Commission fines Facebook €110 million for providing false information about its takeover of WhatsApp

International

On 18 May 2018, the European Commission impose a €110 million fine on Facebook for providing misleading information during the Commission’s investigation of Facebook’s acquisition of WhatsApp in 2014.  This is the first fine which the Commission has imposed on a company for provision of incorrect or misleading information since the revised EU Merger Regulation was adopted in 2004.  The decision came with a clear message to businesses.  Commissioner for Competition Vestager in a public statement announcing the decision stated -

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”.

Why was the fine imposed?

Under the Merger Regulation, the Commission can impose fines of up to 1% of the aggregated turnover of the parties for intentionally or negligently providing misleading information.

When Facebook notified its acquisition of WhatsApp under the EU Merger Regulation in 2014  it was required to provide information concerning the parties’ respective activities in order for the Commission to assess the likely impact of the merger on users. 

At the time, Facebook informed the Commission that it would be unable to establish reliable automated matching between Facebook users’ accounts and WhatsApp users’ accounts.  This was set out in its notification and later in a response to a further request for information. 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.  This sparked an investigation by the Commission into whether Facebook had provided accurate information in 2014 regarding the technical possibility of automatic user matching.

The investigation disclosed that at the time of the merger notification, the potential for automatic matching already existed and that Facebook staff were aware of that possibility.  However, the Commission stopped short of finding that its actions were intentional. The Commission also acknowledged Facebook’s recognition of the mistake and its cooperation in the procedural investigation.

Does the decision have an impact on the approval of the Merger?

The decision to fine Facebook for its procedural misdemeanour has no impact on the Commission’s approval of its takeover of WhatsApp.  During its investigation of the merger the Commission took into account the possibility that even if user matching was not possible at the time it could be in the near future and made its assessment on that basis.  Consequently, it has decided that this disclosure does not change its analysis.  The Commission has said that the decision does not impact on any ongoing national antitrust procedures, privacy, data protection or consumer protection issues which may arise following WhatsApp’s change in service and privacy policy.

Implications

The implications of the case are clear.  Merger filing applications in complex cases require careful consideration and requests for information from a competition authority are often broadly worded with tight deadlines for responses. But it is worth ensuring that any misunderstandings over what information is required are clarified.