On May 18, the European Commission (the Commission) fined Facebook €110 million for providing incorrect or misleading information during its 2014 WhatsApp merger notification (under the 2004 EU Merger Regulation - the EUMR). Although a substantial fine, the Commission will not be reconsidering the clearance decision, as it considered that the incorrect or misleading information did not impact its decision. This is the first time that the Commission has imposed such fines under the EUMR.
Legal obligations under the EUMR
The EUMR obliges parties to a merger review to provide correct and non-misleading information, and this applies irrespective as to whether the information has an impact on the ultimate outcome of the merger assessment. Under the EUMR, where incorrect or misleading information is provided, the Commission can impose a fine of up to 1% of the aggregated turnover of the companies involved. When considering the penalty, the Commission will consider the nature, gravity and duration of the infringement as well as any mitigating or aggravating circumstances.
The investigation and fine
Following its investigation the Commission found that, contrary to the statements made in 2014, the technical ability to automatically match Facebook's and WhatsApp's user accounts already existed in 2014, and that Facebook was aware of such a possibility. The Commission considered that: (i) Facebook staff were aware of the possibility that accounts could be matched, (ii) Facebook was aware of the relevance of user matching for the Commission's assessment, and (iii) that Facebook was aware of its obligations under the EUMR. It therefore found that Facebook's breach (two separate infringements relating to the same topic: the information on the notification form and the information in the reply to the request for information), was at least negligent.
In setting the level of the fine, the Commission took Facebook's cooperation during the investigation into account, namely, it acknowledged the infringement, and its waiver of its procedural rights (to have access to the Commission's file, and an oral hearing). The Commission determined that €110 million was both proportionate and an appropriate deterrent.
In deciding not to reopen the 2014 clearance decision, the Commission noted that its decision was not solely based automated user matching, and that in any event at the time it had carried out an 'even if' assessment that assumed user matching as a possibility. The Commission therefore considered that, albeit relevant, the incorrect or misleading information provided by Facebook "did not have an impact on the outcome of the clearance decision".
Wider considerations for businesses
This is the first time that the Commission has adopted a decision imposing fines on a company for the provision of incorrect or misleading information since the entry into force of the 2004 EUMR. Although the Facebook fine is higher than any other fine for similar infringement, this is because, prior to 2004 fines were capped at €50,000, and fines had been imposed in five cases between 1999 and 2004.
Today's fine operates as a cautionary warning to businesses: the provision of either incorrect or misleading information to the Commission will not be tolerated by the Commission, regardless of the relevance to the review at hand. The Commission can be expected to pursue similar such cases like this whenever they arise, and businesses need to be careful to avoid either negligent or intentional provision of incorrect or misleading information.
Finally, it should be noted that national competition authorities often have similar powers, and have imposed fines in various jurisdictions, so this is equally an important consideration for notifications to national competition authorities.