The EUR 110 million fine imposed on Facebook confirms that the European Commission will not tolerate the supply of misleading or incorrect information during its merger control review process. The European Commission took a strict approach in imposing two separate fines - one in relation to information Facebook provided in response to a request for information and one in relation to information included in the notification itself, even though the underlying information was the same. Facebook and two pending cases concerning the same offence (one in relation to Merck's acquisition of Sigma-Aldrich in 2015 and one in relation to GE's acquisition of LM Wind earlier this year) also confirm an increased focus by the European Commission on the potential negative effects of mergers on innovation - in all three cases, the incorrect or misleading information related to product development or innovation. This of particular relevance for companies active in the pharma or medical devices sectors - the likely implication of these cases is that what can already be very lengthy pre-notification discussions in cases involving new markets and/or complex theories of harm will likely become even lengthier. It now becomes even more important to ensure that all theories of harm are out in the open from an early stage and that the parties clearly understand the scope of any follow-up questions from the case team. In setting Facebook’s fine, the EC took into account the fact that Facebook cooperated with the European Commission during the investigation (including acknowledging the infringement and waiving certain procedural rights). The EC also acknowledged that the incorrect or misleading information had no impact on the outcome of the 2014 merger review process. Had the facts been different, Facebook could well have faced an even higher fine. To avoid any ambiguity or misunderstanding when responding to a request for information from the European Commission:
- Confirm the scope of any question which seems unclear with the case team (in writing)
- Ensure you have the support of individuals from within the business with a sufficiently broad understanding of the relevant products, including any still under development
- Set out your understanding of the scope of a question
- Be explicit that your response does not go beyond the stated scope of the question and include any limitations on scope of the response as well as any limitations on the scope of the efforts undertaken to identify relevant information
- Carefully consider whether responses to information requests need to be incorporated into the filing itself. The context of those initial questions might not have been clear at an early stage of the proceedings. As Facebook shows, the European Commission will treat the supply of misleading or incorrect information in response to request for information the notification form itself as separate infringements.