However, this concern made up only half of the CMA’s argument. Cautioning about less competition between social media platforms, the regulator at the same time warned of its impact on a market that does not yet exist. The CMA said Giphy had the potential to compete with Facebook in the UK advertising market if it were not bought. “Prior to the merger, Giphy launched an innovative advertising service that it was considering expanding to countries outside the United States, including the United Kingdom,” the watchdog said in a statement, citing GIFs that Pepsi and Duncan donuts Made to promote their brands.
“It’s interesting,” says Peter Broadhurst, a competitive partner at law firm Crowell & Morning, who called the deal involving two US companies “expansionist.” “Giphy was not generating any revenue in the UK,” he says. “But the CMA found evidence, especially from his voice, that there was some strong evidence that he may have tried to sell advertising in the UK at some point in the future, and he felt that ‘this is enough for us.’ The verdict also shows this. The paper says Britain’s regulator, encouraged by Brexit, is ready to show itself at the stage of global distrust. “In the UK, we have an extraordinary government that gives the CMA a fairly wide range of powers to intervene in many transactions, and it is exercising these powers, especially after the Brexit. To respond to small deals. “
This decision is not surprising at all. The CMA has been conducting in-depth investigations into Giphy’s acquisition since April 2021. In September 2021, Facebook responded to the provisional findings of an investigation by questioning the UK’s jurisdiction over the agreement in a document published by the UK government. “The facts, in the current case, are simple,” Facebook said. “Facebook and Giphy have no competition in the UK, and there is no overlap in related business activities which raises competition concerns.”
Tyler believes that Meta is now facing a growing trend where integration is being flagged by countries with which the agreement has nothing to do. She added that the EU and its member states are also beginning to look at deals that go far beyond their borders, including sending Austria’s acquisition of a customer service platform to the European Commission in March 2021. Pointing to Difficult times enforcing against mergers and possibly, as a result, many other enforcers are considering how to prevent market losses from happening, “says Tyler.
It is unusual for a country’s regulator to block an agreement where the companies involved are linked to another country, but there is no precedent for this. In 2001, the European Union blocked the acquisition of Honeywell, another American group of General Electric based in Boston. In 2018, a Chinese survey thwarted plans by US semiconductor company Qualcomm to swallow Dutch rival NXP. In May 2021, airline software companies Saber and Farelogix failed in their appeal against the CMA’s decision to suspend their merger, although Farelogix had no UK customers or businesses.