “interim”, and again on the point of being re-evaluated after Meta’s attorneys gave more case-related documentation to resubmit their own case.

The court issued its ruling in June, but it was quietly made public today in a short memo (per Bloomberg). You can read the full 107-page citation here, or the one-page summary of the decision here.

The specific passage that relates to the referred case notes that the AMC “failed to consult properly and wrongly excised portions of [its] Decision”, and he further noted that the CMA had failed on this point because “the appointed individual members of the CMA group [in the Decision] are not expected to personally conduct a merger investigation and personally write the CMA’s interim findings and final decision. »

“The recent judgment of the Competition Appeals Tribunal endorsed the CMA’s approach to reviewing mergers that could harm innovation,” a CMA spokesperson said in a statement to TechCrunch. . “CMA won on 5 out of 6 reasons, with Meta winning 1 in our process for sharing confidential information. We agreed to reconsider our decision in light of this finding. We will begin our review shortly and aim to complete the referral within three months of today’s order. »

We’ve also reached out to Meta for comment and will update this post as we learn more, but this effectively means Meta’s legal team will now have access to the AMC’s final unredacted report for mount a new defense of the agreement, and specific rebuttals at all points, based on this data.

The initial acquisition of Giphy, had the CMA order been confirmed, would have required Meta not only to find a buyer, but also to pay Giphy a break fee of approximately in the process. Ironically, the case has already seen information withheld from the other side: Facebook paid a $70 million fine for failing to provide data to the CMA as part of the antitrust investigation (a fact that does not is still irrelevant to the court’s decision).

If you’re wondering who else might be interested in acquiring the company if Meta can’t, or if Giphy would be looking to start its own independent company, it’s interesting that in the meantime Giphy has made some very interesting deals with other social media. companies such as TikTok and Reddit.

The original decision published by the CMA panel in November 2021, which was overturned here, noted that “Facebook would be able to increase its already significant market power over other social media platforms by deny or limit other platforms’ access to Giphy GIFs, driving more traffic to Facebook-owned sites – Facebook, WhatsApp and Instagram – which already account for 73% of time spent on social media in the Kingdom -United, or modify access conditions by, for example, requiring TikTok, Twitter and Snapchat to provide more user data in order to access Giphy GIFs.

He also pointed out that the agreement would have an impact on the display advertising market. “BPrior to the merger, Giphy had launched innovative advertising services which it planned to expand to countries outside of the United States, including the United Kingdom. Giphy’s services have enabled companies – such as Dunkin’ Donuts and Pepsi – to promote their brands through visual images and GIFs,” the AMC noted.

“Giphy’s advertising services had the potential to compete with Facebook’s own display advertising services. They would also have encouraged greater innovation from other market players, including social media sites and advertisers. Facebook terminated Giphy’s advertising services at the time of the merger, removing an important source of potential competition. The CMA finds this particularly concerning given that Facebook controls nearly half of the UK’s £7 billion display advertising market.

If information is a powerful coin in court, then Meta made a key breakthrough to give it another shot at keeping Giphy, and conversely, the CMA found that when competing with the legal team of a tech giant, it is important to be above reproach in the way it does all its paperwork and other work.

But it’s more than that. Some have seen this Giphy deal and how it’s playing out in the antitrust arena as sort of a make-up for what, in retrospect, looks like a failure to bring more oversight and potential competitive remedies, around much bigger deals than Facebook made a few years ago its acquisitions first of Instagram and then of WhatsApp.

In this regard, this case becomes a kind of precedent for both parties. A victory for Meta here provides a strong message for Meta with subsequent mergers and acquisitions and what it can expect to do. And a victory for the CMA sets the tone for how it might react to other deals of this size for both Meta and other major social media and consumer internet giants.

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