The European Commission today announced it has fined Facebook €110 million for providing incorrect or misleading information during the EU merger notification of its $19 billion (€12 billion) acquisition of WhatsApp in 2014. The full decision is not yet available but a press release can be found here.
The February 2014 transaction was notified to the Commission and cleared without conditions in October 2014. In the course of that notification process, Facebook stated on two occasions, in the notification itself and in response to a Commission information request, that it would be unable to establish reliable automated matching between Facebook and WhatsApp user accounts.
In December 2016, the Commission addressed a Statement of Objections to Facebook detailing its concerns, as reported in this blog post, in Spanish. Facebook accepted the Commission’s findings, waiving its right to access the file and request an oral hearing and opting to cooperate with the Commission’s investigation. The Commission has now confirmed that decision.
The Commission has the power to impose fines of up to 1% of the infringing party’s turnover and in this case the fine of €110 million represents around 0.44% of Facebook’s 2016 revenues. It was calculated taking into account the fact that there were two counts of misleading information being provided and that the information was knowingly misleading, but also recognizes Facebook’s cooperation with the investigation. It is by far the highest fine imposed by the Commission for supplying misleading information and the first imposed under the current merger regulation, which entered into force in 2004. Prior to that, fines had been calculated on a different basis and were significantly lower.
The Commission also has the power to revoke clearance decisions based on misleading information for which one of the parties are responsible, but has decided in this case that the October 2014 clearance is not affected. Specifically, the Commission’s original analysis had found that the transaction did not give rise to concerns even on the alternative basis that matching was possible (despite Facebook’s denial) and as a result, the misleading information did not have an impact on that decision.
Nevertheless, the decision provides a clear reminder of the importance of taking due care in the preparation of merger filings and the potentially severe consequences in terms of fines and the revocation of decisions if incorrect information is provided, whether to the European Commission or to national authorities such as the CNMC, which have similar powers.