FCA does not like Facebook's takeover of GIPHY

Apr 14, 2021 Benn-Ibler Rechtsanwälte

The Austrian Federal Competition Authority (FCA) is currently investigating the takeover of the US GIF and sticker platform GIPHY by the US Facebook group. The merger had not been notified - possibly unjustly, according to the FCA.

In May 2020, Facebook acquired the platform GIPHY without notifying the merger to the FCA. In the view of the FCA, the merger could violate the merger control rules that came into force in Austria in 2018.

These provide for an obligation to notify, inter alia, if the merger consideration amounts to more than 200 million euros and the company to be acquired is active to a considerable extent in Austria (Sec. 9 (4) (4) Cartel Act, Kartellgesetz).

The FCA states that a high consideration is "often a sign of innovative business ideas and high competitive market potential". The new transaction threshold of €200 million is intended to cover mergers in the digital economy where the otherwise relevant turnover threshold does not play a role because the company to be acquired does not have any relevant turnover.

For the FCA, it must now be examined whether the domestic activity of GIPHY reaches the required threshold of a "significant scope". The FCA is supported by expert opinions from the regulatory body RTR on the economic significance of the use of GIPHY.

As the FCA emphasizes in its dispatch, Austria is not the only state in which the takeover of GIPHY has led to distortions under competition law. The UK Competition & Markets Authority (CMA) has also been conducting proceedings against Facebook since 2020.

At the end of March 2021, the CMA, for its part, determined that there was a sufficiently high probability that competition would be restricted by the acquisition and is now conducting an in-depth investigation.

FCA, Press release: FCA examines Facebook's takeover of GIPHY - merger not notified to the FCA (29.03.2021)