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Facebook/GIPHY merger: AFCA files request for examination with Cartel Court

On 20 July 2021, Facebook notified AFCA of its plan to acquire all of the shares in and sole control of GIPHY (Z-5549). On 17 August 2021, AFCA filed a request for examination with the Cartel Court due to competition concerns (Phase II).

Background information

The merger had been completed in May 2020, which is why the Austrian Federal Competition Authority (AFCA) had previously already instituted proceedings against Facebook for failure to notify the acquisition (cf. AFCA’s press release of 07 June 2021).

The Cartel Court decided in favour of AFCA’s application on 22 July 2021, imposing a (not yet final) fine of EUR 9.6 million on Facebook on the grounds of its failure to notify the merger with GIPHY, this being the amount that the AFCA had applied for. The merger should have been notified with the AFCA due to it exceeding the transaction threshold pursuant to § 9 para. 4 of the Cartel Act (KartG).

Competition concerns

In the course of its investigation, the AFCA gathered extensive information and obtained feedback from a large number of market participants.

Since the AFCA’s competition concerns could not be dispelled in the course of these investigations, they must now be examined in depth by the Cartel Court (Phase II).

The AFCA specifically requested looking into whether Facebook has increased its potentially dominant market position in relation to social media and online advertising as a result of its acquisition of GIPHY.

A range of potentially harmful forms of conduct would need to be investigated, particularly whether, as a result of the merger, Facebook is now in a position:

  • to restrict non-discriminatory access to GIPHY for other online platforms;
  • to obtain sensitive data about competing online platforms through other apps’ integrated interface to the GIPHY library;
  • to reduce competition for digital advertising revenues.

Owing to the described competition concerns, the AFCA and the Federal Cartel Prosecutor filed a request for examination with the Cartel Court on 17 August 2021. The Cartel Court is obliged to examine the request within a period of five months.