Wednesday 21 February 2018

Facebook fined €110m for providing misleading information about WhatsApp takeover

Photo: Stock
Photo: Stock
Ellie Donnelly

Ellie Donnelly

The European Commission has fined Facebook €110m for providing incorrect or misleading information during the Commission's 2014 investigation of Facebook's acquisition of WhatsApp.

"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 Commissioner in charge of competition policy Margrethe Vestager said.

The EU merger regulation, under which it investigated Facebook, obliges companies in a merger investigation to provide correct information that is not misleading as, the Commission said, this is essential for the Commission to review mergers and takeovers in a timely and effective manner.

This obligation applies, regardless of whether the information has an impact on the ultimate outcome of the merger assessment according to the Commission.

In issuing the fine, the Commission said that when Facebook notified it of the acquisition of WhatsApp in 2014, it informed the Commission that it would be unable to establish reliable automated matching between Facebook users' accounts and WhatsApp users' accounts.

Facebook stated this both in the notification form and in a reply to a request of information from the Commission. However, in August 2016, WhatsApp announced updates to its terms of service and privacy policy, including the possibility of linking WhatsApp users' phone numbers with Facebook users' identities the Commission said.

In December 2016, the Commission addressed a statement of objections to Facebook detailing its concerns.

The Commission said that it found that, contrary to Facebook's statements in the 2014 merger review process, the technical possibility of automatically matching Facebook and WhatsApp users' identities already existed in 2014, and that Facebook staff were aware of such a possibility.

According to the merger regulation, the Commission can impose fines of up to 1pc of the aggregated turnover of companies, which intentionally or negligently provide incorrect or misleading information to the Commission.

In setting the amount of a fine, the Commission takes into account the nature, the gravity and duration of the infringement, as well as any mitigating and aggravating circumstances.

According to the Commission, Facebook committed two separate infringements by providing incorrect and misleading information in the merger notification form and in the reply to a Commission request for information.

The Commission today said that it considers these infringements serious because they prevented it from having all relevant information for the assessment of the transaction.

Facebook said in a statement that the errors made in the 2014 filings were not intentional and that the European Commission confirmed that they had not affected the outcome of the merger review.

"Today's announcement brings this matter to a close," Facebook said.

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