Display ad dominance: Meta fails in bid to quash CMA decision to sell Giphy

Tribunal rejects all but one of Meta’s challenges as part of appeal against reversing its acquisition of the animated GIF platform in May 2020.

Facebook Giphy

Meta has virtually failed in its bid to overturn a decision by the UK’s Competition & Markets Authority (CMA) to reverse its acquisition of animated GIF platform Giphy

“Significantly lessen dynamic competition in the UK market”

Meta’s appeal against the decision – lodged last December – meant the case was referred to the Competition Appeal Tribunal (CAT). At the time, a phase two investigation by the CMA into the May 2020 $315m purchase found that it would significantly lessen dynamic competition in the UK market.

Despite the companies being based in the US, both are active in the UK and the CMA concluded that the acquisition would reduce competition between social media platforms and had already removed Giphy as a potential challenger in the UK display ad market. 

As a result, the CMA ordered Meta to sell Giphy to an approved buyer. 

Meta appealed the decision on six grounds – five of which were rejected unanimously by the Tribunal. Notably, the Tribunal concluded that the CMA’s findings that the acquisition significantly reduced dynamic competition was lawful. 

The Tribunal, within its judgement document, said: “It is our task not to consider whether the CMA has “got it right”, but whether the decision it made was lawful or not. In this regard, we have no hesitation in concluding that the decision made by the CMA was one that it was entitled to make.” 

Challenge on disclosure

The Tribunal found in Meta’s favour on part of one of its six challenges, which was that the CMA overly favoured confidentiality concerns of third parties in relation to disclosing information, and that it had in fact “failed properly to consult and has wrongly excised portions from [its] decision”.

The CMA had not, until August last year, informed Meta that one of its prominent social media competitors Snap had bought Giphy rival Gfycat, despite being in possession of this information since June 2020.  

The CMA said that the “impact of this on the CMA’s decision will be determined in due course”.

Andrea Coscelli, Chief Executive at the CMA,said: “We welcome this resounding endorsement by the Competition Appeal Tribunal of the CMA’s approach to reviewing mergers that may harm innovation. Innovation is a vital part of the competitive process, particularly in digital markets. We also welcome the Tribunal’s endorsement of the ‘care and careful consideration’ given to this issue by the independent Inquiry Group in this case.

“This judgement helps reinforce our ability to protect competition and innovation in digital markets.”

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