Facebook has been fined £50.5 million for breaching an order imposed by the UK’s competitions watchdog during its investigation into Facebook’s purchase of Giphy.

The Competition and Markets Authority ruled that the social media giant deliberately refused to comply with its investigation into the $400m merger.

In August, the CMA provisionally found that the Silicon Valley deal – which brought together Facebook, the largest provider of social media sites and display advertising in the UK, with Giphy, the largest provider of GIFs – could remove a potential challenger in the display advertising market.

If confirmed, the ruling could require Facebook to unwind the deal and sell off Giphy in its entirety.

Now the CMA has issued a £50m fine over Facebook’s conduct.

“It is standard practice to issue an initial enforcement order at the start of an investigation into a completed acquisition. This ensures that companies continue to compete with each other as they would have without the merger, and prevents the companies involved from integrating further while a merger investigation is ongoing,” it stated. 

“The Competition and Markets Authority imposed this type of order on Facebook in June 2020 in relation to its purchase of Giphy.

“Facebook is required, as part of the process, to provide the CMA with regular updates outlining its compliance with the IEO. Facebook significantly limited the scope of those updates, despite repeated warnings from the CMA. 

“It was also criticised last year by the Competition Appeal Tribunal and Court of Appeal for its lack of cooperation with the CMA and ‘what might be regarded as a high-risk strategy’ in relation to not complying with the IEO and not keeping the CMA updated as the IEO required.

“The compliance reports are crucial to ensure that the CMA has oversight of the companies’ behaviour, including whether Facebook has been taking any action which might prejudice the outcome of its investigation.”

This is the first time a company has been found by the CMA to have breached an IEO by consciously refusing to report all the required information. 

It issued multiple warnings to Facebook and considered its failure to comply – which it says fundamentally undermined its ability to prevent, monitor and put right any issues – “deliberate”. 

Separately, the CMA  fined Facebook £500,000 for changing its chief compliance officer on two separate occasions without seeking consent first.

Joel Bamford, senior director of mergers at the CMA, said: “Initial enforcement orders are a key part of the UK’s voluntary merger control regime. 

“Companies are not required to seek CMA approval before they complete an acquisition but, if they decide to go ahead with a merger, we can stop the companies from integrating further if we think consumers might be affected and an investigation is needed.

“We warned Facebook that its refusal to provide us with important information was a breach of the order but, even after losing its appeal in two separate courts, Facebook continued to disregard its legal obligations.

“This should serve as a warning to any company that thinks it is above the law.”